Medium-Term Management Plan
From 2017 to 2019 Ending February
2
Introduction
Y
3
Overview of Structural Reform
•Complete PDCA: Strict budget control with “Golden Rule” and ”Landing the helicopter”, Detailed quarterly review with subsidiaries
• Withdrawal of unprofitable businesses and closure of brands
•Introduction of NPS: High quality customer experience through NPS, eNPS and PDCA •Implementation of BPR: Reduction of opportunity loss and lost profits by improving
operation
•Digital: Omni-channeling, investment to digital marketing and IoT of stores to utilize big data
•Overseas: Cross-boarder E-commerce, partnership with Chinese apparel companies, acceleration of overseas business in South East Asia(SEA), Discussion of International M&A
•Affiliated Businesses Creating Synergy to the Core Apparel: Establish a new business model from combination of fashion and beauty
•Brand Portfolio Management: Evaluate each brand’s maximum growth potential and carefully select M&A to fill in blank spaces in the portfolio
•Reinforcement of MD and Creation: Establishment of “Fashion Marketing Office” and actions to find next generation seeds
•Streamlining SCM: warehouse consolidation, direct trading, overseas inspection/assort and optimization of the margin for trading companies
4
Environment Surrounding Apparel
Women’s apparel industry will
gradually decrease 0.5% per
annum(excl. E-commerce)
The middle price range market,
where TSI’s main battlefield, will
decrease 2% per annum(excl.
E-Commerce)
Apparel E-Commerce market will
grow 9% annually up to 2020
Headwind of exterior environment is
stronger than expected
Widening gap of win and lose within
commercial facilities, and severe
competition of limited pie
Consumer apparel
expenditure will be
decreasing 1% per annum
Consuming trend is
changing due to users
“self-editing ability”
Trends are becoming
shorter and smaller
“Smartphone first”,
spending of smartphone is
increasing (3% growth
annually over past 10 yrs.)
Major apparel companies are
implementing corporate
restructure
Mid-class companies are
advancing and achieving high
ROE through highly
developed operation and
management theory
Mid- small- brands with
unique and sole concepts are
maintaining steady growth,
but overall industry is
becoming homogeneous
Reinforce Business infrastructure of Existing Businesses
: concentration of investment to existing
businesses and continue reinforcement its business infrastructure
Strategic Investment for Growth
: Acceleration of investment to E-Commerce, overseas and M&A,
actions to find next generation seeds
Build businesses and brand portfolio which
correspond to exterior environmental changes
5
Growth Prospect of Market and TSI
’
’
％
Y
Y
6
Basic Principles and Direction of Measures
Introduction of customer NPS, eNPS and PDCA
Price strategy based on scientific analysis
(Optimization of price setting, proper sale rate, discount rate and items per customer)
Reinforcement of MD and creation, Refine products’ appealing
points and limit # of styles
Centralization of contacts with major facility developers
Accelerate investment to digital marketing
Evaluation of the maximum growth potential of brands,
actions to find next generation seeds
Omni-channeling, investment to digital marketing and IoT of
stores to utilize big data
M&A and partnership based on trustworthy value evaluation
(Domestic apparel, natural cosmetics, M&A of skincare brands, partnership with Chinese apparel etc.)
Purchasing at market’s best price
Rationalization of logistics and optimization of cost
(Concentration of warehouses, direct trading, optimization of margin for trading companies, overseas inspections/assortment of product)
Initiation of BPR(Business Process Re-engineering)
Basic Principles
Reinforce Business
infrastructure of Existing
Brands
: concentration of
investment to existing
businesses and continue
reinforce its business
infrastructure
Strategic Investment for
Growth
: Acceleration of
investment to E-commerce,
overseas and M&A, actions to
find next generation seeds
Build businesses and brand
portfolio which
correspond to
exterior environmental
changes
Determination based on
fact(numerical) and analysis,
and establishment of
reasonable operation basis
7
’ ’ ί ὸ ’ Ṟ ṟ Ṡ Introduction of NPS
• Targets for the number of customers/customer unit price by time of day and by individual • Analysis of positive factors/negative factors of
each day
• Plan to gain back the unachieved amount against the budget
• Motivation improvement through rallies • Immediate deployment of best practices
- Real-time improvement of VMD - “Best Sales Talk”
Financial
Results
“What is the likelihood of you recommending our company to your friends?”
Highly likely
Highly unlikely
(Promoters) (Detractors)
Customer satisfaction Let’s shop here! Let’s work together! Growth opportunity Outstanding performance, trust, common values Passion, creativity Employee satisfaction Sustainable profit growth
8
Results of NPS -SANEI bd’s Current
Revenue-Y Y ’
Y
Y
9
Enhancement of MD and Creation
FORMULA: “Customers’ feeling” x “General Trends” = Desired Manufacturing of Each Brand
?
’
?
10
Strengthening e-Commerce Business and Digital Marketing
=
All brands will have omni-channel sites launched by
end of H1.
Branded smartphone apps equipped with loyalty
points management function by end of Feb 2017 (H2).
Marketing Automation
Automated traffic generation/funneling to branded apps will
enable us to acquire users based on their social media
activities profile.
Commencing testing of automated capturing of foot traffic,
visitors, customer profiles, conversion rates and other data
in physical retail stores through retail IoT to utilize big data
in brick and mortar stores.
Launching of phased approach to cross-border
e-commerce with Direct to Consumer sites and
online stores on 3
rdparty platforms.
Connecting User Generated
Content on Social Networks
to e-Commerce
We will be the first in Japan to integrate Olapic’s User
Generated Content management platform for e-commerce
Last year, we became the first Japanese users of
Demandware, who is the largest e-commerce platform in the
US and Europe. This year, we will launch proprietary and 3
rdparty global e-commerce sites.
Trial installation of
RetailNext, the American
market leader in retail IoT
Entering the 2
ndphase of our omni-channel strategy:
11
Speedily Drive Forward M&A and Overseas Strategy
’
’
’
’
à
’
China
Discussion of JV with a
major Chinese apparel
company, envision the start
for business in 2017SS
-> Full-scale entry into
accessible luxury and
middle income market in
China
SEA
12
Sophistication of Processes: Business Process Re-engineering
Production
Logistics
Stores
Store Distribution Automatic Stocking
Discount Order dispatch in
beginning of term
Mid-term Additional Inserts
Shipment Gather customers’ voices
regarding samples and enhance the accuracy of
demand forecast
Enhance the accuracy of the initial distribution plan in order to improve the
proper sales rate
Review the stocking rules and reduce opportunity
losses
MD Sales
Planning of overviews/products
Decision on order volume Additional Inserts Initial Distribution Plan Discount Manual Stocking
Reduce the lead time for additional inserts and expand
sales opportunities Enhance the
accuracy of planning by basing it on a
wider scope of information
Review the standard and discount products in an
appropriate manner in order to improve the final
digestibility rate
13
Progress of 3 Years Medium-term strategies –Enhancement of Profitability
Basis-Closure of 12 brands including liquidation of 2 subsidiaries and transfer of 1 brand
-> Early retirement 528 employees, closure of 292 stores and replaced 64 with continuing brands
Thrash out all the cuttable costs and clarify the ways of reducing -> Achieving 0.8bn yen reduction mainly from magazine advertisement and freebies
Stricter standard of withdrawal from “unprofitable” to “low profitable” and monitoring progress quarterly, enabling subsidiaries to submit turnaround plans for discussion in timely manner
Expecting to reduce 1.7bn yen cost reduction from centralization of purchasing, establishment of purchasing rules and send out strict budget guideline
Understanding conditions of subsidiaries thoroughly by quarterly review -> discuss
countermeasures with subsidiaries, implement cost control correspond to sales progress
Introduced to SANEI bd -> 6 out of 7 divisions are improving sales from Jan. to Feb. 2016
Formulate budget through strict guideline -> manage budget progress through quarterly review
Expand to other brands and develop PDCA cycle depending on circumstances of subsidiaries
─
Reduced 0.49 bn yen SCM cost through increment of direct trading ratio and optimization of import trading companies
Demand forecast, enhance accuracy of production/distribution and development of discounting to obviate and minimize sales opportunity losses and profit losses
Reduce 0.85bn yen through increasing direct trading ratio, optimization of import trading companies and concentration of warehouses
Completed renewal of production, receipts and payments, distribution, stores, EC, logistics, financing systems of certain subsidiaries with the new operating core system from Mar. 2015
14
Drive forward business infrastructure to achieve E-Commerce ratio of 20%
O2O sites 25 (Y/Y +14), strengthen relationship with 3rdparty E-commerce such as ZOZOTOWN
Contacts with several major apparel companies in Chinese and SEA. Evaluate suitable brands, planning for expansion scheme from M&A to establishment of JV
Release of smartphone apps of brands with point managing function, plan to broaden cross-border EC/ Trial opening of big data utilization through IoT of Stores
Aiming to establish JV with Chinese major company to start business in the country from 2017SS. For SEA, planning to expand brand sales through M&A to capital tie-up
─
Decision of M&A of d’un à dix and Chez unaun to complement a blank space of TSI’s brand portfolio with the taste of “French Authentic”
Negotiation of M&A that is not easily affected by climate and have strong synergy effect to TSI
Evaluate each brand’s appropriate size and maximum growth potential, and discussion of M&A to fill in further blank spaces of the portfolio
─
Establishment of “Fashion Marketing Office” -> Initiation of the internal process to analyze social trends, translate into fashion trends, and reflect on actual manufacturing
