TOKYO — After reaching its 2020 sales goal of 1 trillion yen, or $9.45 billion, at the end of last year, Shiseido has unveiled a new three-year plan aimed at accelerating its growth.
The plan is the second stage of the Japanese beauty company’s medium-to-long-term strategy, which it calls “Vision 2020.” While the first three years of the strategy, which ran from 2015 to 2017, focused on restructuring, the next three will be dedicated to building on the company’s success. It now hopes to reach 1.2 trillion yen in sales by 2020.
At a media gathering at its Ginza office Monday, Shiseido’s president and chief executive officer, Masahiko Uotani, said he wants to strengthen the company’s governance in order to make it the most trusted company in beauty. He also stressed the importance of refocusing Shiseido’s brand strategy, while emphasizing digitization, innovation, human resources and a global management structure.
In terms of refining the brand strategy, Shiseido will focus on prestige brands, which include its namesake brand as well as Clé de Peau Beauté, Nars, BareMinerals, Laura Mercier, Dolce & Gabbana and Ipsa.
“Among the prestige brands, there are three categories: skin care, makeup and fragrance,” Uotani said. “We will grow the prestige skin-care category, in which Shiseido is already strong, even more. By growing our skin-care business over these next three years, we will also become stronger in the category of makeup.”
Measures Shiseido will take in the area of prestige brands include working with retailers to develop products and improve visual merchandizing, improving its social media presence, and creating cross-border marketing initiatives that mainly target Chinese consumers, but will eventually expand across Asia and the rest of the world.
Uotani said he expects the prestige brands to make up around 71 percent of Shiseido’s business between now and 2020, which would be 10 percent growth in share size. He forecasts that fragrances will account for about 10 percent of the 71 percent share.
In Asia, Shiseido will also expand its cosmetics and personal care brands. Four brands that are only available in Japan — Elixir, Anessa, Senka and Integrate — will be expanded into China and other Asian regions.
“Mid- and low-priced products that are made in Japan are extremely well trusted among Asian and Chinese customers, and this is a very important area for Shiseido as a Japanese company,” Uotani said.
The executive said the company will invest 120 billion yen in marketing activities over the next three years. An additional investment of 130 billion yen will be used to restructure its supply system, build new factories and strengthen cooperation with suppliers. On the other hand, Shiseido will aim to reduce costs by 40 billion yen over the same three-year period. It will do this by improving efficiency in its supply chain, improving productivity, and system integration.
Shiseido is also placing greater importance on digitization and new technologies. In addition to strengthening its e-commerce activities, it will integrate its business processes between its Tokyo headquarters and regional offices, build an integrated IT platform, and centralize data, which will require a total investment of 27 billion yen over three years. Shiseido has already shown a strong interest in developing and utilizing new technologies, and it will continue to expand its activities in this area. Its acquisitions of Match Co. and Giaran, as well as its proprietary IoT technology Optune, will facilitate the forays into new technologies. Uotani said the company is open to additional acquisitions of prestige brands, new technologies and new businesses.
“If there is an opportunity for the acquisition of these kinds of things, we will focus our attention on it at that time,” the executive said. “Right now we have absolutely no plans for immediate acquisitions, but I would like to continue looking at opportunities.”
Shiseido also released its guidance for the current fiscal year, ending Dec. 31. It is expecting net income to more than double, totaling 54 billion yen. It predicts operating income will grow by 11.9 percent to 90 billion yen, which it says will be due to higher margins accompanying a predicted sales increase. The company is forecasting sales growth of 2.8 percent to 1.03 trillion yen.