TOKYO — Shiseido Co. Ltd. is aiming for annual sales growth of 20 percent under an aggressive new three-year strategy.
“From now, Shiseido will aim to become a global player that is representative of Asia — with its origins in Japan,” the firm stated. Efforts will focus on improving quality across the board from fiscal 2008, which began April 1, to 2010 and getting into a growth trajectory from fiscal 2011 to 2013.
The firm expects to report full-year results later this month.
With the three-year plan, the group will focus on building the brand’s global following, improving management operations and strengthening ties between Shiseido’s worldwide affiliates.
“In addition to balancing the expansion of growth potential and raising profitability carried over from [a recent] three-year plan,” the firm stated, “Shiseido will seek to realize…objectives in line with the key focal points of ‘globalization,’ ‘distinction and concentration’ and ‘utilizing external knowledge and resources.'”
Regarding its focus on its signature brand, the firm stated, “to be able to fully exert the strengths of the Shiseido brand, [the company] will renew its product portfolio.” It added, “As for specific marketing methods, Shiseido will work on building business models for the future to ensure sustainable growth and expand market share in emerging markets besides China and Russia.”
Shiseido plans to develop so-called mega lines in Asia to expand market share there — and as a first step in the development of masstige marketing. Full-scale rollouts of masstige products are slated to begin during fiscal 2011 to fiscal 2013.
Products for the masstige market will be produced at a new manufacturing subsidiary, Shiseido Vietnam Inc., the firm noted. Construction of the factory is scheduled to be finished in October 2009, with operations beginning in December 2009.
Shiseido also is maintaining a 20 percent growth plan for its business in China. Efforts there include further development of its Aupres brand, which was introduced exclusively for the Chinese market about 14 years ago. The firm also plans to expand its cosmetics specialty store business in China.
In its home market of Japan, sales targets for account executives will be discontinued and more emphasis will be placed on customer service processes.
This story first appeared in the April 11, 2008 issue of WWD. Subscribe Today.
When it comes to the product assortment, Shiseido said it will eventually reduce the number of brands it has to 21 from 27, an assortment that will include six of the megalines.
Instead of sales targets for account executives, there will be an evaluation index, whereby standards gauging “growth in the number of customers,” the “ratio of repeat customer visits” and a “survey evaluation by business partners” will be introduced. Together with beauty consultants, whose sales quotas already were eliminated during the previous three-year plan, “100 percent customer-oriented” activities will be thoroughly implemented, the company said.
With regard to research and development, Shiseido will bolster its core strength of skin care research while also focusing on new areas like “therapy makeup,” cosmetic dermatology treatments/apparatus and health and beauty care.
Improving the global production structure will also be a focus. Shiseido aims to establish an optimal global production structure by establishing its first manufacturing subsidiary in the ASEAN region in Vietnam and closing a factory in New Zealand, as well as promoting utilization of strategic outsourcing.
During the firm’s last three-year plan, Shiseido appointed external board members and reduced its number of corporate officers.
Shiseido is actively promoting several green initiatives, which included the installation of solar panels at its manufacturing subsidiary in the United States last year. “As a global company and global citizen, Shiseido recognizes environmental initiatives as an important responsibility,” said the group. Also, Shiseido has collected “eco ideas” from company workers in order to provide each employee with the chance to consider environmental issues as a matter of personal concern.
Shiseido aims to achieve operating profitability of 10 percent or higher by the end of the final fiscal year of its new plan. An annual average sales growth rate of 4 percent to 5 percent, along with an overseas sales ratio of 40 percent or higher, will be targeted.