Business Week

August 11, 2005


By Pallavi Gogoi

The Serious Cachet of "Secret Brands"

Label-free retailers Muji and American Apparel are proof that success doesn't necessarily depend on spending big to build a name

In a world where brands rule, nobody drinks sweetened caramel water. They drink Coke or Pepsi. And while some still drink no-name water, many prefer Evian or Poland Springs. Brands are so embedded in our daily habits that it's hard to imagine a world without them. But a couple of store chains -- Muji of Japan and American Apparel in the U.S. -- are striving to establish just such a world by offering the "unbrand" with their logo-free products, and they're achieving tremendous success. How to account for it?

Logo-free obviously appeals to set of consumers who are sick of being bombarded with brand names and seek to be unshackled from them. "There's a core group of people that can't stand the idea of having to walk around as a corporate billboard with a logo stuck on the chest," says Steve Manning, managing director of Igor, brand naming agency in San Francisco.

But in the case of Muji and American Apparel, more than that is going on. Both retailers have carved out a niche by offering a certain style, whether minimalist in the Muji's case or classic fashion revival in American Apparel's, that has captured the imagination of millions.

IN THE GUCCI CLUB? Muji has been so effective at producing a line of sleek products that it has achieved cult status in the designer world. Its products are a conversation piece. When you have a radio without any brand name emblazoned on it, those in the know might ask: "Is that Muji?" Muji has become the secret brand.

This is counterintuitive, because logo-free has long meant lower-end, products embraced by those who couldn't afford a brand name. Brands identify you as belonging to a certain club -- whether it's shirts embroidered with the Polo horseback rider, a Gucci bag, or even a Gap T-shirt. And companies spend a lot of money and time establishing a brand that appeals to people's vanity and gives them a sense of exclusivity.

Muji certainly has made a business case for saving marketing dollars on brand building and plowing that money into better design at affordable prices. Its executives believe a brand name or a logo is extraneous and doesn't bring a specific benefit to consumers except to satisfy their ego. "Muji can focus on the basic essence of products instead of dedicating energies to the frills," says Hiroyoshi Azami, General Manager at Japan's Ryohin Keikaku, which owns the Muji stores.

"A ZEN LEVEL." Muji is short for mujirushi ryohin, which translates roughly to "no label, quality goods," and its mission is to provide well designed, useful products at affordable prices. There's a simple purity in Muji's offerings, which range from stationery and housewares to toiletries. They're functional and so deliberately unfussy and anonymous that even though they're intended go unnoticed, they end up drawing attention.

"You just say the name, and it instills certain thoughts of quality and loyalty, and there's a Zen level of branding about that," says Paul Rand, managing director at Ketchum, a communications firm that assists companies on marketing strategies.

Muji is considering opening stores in the U.S. in 2006, having grown from a single outlet in the mid 1980s to 285 stores in Japan and 41 overseas, including in England, Ireland, France, and China.

NO POLITICAL AXES. In the U.S., American Apparel has had similar success. In just seven years, it has grown to 14 stores domestically and a dozen or so in Mexico, Canada, and Europe. It made $250 million last year.

Its logo-free clothing is made of 100% cotton in bright solid colors with no imprints. American Apparel promotes itself as "sweat-shop free" and "Made in Downtown L.A.," because its two factories, where the cutting and sewing are done, are located in Los Angeles (see BW, 6/27/05, "Living On The Edge At American Apparel"). It has become one of the largest manufacturers of T-shirts in America. "We like the simplicity of unmarked clothing, and many people find it appealing and even more versatile," says Alexandra Spunt, content adviser at American Apparel.

It's important to note that neither Muji nor American Apparel necessarily has aligned itself to a political message by keeping its products logo-free. Nor are they a direct response to the anticorporate movement launched by activist Naomi Klein, who took up her war against brands and logos and globalization during the 1990s. Many of her followers still sport clothing without logos in reaction to the outrage that Klein generated by exposing the sweatshops in Asia and how people labored over the ubiquitous Swoosh logo of Nike (NKE). In the wake of Klein's book, No Logo, the big shoemaker even reduced the size of its logo in response.

NOT SO ANONYMOUS. But at Muji and American Apparel, it's about adopting a certain style, which certainly isn't random. "It's important to have a certain personality and iconic design that runs through," says Igor's Manning. American Apparel believes in classic styles and doesn't change its apparel according to seasons. Its most popular offering, a form-fitting T-shirt in solid colors, will always be available in exactly the same sizes and colors at all times -- giving it a timeless and recognizable feel. "If a T-shirt fits, and you like it, you can always come back to our stores and find it," says American Apparel's Spunt.

For Muji, design is key. It has 15 in-house designers and also commissions top designers around the world to create its products. Muji's Azami takes great pains to stress that these designers are anonymous, and he refuses to identify which products they've made.

However, it's well known that Muji has employed Enzo Mari, the Italian designer known for his experimental designs in plastics and children's toys and whose works have been showcased in the Museum of Modern Art. Also believed to be on the roster are Sam Hecht, formerly head of design at IDEO Europe, and Fukazawa Naoto, a Japanese designer well-known for his minimalist designs of home electronics.

Clearly, Muji and American Apparel don't want logos or brands to mark their products. But they haven't been able to escape becoming identifiable brands themselves.

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