TSI Group Medium-term
Management Plan
FY2012 to FY2014
Construction of the Medium-term Management Plan
Outline of each element
Ideal TSI Group
Universal values and direction of group management
• Final shape that the group aspires to become in the medium-to-long term based on the external environment and the strengths of the group
• Position that the group aims to attain in the market, etc.
TSI Group growth scenario
TSI Group individual business
strategies
Growth scenario to achieve the ideal
• Basic policy of the medium-term management plan to achieve the medium-to-long term ideal
Specific business and functional strategies to achieve the growth scenario
• Business and functional strategies that will be promoted group-wide to achieve the growth scenario
1
2
3
Ideal TSI G
roup
1.
TSI Group Corporate Philosophy
The following is the TSI Group’s corporate philosophy, and we will maintain the philosophy as a
universal value of the TSI Group.
Corporate Philosophy
Corporate Philosophy (management philosophy)(management philosophy)
We create values that brighten up the spirit of people through fashion and share the joy
of living with society.
Mission
Mission (basic management policy)(basic management policy)
1. We deliver new fascination to society through creations that are ahead of the times.
2. We thoroughly implement a product-oriented business that aims to create truly
valuable products.
3. It is our joy to change the emotions of our customers to excitement by offering them
Even though we will discover changing market needs, areas with high sensitivity and fashionareas with high sensitivity and fashionare the central domains, in principle.
We will expand business to areas relating to total fashion areas relating to total fashion and move away from the conventional apparel business centered around clothing.
2.
TSI Group Business Domain
5
Business domains that TSI Group pursues
Business domains that TSI Group pursues
* The positioning of each company is based on our analysis and is presented according to the main business areas.
Practical clothing + clothing ornaments
Practical clothing + clothing ornaments Fashion clothing + clothing ornamentsFashion clothing + clothing ornaments Total fashionTotal fashion
Retail Retail --ty pe ty pe SPA SPA
(incl. select shops)
(incl. select shops)
Maker Maker --ty p e ty p e SPA SPA Maker Maker --ty p e ty p e Appare l Appare l Commodity
Commodity FashionFashion
Customer focus e d Customer focus e d Prod uct focused Prod uct focused
Business domains that Business domains that the TSI Group will pursue the TSI Group will pursue
Current main business
domain
In order to realize the previous corporate philosophy, we will pursue the following areas as our business
domains and will aim to realize growth unique to the TSI Group.
GMS clothing
Fashion center firm
Leading casual SPA
3.
Form of TSI Group Management
Below is the management policy of the TSI Group, and we will utilize this to achieve continuous
growth in the aforementioned business domains.
2. Management based on the strongest business portfolio
2. Management based on the strongest business portfolio
We will execute portfolio
We will execute portfolio--based management to create new brands, businesses, and business based management to create new brands, businesses, and business
models, and to generate the best mix so that we can constantly s
models, and to generate the best mix so that we can constantly survive and win in the changing urvive and win in the changing marketplace.
marketplace.
Continuous development and acquisition of new brands
Establishment of an optimal business model
Select shops Retail-type SPA Maker-type SPA Maker-type apparel
Dept. store SC
Stand-alone store E-commerce
Diversified business areas
Lifestyle
Clothing ornaments Apparel
Others
“
“The strongest business portfolioThe strongest business portfolio””in the fashion industry:in the fashion industry: business area x brand xbusiness area x brand xbusiness modebusiness modell
We will make maximum use of the TSI Group synergy by utilizing t
We will make maximum use of the TSI Group synergy by utilizing theheknowhowknowhow, skills, and , skills, and resources of the entire group, and thereby mutually enhance our
resources of the entire group, and thereby mutually enhance ourstrengths and complement our strengths and complement our weaknesses.
weaknesses.
1. Maximum use of group synergy
1. Maximum use of group synergy
Execute new market strategies that were difficult to be implemented by individual companies.
4.
Management Targets
7
The followings are the priority management targets of the TSI Group, all in order to achieve the
strongest business portfolio.
When considering management targets:
When considering management targets:
In order to execute our “ability to produce customer-oriented products” in an environment that is
thoroughly managed in terms of revenue and investment and to continue to constantly create new fashion, we will need the financial and investment capabilities to support such.
⇒ In other words, it is significant to ““realize high profitability,realize high profitability,” the highest in the industry, for the ” continuous growth of the TSI Group.
Priority targets of the TSI Group
Priority targets of the TSI Group
Operating income (%)
Operating income (%)
Target indexTarget index 20122012 Feb. term actualFeb. term actual
2015 Feb. term target
2015 Feb. term target (final year of the medium
(final year of the medium--term term
management plan)
management plan)
--
6.9 billion
6.9 billion
yen
yen
(
(
-
-
4.6%)
4.6%)
5 billion yen (2.3%)
5 billion yen (2.3%)
Sales
TSI Group Growth
Sce
n
ario
1.
Basic Policy of the Medium-term Management Plan
9
The basic policy of the medium-term management plan is to promote “structural reform without sanctuary” to achieve “prompt positive profit,” which is the condition for continuous growth to realize the “Ideal TSI Group.”
2012 Feb. term
2014 Feb. term
2015 Feb. term
20XX Feb. term Basic policy of the FY2012 to FY2014
Medium-term Management Plan
“structural reform without sanctuary”
Now (2012 Feb. term) Sales: 147.8 billion yen
Op. income: -6.9 billion yen (-4.6%)
2014 Feb. term: Profitable sales
Target of the 2015 Feb. term Sales: 220 billion yen
Op. income: 5 billion yen (2.3%)
Future = Ideal
“High profitability,” the highest in the industry (8% operating income)
“Continuous growth” through a highly profitable structure and
group-wide synergies Operating
TSI Group Individual Business Strategies
11
Thoroughly review cost structure and make improvements to generate continuous profit.
Focus on business areas that are expected to be profitable and concentrate the investment of business resources.
Strengthen the functions of the holding company as well as increase frequency and enhance the quality of information-sharing within the TSI Group, in order to accelerate the above.
FY2012 to 2014 basic policy:
“Structural
reform
without
sanctuary”
1.
Central Strategies of the Medium-term Management Plan
We will concentrate on the below three strategic themes under the basic policy of the medium-term
management plan to promote “structural reform without sanctuary.”
Central strategies of the medium
Central strategies of the medium--term management planterm management plan
Reforming cost structure
Reforming cost structure
(Transform into a highly-profitable structure.)
Improving profitability
Improving profitability
(Selection and concentration on highly profitable businesses)
Strengthening group
Strengthening group
management capabilities
management capabilities
2.
Measures toward “Reforming Cost Structure”
Strategic themes and central measures
Strategic themes and central measures
(3) Promote effective and optimal back-office functions within the
group.
Partially concentrate the HQ operations of the group and consider
outsourcing.
Achieve optimal outsourcing cost, such as for IT.
(1) Reconstruct the brand portfolio and store networks by thoroughly
executing profitability management.
Promote the reconstruction/integration of non-profitable brands/stores.
• Evaluation and withdrawal of brands/stores based on a group-wide
standard on withdrawal and new-store establishment (incl. a review of business requirements and store form)
Review HR size depending on the withdrawal of brands/stores.
(4) Promote an optimal HR structure.
Review HR structures, such as the age structure.
Achieve optimal employment according to type of work, such as
work-from-home and dispatched employees.
Implement a flexible compensation system, such as the expansion of
a performance-based pay system.
(2) Enhance the productivity of each
store/brand.
Share knowhow within the TSI Group.
• Planning and production capabilities of products that sell
• Demand-supply adjustment to prevent products from missing sales
opportunities
3-1.
Strategic Themes toward “Improving Profitability”
13
In order to achieve the continuous growth of the TSI Group amid a stagnant industry and a dramatically changing market structure, it is a must to strengthen existing businesses and to improve profitability by expanding business areas and markets.
Strategic themes and sales targets (2015
Strategic themes and sales targets (2015
Feb. term)
Feb. term)
Slow domestic sales growth and domestic consumption
• Japan’s nominal GDP is projected at approx. 510 trillion yen in 2015 (global CAGR grew 5% in 2011 to 2015, but Japan was slow with 3%), and Japan’s GDP per capita is ranked 18th in the world.
• Domestic household consumption is projected at approx. 194 trillion yen in 2015 (CAGR for 2010 to 2015: -0.2%), and actual consumption excluding living cost exhibits a decreasing trend.
(1) Strengthen existing
channels
(dept. stores, SCs).
(2) Expand new channels Market environment
Market environment
Channel shift in the apparel retail market
• Department stores and SCs will see a dramatic decline in sales, but will continue to occupy high shares.
• On the other hand, there is a pronounced expansion of e-commerce and outlet mall markets.
114.3 billion yen 160 160 billion yen billion yen 10 billion yen 25 25
billion yen
billion yen
Expansion of consumption related to fashion other than apparel and clothing
• The apparel market is projected to be around 8.8 trillion yen in 2014 and is exhibiting a cut-down trend.
• On the other hand, expenses for services are expected to increase.
(3) Expand
business areas 16.5
billion yen
20
20
billion yen
billion yen
Continuous growth of Asian markets
• Asian households of middle-class or higher will occupy 60% of the worldwide households in 2015.
• The Chinese household of middle-class or higher will occupy more than half of the entire Asian households in 2015.
(4) Accelerate global business development 7 billion yen 15 15 billion yen billion yen
TSI Group total
3-2.
Measures toward “Improving Profitability”
Strategic themes and central measures
Strategic themes and central measures
(1) Strengthen existing channels
(dept. stores, SCs).
(2) Expand new channels.
(3) Expand business domain.
(4) Accelerate global business development.
Strengthen negotiation power to open stores as a group.
Strengthen sales power by utilizing group capabilities.
Establish advanced SPA.
Strengthen business for SCs in suburbs.
Develop new channels from zero and create new markets.
Develop a brand-mix strategy as a unified group.
Develop brands/products according to the characteristics of channels.
Establish an e-commerce platform and actively develop its business.
Strengthen negotiation power to open stores as a group.
Organize a business foundation to establish local business.
Expand business scale through M&As.
Develop new businesses/brands that deliver new lifestyles and values.
Enter into new business with minimum risk by making use of M&As.
Enter into new business by making use of license agreements with
4.
Measures toward Strengthening “Group Management Capabilities”
15
Strategic themes and central measures
Strategic themes and central measures
(1) Strengthen the function of the holding
company.
(2) Integrate business infrastructure.
(3) Develop human resources that will drive
growth.
(4) Establish advanced SCM.
Establish a system for information-sharing and collaboration within the TSI Group.
Develop a comprehensive strategy for the entire group.
Strengthen the management and control of subsidiaries.
Conduct integrated management of functions for the group, such as for store development.
Reduce cost by sharing business infrastructure, such as for IT.
Promote the sharing and advancement of business support functions.
Establish a production system based on perspectives for the future.
Consider “an ideal distribution system” for the medium-to-long term.
Promote the interaction of human resources.
Develop management leaders for the next generation.
Strengthen sales capabilities using the power of the group and
(Supplementary Material)
Excerpts on “Improving
Improving Profitability (Selection and Concentration on Highly-profitable Businesses)
(2) Expanding new channels (e-commerce) (1/2)
17
Establish an e-commerce business platform.
Concentrate the e-commerce features of the group onto TSI and establish an e-commerce platform.
Promote a proactive e-commerce business, including selling through vendors.
Use the EC Strategy Dept. as a group to support “low cost and high quality.”
Diversify the profitability model of e-commerce business. Current e-commerce business structure
New business structure (proposal)
機能集約
Develop e-commerce according to “brand characteristics” such as
brand-type and business-type.
・ Utilize SELECSONIC.
・ Consider the establishment of individual sites for each brand. ・ Consider the establishment of individual sites according to
business type.
・ Collaborate with external influential sites.
・・・
Establish theEstablish the ee--commercecommercebusiness platform of the group.business platform of the group.
◆
Expand sales from new channels, such as e-commerce, from 11 billion yen
25 billion yen
Sales Dept.
EC Strategy Dept.
IT Strategy Dept. Sales Dept.
EC Strategy
18
Thoroughly differentiate with the e-commerce sites of other firms.
(1) Strengthen collaboration with SNS(2) Partner with firms of other industries
(3) Enhance the Selec+me webzine
etc…
Target brands
＋
Addition of influential brands
etc…
・Gather appealing
group brands
Rich brand lineup
＝
Improving Profitability (Selection and Concentration on Highly-profitable Businesses)
(2) Expanding new channels (e-commerce)
(2/2)
Sales expansion through SELECSONIC
Sales expansion through SELECSONICsite enhancementsite enhancement
Expansion of target brands
Improving website appeal
Entering new markets
(1) Launch OUTLET
(2) Develop the Chinese market
(1) SNS: application, etc. (2) Partnership: Shiseido (3) Selec+me: use talent personalities and models
Launch “SELECSONIC OUTLET.”
Improving Profitability (Selection and Concentration on Highly-profitable Businesses)
(4) Accelerating global business development (1/2)
19
×
Active overseas development of influential group brands
Promote central areas and central themes to expand overseas busi
Promote central areas and central themes to expand overseas business.ness.
Brand candidates
Business expansion in China (incl. M&As)
Utilize Tokyo Style Shanghai Commercial & Trading Co., Ltd. as an apparel business platform.
Establish a sales company that will serve as the retail business
platform by joint investment with an operating company.
Utilize the retail knowhow of “m.tsubomi.”
Expand through active M&As.
Business expansion in Hong Kong and southeast Asia (incl. M&As) Expand brands established in Hong Kong to southeast Asia.
Expand through active M&As.
Improving Profitability (Selection and Concentration on Highly-profitable Businesses)
(4) Accelerating global business development (2/2)
Strengthen the apparel business platform.
●Tokyo Style Commercial & Trading Co., Ltd.
●Beijing Tsubomi Fashion Co., Ltd.
●Shanghai Chan Ying Fashion
Beijing
Shanghai
Hong Kong
●Tokyo Style Hong Kong ●C.S.F.LIMITED
Republic of Korea
●S.I.K.CO.,LTD
Singapore
●C.S.F. Singapore branch
●Establishnew sales company
Establish platforms according to business
Establish platforms according to business--type.type.
Strengthen the Tokyo Style Shanghai Commercial & Trading Co., Ltd. ・Sales platform function of apparel brands within the group
・Further expansion of the apparel function for local production
Establish a retail business platform.
Establish a “sales company” through the joint investment of TSI and an operating company.
・Establish a sales platform for retail brands within the group.
・Support the apparel function of Tokyo Style Shanghai Commercial & Trading Co., Ltd.
・Decrease cost percentage by organizing a drop shipping structure. ・Secure optimal HR resources that will serve as the connection
with other companies and dispatch them.
Expand brand development.
Active development of “successful” brands in Japan ・Well-known brands in the Asian market
・High store demand for popular Japanese brands in China and Hong Kong, etc.
Establish a “TSI zone” in commercial facilities by promoting multiple brands.
Strengthening Group Management Capabilities
(1) Strengthening function of the holding company
21
Bring together “the strongest business portfolio” in the fashion industry in
the holding company.
◆
Maximum use of holding company functions
Strongly promote structural reform without sanctuary and the strongest portfolio-based management, as well as effectively use the management resources of the entire group and exhibit maximum
synergy.
Maximum use of group synergy
Establish a group of market-leader business/brands and continue with initiatives.Strongest portfolio-based management
Strengthen negotiation power to open stores by promoting the collaboration of winning brands within the group.
Strengthen media buying power through group negotiation.
Maximum use of sales staff by establishing an active HR interaction structure
Establish the incubation platform of the fashion industry.
Promote further growth through the “free competition” of group brands with respect to corporate culture.
Develop criteria for portfolio-based management unique to the group to allow for prompt change and asset transfer.Major functions of the holding company (strategy and management)
• Development and promotion
of a portfolio strategy to strengthen multi-brand strategy and M&A strategy
• Promote synergy by
strengthening sales power and marketing.
• Organize “ideal” production
and delivery systems (integrate overlapping functions and concentrate purchasing, etc.).
• Oversee and execute a global partnership strategy and a strategy to open stores.
• Decide on a group
management policy.
• Monitor various measures.
• Organize a common business
infrastructure.
• Promote HR interaction within
the group.
• Develop next-generation
Strengthening Group Management Capabilities
(1) Strengthening function of the holding company
Strengthen group competitiveness by making maximum use of the brand
characteristics of each operating company.
Organizational restructuring optimal to the group
(1) Flat operating company structure
Restructure to create a flat group organization under the holding company that will go beyond the
borders of the current TS and SI framework.
(2) Concentrate functional subsidiaries and integrate overlapping functions.
Promote rationalization by concentrating/integrating functional subsidiaries and overlapping areas.
(3) Promote outsourcing.
Review which functions are central to the group and promote active outsourcing.
TSI HD TS SI Brand subs idi a ry TSI HD SSC Overseas subs idiar y XXXX XXXX XXXX Logistics su bsi d iar y Brand subs idi a ry
Split-up and restructure from TS and SI
Integrate functional subsidiaries XXXX XXXX
Company split-up and restructuring optimal for business operation
Overseas subs idiar y Logistics su bsi d iar y Brand subs idi a ry Logistics su bsi d iar y Overseas subs idiar y Pr oduc tion s u bsidiary
Now Future structure
Productio n sub s idiar y
Each group company will achieve self-sustaining business expansion by making use of its own brand characteristics and thereby enhancing the value of the TSI Group.
Pr
oduc
tion s
u
■ Domestic production and delivery operations ■ Overseas production and logistics operations
Strengthening Group Management Capabilities
(4) Establishing advanced SCM (1/2)
23
TSI factory
Each overseas store
Dept. store
FB
Commissioned factory
Overseas logistics base
Inspection Delivery to each store
Store
Delivery to each store Press
Inspection
TSI and commissioned factories
Press
“Transit-type” logistics to each store (complete delivery and process at overseas)
Re
Re--establish a production structure.establish a production structure.
Reposition overseas production bases based on future perspectives
Establish production bases in Asia.
・ Review the role of Chinese production bases, including TSI’s own factory, and reposition them. ・ Shift production bases based on a long-term vision.
Reorganize the domestic production structure
Optimize the domestic production structure.
・ Redefine the roles of TSI’s own factories and external manufacturers and make effective use of them. ・ Increase product value by strengthening collaboration with influential domestic manufacturers.
Evolution to
Evolution to ““ideal logisticsideal logistics””in the mediumin the medium--toto--long termlong term
Review and restructuring of domestic and overseas logistics bases
Strengthen overseas logistics operation.
・ Establish delivery bases that can meet the needs of both domestic and overseas business.
・ Review the function of overseas/domestic logistics bases and establish “transit-type” logistics in Japan.
Id
eal structure
Strengthening Group Management Capabilities
(4) Establishing advanced SCM (2/2)
Shanghai area
Beijing area South Korea
India
Pakistan Inland China
Singapore
Hong Kong
Japan
Delivery base
TSI factory Commissioned factory Base
Delivery base
Vietnam
Delivery base
TSI factory
Commissioned factory Base
(1) Reposition overseas production bases
Consider the optimization of overseas production bases, including TSI and commissioned factories.
(2) Use overseas delivery bases
Establish a logistics center overseas.
Review domestic delivery functions by strengthening overseas logistics.
(3) Restructure domestic production and delivery
Optimize production and transfer domestic delivery functions to “transit-type.”
