03.06.18
Through a combination of investment, digitalization and innovation, Shiseido expects sales will grow at a CAGR of 8% through 2020, according to a new three-year plan. The program, dubbed New Strategy to Accelerate Growth, is designed to make the company one of the top three players in the global prestige market by 2030.
But first things first. Under the New Three-Year Plan of the second phase of the medium-to-long term strategy, Vision 2020, the 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.
"We 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," said Shiseido in a statement. "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 yen ($11.4 billion at current exchange rates), operating income exceeding 120 billion yen, and ROE exceeding 14% by 2020, the final year of the new strategy."
Key strategies under the Three-Year Plan include:
But first things first. Under the New Three-Year Plan of the second phase of the medium-to-long term strategy, Vision 2020, the 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.
"We 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," said Shiseido in a statement. "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 yen ($11.4 billion at current exchange rates), operating income exceeding 120 billion yen, and ROE exceeding 14% by 2020, the final year of the new strategy."
Key strategies under the Three-Year Plan include:
1. Prestige First Strategy
Increase sales of makeup and fragrances in the global prestige market in order to expand market share while strengtheningprofit base by increasing sales of skin care products, Shiseido's biggest strength. Through the introduction of innovative breakthrough products, product development in collaboration with retailers, upgrades in visual merchandizing, expansion of brand shops, and optimization of digital communication through social media Shiseido will provide customers with more brand experience opportunities.
"We will also develop further upon our cross-border marketing, mainly focusing on the Chinese consumer, expanding to all of Asia and in the future to the rest of the world," according to the company.
In Asia, in addition to prestige brands, Shiseido will expand to promote four more brands currently marketed mainly in Japan (Elixir, Anessa, Senka and Integrate) to the China market and other Asian regions. In order to capture the needs of consumers in each market Shiseido will expand research and development, develop products that bring high added value, and collaborate with retailers to further enhance its brand power.
With the purpose of restructuring its supply system, Shiseido will increase its capital expenditure, separate from the marketing investment, by a total of 130 billion yen within the next three years, in order to enhance the production system, build new factories, and strengthen cooperation with suppliers.
Increase sales of makeup and fragrances in the global prestige market in order to expand market share while strengtheningprofit base by increasing sales of skin care products, Shiseido's biggest strength. Through the introduction of innovative breakthrough products, product development in collaboration with retailers, upgrades in visual merchandizing, expansion of brand shops, and optimization of digital communication through social media Shiseido will provide customers with more brand experience opportunities.
"We will also develop further upon our cross-border marketing, mainly focusing on the Chinese consumer, expanding to all of Asia and in the future to the rest of the world," according to the company.
In Asia, in addition to prestige brands, Shiseido will expand to promote four more brands currently marketed mainly in Japan (Elixir, Anessa, Senka and Integrate) to the China market and other Asian regions. In order to capture the needs of consumers in each market Shiseido will expand research and development, develop products that bring high added value, and collaborate with retailers to further enhance its brand power.
With the purpose of restructuring its supply system, Shiseido will increase its capital expenditure, separate from the marketing investment, by a total of 130 billion yen within the next three years, in order to enhance the production system, build new factories, and strengthen cooperation with suppliers.
2. Acceleration of Digitalization and New Business Development
In e-commerce (EC), Shiseido will strengthen cooperation with major EC websites around the world, integrate in-store customer data at the shop front, and promote customer relationship management (CRM). In order to elevate the business operations infrastructure, while developing all employees' capabilities. Shiseido will also promote the seamless integration of business processes between the main headquarters and every regional headquarter, build an integrated IT platform, and centralize the management of data. This will require an investment of approximately 27 billion JPY in total during the next three years. For new business development, Shiseido will strengthen its solutions through personalization in order to provide value according to every consumer's individual needs. By combining superior digital technologies (including IoT) with its exciting businesses, the companyl create new products and consumer experiences.
3. New Value Creation through Innovation
By merging its 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 Shiseido will increase the number of R&D personnel 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 its innovation centers around the world.
4. Developing Talent and Organization to Be a Global Winner
Shiseido will open training facilities at all of its 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, Shiseido plans to invest approximately 14 billion yen. At the same time, the company will renovate office environments in Japan and overseas. Furthermore, in order to accelerate organization diversity, Shiseido will create a global talent database with unified standards and promote global mobility. In Japan, Shiseido aims to reach a 40% ratio of women in managerial positions, considering the specifics of its business.
5. Next New Global Management Model
In 2016, Shiseido launched a matrix-type global management structure intersecting brand categories with its six regions and 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 skin care, the Americas for makeup and digital marketing, and EMEA for fragrances. This year, Shiseido 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, Shiseido will establish the Technology Innovation Center in Boston, US, among others.
In e-commerce (EC), Shiseido will strengthen cooperation with major EC websites around the world, integrate in-store customer data at the shop front, and promote customer relationship management (CRM). In order to elevate the business operations infrastructure, while developing all employees' capabilities. Shiseido will also promote the seamless integration of business processes between the main headquarters and every regional headquarter, build an integrated IT platform, and centralize the management of data. This will require an investment of approximately 27 billion JPY in total during the next three years. For new business development, Shiseido will strengthen its solutions through personalization in order to provide value according to every consumer's individual needs. By combining superior digital technologies (including IoT) with its exciting businesses, the companyl create new products and consumer experiences.
3. New Value Creation through Innovation
By merging its 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 Shiseido will increase the number of R&D personnel 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 its innovation centers around the world.
4. Developing Talent and Organization to Be a Global Winner
Shiseido will open training facilities at all of its 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, Shiseido plans to invest approximately 14 billion yen. At the same time, the company will renovate office environments in Japan and overseas. Furthermore, in order to accelerate organization diversity, Shiseido will create a global talent database with unified standards and promote global mobility. In Japan, Shiseido aims to reach a 40% ratio of women in managerial positions, considering the specifics of its business.
5. Next New Global Management Model
In 2016, Shiseido launched a matrix-type global management structure intersecting brand categories with its six regions and 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 skin care, the Americas for makeup and digital marketing, and EMEA for fragrances. This year, Shiseido 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, Shiseido will establish the Technology Innovation Center in Boston, US, among others.
