Management Plan

Isetan Mitsukoshi Group's Value Creation Process

Vision for the Long Term

To be a “special” department store-centered retail group that enriches the lives of its customers

~To gain the utmost support in high sensitivity, fine quality consumption, with the pride of Japan and the ability to convey this around the world~

Medium-to Long-Term management plan

Medium-to Long-Term Strategic Steps (Flow and Time Scale)

Direction

[Revitalize Phase] :   Under the current medium-term management plan, we will revitalize department stores through our strategy of " High sensitivity, fine quality".

[Deployment Phase] :  Expanding the infrastructure functions cultivated during the revitalize phase to external sources through the " Stronger intra-Group coordination strategy"

[Fruiting Phase] :  Through " Urban development " wrapped with the appeal of department stores by organically utilizing our own infrastructure ,we will become the "Special" existence that gains the utmost support in high sensitivity, fine quality consumption, with the pride of Japan and the ability to convey this around the world.

Medium-to Long-Term Profit Steps and Portfolio Image

・Revitalize department store business and reach operating profit of ¥35 billion within the current medium-term plan

(Operating income of ¥29.2 billion in Fiscal Year 2018, exceeding the record high of ¥34.6 billion in Fiscal Year 2013)
≪Record high profit after the management merger≫

・ Subsequently, after a period of declining revenues accompanied by real estate development,

①An increase in rental income after the completion of real estate development,

②An increase in card revenues due to the promotion of the CRM strategy contributed,

In the long term 10 years span [fruiting phase],We will achieve operating income at ¥50 billion level.
≪Reform for business portfolio≫

・After that, the remaining real estate development projects will be completed, and the profit level will further leap forward.

Key Strategy

Strategic Framework (birds-eye view)

Key Strategy1"High sensitivity and fine quality" Strategy

[High sensitivity, fine quality consumption]

・All consumer spending by customers who are committed to life and seek fine quality, affluent lifestyles

・ Consumption by all customers who use the Mitsukoshi Isetan Group, whether once a month or once a year, daily and special days.

[Direction]

・Providing seamless customer experience value combining real stores and online through a "high-sensitivity" strategy and digital reforms.

・ Expanding the “Group Lifetime Individual Customers” with “connected CRM” based on personal (individual) marketing.

①Construction of fine quality stores with high sensitivity

Direction

Evolve the 2 main stores into symbols of "admiration and empathy"

High sensitivity, fine quality network refined as "symbol" of urbanization

②(Individual) Out-of-store sales Reform

Direction

Increase the lifetime value of Out-of-sales customers nationwide with

[Out-of-sales + buyers + in-store attendants] × [Digital]

・Direct Marketing Activities through a New Sales Network Structure Surrounding Customers

・Taking in “Potential Needs Outside Department Stores“ they have not been purchased by department stores to date,beyond resolving customer requests.

・Establishment of "Integrated Out-of-store sales Organization" beyond Goodwill

③Establishment of high sensitivity, fine quality "base network"

Direction

Allocate brick-and-mortar stores to suit the size of the nationwide market in preparation for the dominance of high sensitivity consumption

Establishment of a highly sensitive, fine quality network of bases based on flagship stores and regional stores

・Strengthening Cooperation Utilizing High sensitivity "Base Network"

・With our digital network and sales network, Expansion of collaboration between stores and stores

Key Strategy 2"CRM Strategy connecting with individual customers"

Framework for "CRM Initiatives that connect to Individual Customers"

Approach to step-linking strategies

Direction

・Expanding the scale and amount of use of "connected customers" through both the department store business and the card business.

・Isetan Mitsukoshi Apps and MI Card to implement approaches according to the steps of "connected individual customers“.

Key Strategy 3“Stronger intra-Group coordination Strategy"

Direction

・Develop the revitalized department store business system every step

・The "Preparatory Organization" was established in the fall of Fiscal Year 2021.

Establish "Stronger intra-Group coordination Promotion System" in Fiscal Year 2022

Group Platform

1. Digital Reform (DX)

・We provides the best customer experience by the system integrating 4 DXs that we have developed inhouse, namely the "online shopping experience", "digitization of customer service", "digitization of sales support" and "online appeal".



・We establish our seamless operations by combining “brick-and-mortar stores” and “human power” with "4 DX's"

2. CRE and business model reforms

2-1. Development of " Urban development" as a Core Base

・From the perspective of urban development, we will continue to promote "special" department stores that serve as symbols of "respects and empathy" in the highly sensitive and fine quality "base network" and "lasting new value" derived from these stores.

2-2. Enhancing Real Estate Value Nationwide

・To build a highly sensitive, fine quality network of bases, we will maximize the use of our nationwide real estate holdings and promote real estate development from the perspective of "urban development“ that contributes to regional revitalization.

We design a business model in line with the market size × customer need ☓ distance of the main store for each owned property and the leased property.

・We promote the development of real estate in flagship store areas and nationwide areas in preparation for [Fruiting Phase].

2-3. Overseas Business Model from the CRE Perspective

・In existing businesses, we will implement "selection and conversion" based on the contract period and profitability. We make comprehensive judgments In light of category revisions, improved profitability through newbusiness models, and contract terms.

・In future business development, we intend to leverage our commercial management expertise to create a development-oriented model.

3. Income and expenditure structure reform (scientific analysis of department store)

3-1. Cost structure reforms

・We will redesign our department store business structure by controlling costs from a scientific perspective.

・We will promote horizontal deployment of deepening its efforts to reform its cost structure in the Tokyo metropolitan area throughout the entire company.

3-2. Redesign the department store business structure

・We will redesign our business structure through personnel planning from a scientific perspective.

・In addition to the discipline of the direct-to-indirect ratio, we will pursue business process insourcing and we will shift personnel to the financial business, real estate business and other businesses.

Management Platform Sustainability

Toward management with an emphasis on sustainability

Direction

・Contributing to Solving Social Issues through Corporate Activities as a Corporate Responsibility to Society.

・Playing a role in realizing a prosperous future for people and a sustainable society.

Financial Plan

Mid-term KPI

1. Mid-term KPI_Finance

2. Mid-term KPI_Customer

Medium-term cash allocation

Basic Policy

1. Shareholder returns: Early exceed the pre-COVID-19 level of ¥12 per share dividend, and continuously increase dividends in stages thereafter.

2. Interest-bearing debt: Planned reduction of ¥25 billion, securing investment capacity in preparation for future large-scale real estate development.

3. Growth investments: Allocate majority of investment cash flow to growth investments

(Prioritize securing investment capacity during the period of the current medium-term plan and do not repurchase shares in principle)