‘Upfront investment’: Pola aims to increase China revenue by 50% on the back of offline expansion

Parent company Pola Orbis said during its fiscal 2022 earnings conference that it aimed to increase revenue by about 50% year-on-year (YoY) in China. It added that it was planning to 25 more stores in 2023.

It would introduce 10 more counters in department stores, which would take the total number of department store touchpoints to 50 this year.

It added that Pola would roll out one more store in the travel retail market, which would give it seven touchpoints in the lucrative channel.

Furthermore, the company will expand with 14 more stores with aesthetic treatments and have a total of 55 stores providing these services.

These expansions are part of Pola’s plans to strengthen its presence in China, which was the “important market for the group’s overseas expansion.”​

The company believes this would be integral to enhancing its brand’s presence and driving growth in China.

As of 2022, Pola’s had a total of 87 stores after the company introduced 16 new physical stores.

“In FY2023, in addition to the calming of COVID-19, Pola expects to accelerate store openings and to return to above-market-average growth rates,”​ said Yoshikazu Yokote, the firm’s new representative director and president.

“FY2023 will be positioned as a time for upfront investment,”​ he added.

“The strategy for mainland China is not campaign driven but based on improving the customer experience, mainly through offline activities. To achieve this, Pola will accelerate store openings and further expand customer contact points.​

“The company has opened stores providing aesthetic treatments in well-located shopping malls in each major city. The locations in the malls are also good, and store openings contribute to branding. This form of business is differentiated from competitors, and there are still inquiries about opening new stores.”​

While growth slowed in the Chinese market in 2022 due to the prolonged COVID-19 restrictions, Pola Orbis was expecting the market to recover in 2023 with steady growth anticipated in the long term.

Already, it had observed China sales from October to December alone up 5% YoY on a Japanese yen basis and down about 5% on a local currency basis.

While there would be a great focus on its brick-and-mortar expansion, the company said it would continue to fortify its digital channels, building on its successful expansion on Douyin last year.

“Pola newly expanded in Douyin since last year, so the company is off to a good start without relying on well-known KOLs or excessive promotional campaigns. The e-commerce platform will also be used as a useful customer contact point and communication venue. Platform expansion is also under consideration.”​

In 2022, Pola’s net sales decreased by 8.9% to JPY96.4bn (USD708m) while operating income decline by 1.5% to JPY12,5bn (USD91.7m). The brand’s overseas sales dropped by 21.1%.

For 2023, the company was aiming to grow sales by 10%, with domestic and overseas sales up 5% and 30% respectively.