Shiseido Company, Limited (“Shiseido”) has developed the “New Three-Year Plan” (2018-2020) starting in 2018.
Towards the realization of “VISION 2020”, the six-year medium-to-long term strategy that was developed in 2014, the first three years (2015 to 2017), were dedicated to the phase of “Rebuild the Business Foundation” and thoroughly resolve structural issues of the business both in Japan and overseas while reinforcing marketing investment. As a result, in 2017 we surpassed 1 trillion JPY in sales, a target originally set for 2020. Operating income also increased and reached its highest level ever.
SEE ALSO : Shiseido’s results for 2017
With sights set on 2030, the three years between 2018 and 2020 become a phase to implement a “New Strategy to Accelerate Growth” and be among the top three companies in the Global Prestige Cosmetics Market while maintaining our significant presence in Japan and Asia.
With prestige brands as our core business we aim to “Be a Global Winner with Our Heritage” through digital acceleration, synergy maximization with new technologies and brands that have now joined Shiseido, and by increasing further investment.
Under the New Three-Year Plan of the second phase of the medium-to-long term strategy “VISION 2020,” the brands strategy will be further tuned to respond to the needs of every region’s local consumers, active marketing investment will grow, and the company will move forward with digital acceleration, new business development, and new value creation through innovation.
Shiseido will also prioritize and actively invest into our people’s development as we believe that they are the source of new value creation and of our growth. Furthermore, with our global management structure evolution and through a CAGR of more than 8% over 2018-2020, we aim to achieve sales exceeding 1.2 trillion JPY, operating income exceeding 120 billion JPY, and ROE exceeding 14% by 2020, the final year of the new strategy.
The key strategies will focus on five business pillars:
1. Further “Selection and Concentration” of Brand Businesses
While maintaining “Prestige First” as central strategy, we will sustain and expand our growth potential while accelerating the growth of “Cosmetics and Personal Care Brand Business” in Asia. With further development in mind we will commit an additional investment in marketing on the base of the 2017 amount, a combined sum of 120 billion JPY in annual increments over the next three years.
With the purpose of restructuring the supply system, Shiseido will increase capital expenditure, separate from the marketing investment, by a total of 130 billion JPY within the next three years, in order to enhance the production system, build new factories, and strengthen cooperation with suppliers.
SEE ALSO : Shiseido launches new teen brand Posme
2. Acceleration of Digitalization and New Business Development
In e-commerce (EC), the company will strengthen cooperation with major EC websites around the world, integrate in-store customer data at the shop front, and promote CRM (customer relationship management).
3. New Value Creation through Innovation
By merging our own knowledge and experience with the capabilities of acquired brands and technologies together with the high expertise of talented people Shiseido will not only produce innovation in cosmetics but also build innovative business models and explore new frontiers such as artificial skin, hair and skin regeneration, and advanced beauty care.
Furthermore, the number of R＆D personnel will be increased to 1,500 and aim for R＆D investment-to-sales ratio of 3% by 2020. In order to maximize R＆D capabilities on a global level, the “Global Innovation Center” will start its operations in Yokohama Minato Mirai 21, from December 2018, as a hub for all our innovation centers around the world.
4. Developing Talent and Organization to Be a Global Winner – PEOPLE FIRST –
Training facilities will be opened at all regional headquarters targeting employees all over the world, in addition to an MBA program for young employees in order to develop future global talent, enhancement of leadership training programs for management personnel development, and English language training as preparation for the English mandate starting from October 2018.
Over the three years, investments in this area will reach approximately 14 billion JPY in total.
Furthermore, in order to accelerate diversity within the organization, Shiseido will create a global talent database with unified standards and promote global mobility. In Japan, the aim is to reach a 40% ratio of women in managerial positions, considering the specifics of our business.
5. Next New Global Management Model
In 2016, Shiseido launched a matrix-type global management structure intersecting brand categories with our six regions.
At the same time, Shiseido established four “Centers of Excellence (COE)” in which regions that significantly influence categories globally lead strategy planning and product development.
Japan hosts the COE for skincare, the Americas for makeup and digital marketing, and EMEA for fragrances.
SEE ALSO : Shiseido’s new retail concept in Ginza
From 2018, the company will leverage the respective knowledge and experience acquired in each region for the benefit of each brand and global marketing in order to realize a new business model and digitalization as quickly as possible. To that end, the company will establish the “Technology Innovation Center” in Boston, US, among others.
Japan, China, Asia Pacific and Travel Retail will maintain and further accelerate the growth momentum for high profitability. With regards to the Americas and EMEA, Shiseido will work on improving our profitability and aim for more than 10% operating profit margin.