Shiseido unveils three year restructuring programme

By Simon Pitman

- Last updated on GMT

Shiseido unveils three year restructuring programme

Related tags Economic growth

Targeting structural issues for both the company’s domestic and international businesses, the Shiseido three year restructuring programme aims at renewed growth through investment in ‘aggressive marketing’.

The Japan-based company’s programme is being implemented during the 2015 to 2017 financial years, and aims to create accelerated and sustained growth in the subsequent financial period 2018 to 2020.

The company refers to its ‘quantitative goals’ as being 100 billion yen ($830m) or more group operating profit and 12% ROE in FY2020 which would be derived from increased consolidated sales of over one trillion yen.

This will be supported by a total of 900 billion yen in consolidated sales by 2017, and 9 to 10% ROE.

In Asia, the focus will be on China and Japan

The three year plan has a particular focus on the company’s mainstay domestic market, where it says it will focus on ‘building of the foundation for top share in Japan’.

Likewise, China has also grown into a very important market for the company, off the back of sustained economic growth in the country and the emergence of a middle class with an increasingly high spending power.

In this market, Shiseido executives say they want to re-engineer the business in an effort to secure a future of sustained growth.

“The common strategy points to realize these are ‘Nurture strong brands,’ ‘Bold investment in growth areas,’ and ‘Direct connection between headquarters and the front line’,” ​ the company's official statement on the plan outlined.

Accelerated global growth

The continued expansion of the international business has a two-pronged strategy that will focus on the introduction of a new matrix-style organization and a further expansion into travel retail.

The matrix system will see the business divide into four specific categories, namely prestige, cosmetics, personal care and professional, as well as six specific regions and markets – Japan, China, Asia, EU, the US and travel retail.

The expanded travel retail business will see an investment in cosmetics counters and an expansion of representatives trained to deal with this category, together with a new counter at the third terminal of Narita Tokyo International Airport, catering mainly to Asian tourists.

Reinvesting in the brand and R&D

There will also be further investment in the product innovation pipeline that will start with an increased personnel for the company’s research and development team.

In total, the company proposes a 40% increase in the R&D budget by 2017, pushing the worldwide personnel for that area up from 1,000 to 1,500 by 2020.

Investment in R&D will also see the establishment of a global innovation center in Yokohama, with construction currently mooted for 2018 and will ultimately be the largest facility of its kind in the world.

There will also be a concerted drive in marketing and branding that will result in an additional 100 billion yen spend on marketing over the three year period, further supported by a move to re-invigorate and re-inforce the Shiseido brand identity.

Related topics Business & Financial East Asia China

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