NITORI Holdings
NITORI Holdings
2021 Integrated Report
2021 Integrated Report

NITORI
Holdings
Co.,
Ltd.
NITORI
Holdings
Co.,
Ltd.
SapporoHead
OfficeSapporoHead
Office1-2-39,Shinkotoni
Kita-ku,
Sapporo,Hokkaido001-0907
1-2-39,Shinkotoni
7-jo,7-jo,
Kita-ku,
Sapporo,Hokkaido001-0907
Tokyo
Headquarters
Tokyo
Headquarters
3-6-20,Kamiya,Kita-ku,Tokyo
115-0043
3-6-20,Kamiya,Kita-ku,Tokyo
115-0043
Osaka
Headquarters
Osaka
Headquarters
Kamisu-cho,
Toyonaka,
Osaka
561-0823
1-1,1-1,
Kamisu-cho,
Toyonaka,
Osaka
561-0823

www.nitorihd.co.jp/en/
www.nitorihd.co.jp/en/

Enrichinghomes
homes
Enrichingaroundtheworldaroundtheworld
NewPhase,
Phase,New
NewGrowth.
Growth.
New

IntegratedReport
ReportIntegrated
2021
2021
2020.2.21- 2021.2.20
2020.2.21- 2021.2.20

Mission Statement & Vision

Editing Policy

Contents & Editing Policy

We have issued the 2021 Integrated Report to aid
investors, shareholders, and other stakeholders’Company
Information (As of February 20,2021)
understanding of our processes and potential for
1 Management Integration with SHIMACHU CO., LTDachieving a long-term, sustainable enhancement
Company Name
Nitori Holdings Co., Ltd.
of our corporate value. NITORI Group has a
2 Global Business Development: Accelerating Store Openings
businessmodel Executive
integrating manufacturing,
Akio Nitori, Representative Director & Chariman (Cheif
Officer)
Representative
distribution,IT,andretailthat is uniqueOfficer)
even on an
About NITORI Group
Toshiyuki Shirai, Representative Director & President (Cheif
Operatinginternational basis, with its vertically integrated
supplychain asSapporo,the source ofits competitiveness.
Sapporo Head Office: 1-2-39 Shinkotoni 7-jo,
Kita-ku,
Hokkaido001-0907;
Henceforth, the Group’s policy will be to
Address
Tel: +08-81-11-330-6200
strengthen the foundations that support
Tokyo Headquarters: 3-6-20, Kamiya, Kita-ku, Tokyo 115-0043; Tel: +81-3-6741-1235
sustainable growth and corporate valueenhancement by further upgrading the business
Establishment
Established December 1967
model it has built thus far. We have planned andstructured this Integrated Report with a focus on
Incorporated
March 1972
strengthening “cohesiveness” and “narrative
Message from the Chairman
quality” in order to communicate the “sustainability
Revenues¥716,900 million
and future vision of our strategy and business
Our Value Creation Journey
09 (Consolidated)model,” with reference to the disclosure framework
Ordinary
IncomeMessagefrom the President
provided by the International Integrated Reporting¥138,426 million(Consolidated)
Council (IIRC).
15 NITORI Group's Today

Special Feature

MissionStatemet

Enriching homesaround the world

Vision 2032

3,000stores Net Sales ¥3trillion
Vision 2022

1,000stores Net Sales ¥1trillion

03
05

07
11

Stock
To Achieve
Our Mission and Vision
16 Capital¥13,370 million

We set as many domestic and foreign NITORI

Number of Employees
NITORI Group's Strenghts(Consolidated)
17 Business Model for Value Creation
19

Target Scope

36,669(including 18,269 part-time employees)
Group companies subject to consolidated ﬁnancial
statements as possible as the target of ourreporting. However, depending on the item, thereporting target may differ.

Product Development and Coordination

Manufacturing
21 NITORIGroup List (As of February 20,2021)
22

Quality

Overseas Manufacturing
Logistics
23 Companies

StoreFURNITURE
Openings
25 NITORIVIETNAM EPE

Product
Development

28

Manufacturing

Curtain Manufacturing Factory
Quality andFunctionality
HOME DECO CO.,OfferingLTD
the Unexpected
Affordability

SystemDevelopment

FURNITURE
Stores26 NITORI

27

Target Period

Raw Material
Procurement

Product
Planning

Quality
Control

Coordination
Sales (Stores)

Ba Ria-Vung Tau Co., Ltd.

Online Sales & O2O

Trade

Sales (Online)

Logistics

Planning & Development,
A Wide Range of Business Fields Trading,and Logistics Functions

February 21,
2020 Agent
to February
20, 2021
ImportCompanies
NITORI(China)Co.,
Ltd. February 20,
In this report,
the ﬁscal
year
ended
NITORI (Taicang) Trading & Logistics Co., Ltd
2021, is referred
as ﬁscal 2020
or FY2020.
NITORItoTRADINGVIETNAMCOMPANY LIMITED(MALAYSIA)SDN.BHD.
The ActivityNITORI
ReportTRADING
also includes
some recent
NITORI TRADING THAILAND CO., LTD.
content. NITORI INDIA PRIVATE LIMITEDThe significance of this report
Logistics Company

NITORI Group's Sustainability

Home Logistics Co., LtdWEB
Company Information

29

Sustainability Policy

31

Sustainability Framework

33

Offering New Value with Products Balancing Comfort and Environmental
Consciousness

35

Contribution to Environmental Preservation and Recycling-Oriented Society with
Advertising andEffectiveManufacturing
Useof Resources and Recycling
FunctionsPublicity Functions
Nitori
Holdings
Offering Safety and Security and Achieving Sustainable Growth with SuppliersCo., Ltd.
Through Correct Manufacturing and Responsible Procurement

37
39
41
42
43

Advertising Agency(Corporate governance, internal
controls,
compliance,
NitoriPublicetc.)
Co., Ltd.

WEB

Nitori Facility Co., Ltd.
WEB

Sustainability
IR Information
Companies
Information Store Management(Strategies, financial

results information,
Nitori Co., Ltd.
etc.)
-HOME FURNISHINGSTORE-HOME FASHION STORE［Holding Company］-NITORI MALL
Reduction of CO2 Emissions and Realization of Comfortable Workplace by-DECO-HOME-Online Shopping Business
Disclaimer Regarding
Improving Business Productivity, Such as Transportation Efficiency-Renovation
Business
Forward-Looking
Statements
Facility
Management-Corporate Sales Business, etc.
Contribution to Convenient and Enjoyable Shopping Experiences for Customers
FunctionsThis report containsSHIMACHU
plans, strategies
andCO., LTD.
Through Expansion of Store Network and Promotion of O2O-SHIMACHUstatements
forecasts, and forward-looking-SHIMACHU HOME’SNew Initiatives Following the Expansion of Business Fields
regarding the businessperformance-NITORI
HOME’S of NITORI

Human Resources Development

46

Work Environment/ Diversity

47

Local Contribution Activities

48

Corporate Governance60

Sustainability Data Book

Sales Activities

Financial & Company Data

Carpet and Rug Manufacturing Company

NITORI CO., LTD.
Transitionof Key Management Indicators
63 SIAM

01

Facility Management

BookletInsurance Agent Busisness
Integrated Report

65

NITORI Group’s Financial Strategy

69

Company Stock Information / Company Information(Initiatives for
key issues)

Holdings and afﬁliated companies. Thesestatements are not historical facts. These forwardlooking statements are based on the current
assumptions and beliefs of NITORI Holdings inAppareal Sales Company
light of currently available
information. In addition,
N Plus Co., Ltd
these statements contain risks and uncertainties
related to economic trends, personal consumption,
Overseas
market demandand Sales
supply,Companies
taxation systems, and
NITORI TAIWAN CO., LTD
other systems.
Therefore,
please note that the
NITORI (CHINA) HOLDINGS CO., LTD
DECO HOMECHINA CO.,LTD Holdings
actual businessperformanceof NITORINITORI (SHANGHAI) HOME FURNISHING CO., LTD
and its groupcompaniesmay
differthe
NITORI (SHANGHAI) HOMEfrom
FURNISHING
SALES CO., LTD
forecasts.NITORI USA, INC.
02 70

Special Feature 1

Nine Expected Synergies

Management Integration with SHIMACHU CO., LTD.
It came to our attention that SHIMACHU had decided to embark on management integration, aiming to create stores that meet its
customers’ needs and return to a growth trajectory as an enterprise. SHIMACHU was ready to accept and seriously consider proposalsof all kinds in order to select the partner that would be best for all its stakeholders. We were certain that both companies’ corporate
value could be maximized by taking leveraging of its own strengths as a manufacturing-distribution-IT-retail business, and decided tomake a tender offer. As a result, the two parties reached agreement and successfully achieved an amicable management integration.

Issues to be Addressed by NITORI Group
Establish the paths for the group’s
growth and take on new challenges

Offer products, stores and services forprosperous living

Reform the organization and structurethat supports the global chain

New Potential from Management Integration of SHIMACHU and NITORI Group
Enable to provide a wider range of products

SHIMACHU can utilize the experience and strengths of NITORIGroup’s manufacturing-distribution-IT-retail business

Strong collaboration between the two companies enables synergy, which provides customers with comprehensive services
related to housing to customers, and development of business that responds to various lifestyles of customers

Management integration with SHIMACHU through the tender offer and making it
a wholly owned subsidiary will maximize corporate value of both companies.

About SHIMACHU CO., LTD.
SHIMACHU was established in Kasukabe City in 1890, as SHIMAMURA CABINET FACTORY. In 1969, it was incorporated as a limited
company with the name SHIMACHU FURNITURE CO., LTD. In 1978, SHIMACHU moved into the home improvement business. Guided
by the business philosophy of aiming to build stores that are full of satisfaction, surprise, and smiles to provide customers a “special
everyday,” SHIMACHU’s fundamental policy is to offer customer satisfaction by fulﬁlling customers’ needs concerning their homes andlifestyles. SHIMACHU is a long-established company that has developed its business through stores that follow the principle of sellinghome improvement items on the ﬁrst floor and selling furniture and home fashion items on the second floor.

1
2
3
4
5
6
7
8
9

Expanding sales opportunities for high-quality furniture and contributing to realization of enriched lifestyles for awider range of customers by the expansion of SHIMACHU’s stores nationwide
Expansion of sales by mutual supplementation between SHIMACHU's home improvement products with NITORI’s
home fashion (HFa) products, and improvement of proﬁt margin by the sharing of knowhow on the development ofprivate brand (PB) products
Reduction of costs and improvement of asset efﬁciency through joint use of logistics functions

Acceleration of cost reduction and improvement by the provision of function and knowhow pertaining to the various
supply chains possessed by NITORI Group in its capacity as a “Manufacturing, Logistics, IT and Retail Sales”
Pursuit of synergy with the NITORI MALL business and Deco Home businesses
Mutual opening of “shop in shop” stores in the Tokyo metropolitan and central areas, and strategic opening ofstores in wider areas
Bolstering of e-commerce sales structure

Acquisition of mutual and new customers through the adoption of a shared reward points system

Sale of the SHIMACHU's products in overseas stores and realization of future overseas store openings

Voice

Key figures relating to synergies
SHIMACHUNITORI

61 stores

590 stores

PB strategy (source of growth driver)Started PB development

Approx. 90% of products handled are PB
products

Ratio of operating income to net sales(cost reduction)

6.3%

19.2%

TSE 1st Section retail sector average:
5.0%

ROA (asset efficiency improvement)

2.5%

17.2%

TSE 1st Section retail sector average:
2.5%

Membership baseNo. of e-commerce platform members

No. of SHIMAHO-net members
Approx. 57,000
No. of SHIMAHO app members
Approx. 151,000

Number of stores in Japan(room for expansion)

Overseas Expansion−

Additional remarks
Integration enables sales growth atexisting stores for both companies

Total no. of members
Approx. 42 million
No. of app members
9.08 million

Fumihiro Sudo

Representative Director & Chairperson
SHIMACHU CO., LTD.

Target for fiscal 2021
13 million

Aiming to devise speciﬁc scenarios for achieving the nine synergies
and formulate a medium-term business plan, SHIMACHU and NITORIGroup launched the Integration Promotion Committee, setting up nine
sub-committees within it, and we are now identifying issues and seeking
solutions. The key will be to transition from a focus on individual storesand branch-oriented management to ﬁgures-based management
according to chain store management theory. Alongside offering
education and training to enable employees to learn about this form ofmanagement, we are also forging a new organizational structure andconducting personnel exchanges to facilitate integrated operations in ourheadquarters organizations, including merchandising and store
development divisions. We have also made plans to stock NITORI
products at SHIMACHU stores, and in June we opened an integrated
store that brings together the best of both companies. At the same time,
we are instituting management accounting, which is prompting an
increasing number of store managers and others to actively engage intheir own analysis, aiming to use ﬁgures as the basis for creating theirsales floors. I therefore believe that we are now making steady progress
toward realizing synergies.

71 stores(As of February 28, 2021)

03

04

Special Feature 2

CLOSE UP

Global Business Development: Accelerating Store Openings
NITORI Group is currently focused on opening stores overseas. Having launched the Japan-China Joint Project to Strengthen Global
Business in December 2018, in January 2020, we created the Global Business Development Ofﬁce to extend the scope of this projectworldwide and enable our headquarters to take the lead in providing support to build foundations for overseas business.

Activities Undertaken
Four priority issues

Overview of initiatives

Human Resources Development

The Japan headquarters took the lead in developing a system for education, including a shared set ofteaching materials, to quickly and efﬁciently develop the human resources required as store staff.

Product development promotion

Promoted sharing of products and manufacturing subcontractors on a global basis. Transitioned to a
structure making maximum use of the Group’s combined strengths.

Supply system establishment

Having previously supplied products for sale in China separately from those for Japan, an efﬁcient supply
system was developed by making use of NTL (Nitori Taicang Trading & Logistics Co. Ltd.), which is
responsible for supplying products to Japan.
Standardized and clariﬁed criteria for making decisions on selection of new store locations. Developed asystem for ensuring that stores are opened in optimal locations. Standardized the placement of easy-tounderstand POP (point-of-purchase) and promotional materials, easily navigable sales floor layouts, andproposals for attractive displays.

Improving store attractivenessGlobal Business Development Office (started in January 2020)
ThemesOverview of initiatives

Support for overseas business by theJapan headquarters

Supporting issues related to developing business in all countries and regions outside Japan. Encompasses
human resources development, product development, product supply, store creation, omni-channel
development, store work standardization, product supply, and inventory management, etc.

Providing systems and standards for using the know-how employed in Japan throughout every aspect ofClariﬁcation of know-how and transfer overseas operations, including creation of sales floors that offer clear product suggestions, development ofof explicit documentation
standards for product displays and for placement of POP and promotional materials, and faster and more
efﬁcient human resources development.
Product proposals based on lifestylestudies in new countries

Using our understanding of lifestyles in each country and region to promote NITORI products that resolve
frustrations and inconveniences to local citizens in a clear way using sales floors, and POP and promotional
materials, as an alternative to conducting market research on best-selling lines.

Global omni-channel promotion(platform-building, global
standardization)

Evolving from e-commerce deployed in each country to the development of a shared global platform.
Pursuing cost reduction measures and faster expansion to respond promptly to rapid changes in customers’“purchase behavior.”

NITORI Group aims to enrich the lives of people around the world by supplying products andservices that help to resolve the frustrations and inconveniences affecting people’s lives in the
countries and regions where we conduct business. In order to do so, it is important to create systems
that enable us to make use of the know-how and strengths we cultivated in Japan throughout othercountries and regions worldwide. The Global Business Development Ofﬁce is accelerating NITORI

05

Rebuilding systems, while bolstering the organization and human resources

refrain from new store openings and strengthen our foundations with a view
to future expansion of business scale. During this time, we focused on
sharing resources, and the NITORI brand, to rebuild our systems, whilebolstering the organization and human resources. Having designated theShanghai Xujiahui Store as our flagship store, and the Shanghai Qibao Storeas the standard store, we progressed with standardization in such areas asstore creation, shelf allocation, and operational methods. We also undertook
expansion, and scaled sales floors, in other standard stores. We now plan tomake use of the systems we developed and the pool of human resources weare cultivating to resume active store openings. We are planning 14 store
openings for ﬁscal 2021.

CASE 2NITORI TAIWAN CO., LTD
Introducing the prototype sales floor employed in Japan

As one element in the process of introducing systems focused on sharedresources and the NITORI brand, we introduced the prototype sales floor
allocation employed in Japan, installing the prototype entrance display
throughout all our stores. Moreover, in our Taoyuan Taimao Store we
increased the coordinated display ratio to 30%. In conjunction with this, wemade progress with scaling and renovation of sales floors and productcategories, thereby improving the balance of income and expenditure. We
will continue to make use of such initiatives as we proactively open new
stores. We are planning seven store openings for ﬁscal 2021.

CASE 3NITORI USA, INC.
Focusing on e-commerce initiatives

In the U.S., during the COVID-19 pandemic we have focused on

Voice

Director
General Manager of Global
Merchandising Division
General Manager of Global Sales
Promotion Ofﬁce
In charge of Overseas Sales
Business

NITORI (CHINA) HOLDINGS CO., LTD

We positioned the two years up to and including ﬁscal 2020, as a time to

The Japan-China Joint Project to Strengthen Global Business (December 2018 to February 2020)

Masanori Takeda

CASE 1

Group’s overseas expansion through its role of creating systems in all areas including humanresources development, store operations, and distribution, and transferring these systems to our

e-commerce initiatives. We are pursuing our omni-channel strategy, which
includes expanding the regions where Hfa products are available anddeveloping prospective core products, as well as extending the e-commerce
platforms and channels with which we have ties. We are actively backing up
these efforts by, for instance, sending to the U.S. human resources
specialized in supporting such e-commerce expansion. We are planning one
store opening for ﬁscal 2021.

overseas operations.

06

About NITORI Group
Message from the Chairperson

Continuing to provide enrichment toour customers is the very reason the
NITORI Group exists

Akio Nitori

Representative Director & Chairperson (Chief Executive Officer)
NITORI Holdings Co., Ltd.

I would like to offer my deepest condolences to all those who lost their loved ones due to COVID-19. I would also
like to express my heartfelt sympathies to those ﬁghting the virus, and people whose lives have been affected by the
spread of the virus.
On a separate note, I would like to sincerely apologize for the considerable worry and inconvenience caused by theasbestos in excess of legal standards contained in some of the NITORI Group’s diatomite products, which resulted inour customers being required to cooperate with a voluntary recall. Being a company that puts customers ﬁrst, this isan unacceptable matter and once again, I deeply apologize for the tremendous trouble and inconvenience caused.

The driving force behind our growth is the mission to enrich homes

07

Fiscal 2020 marked 34 years of consecutive sales and proﬁt
growth for NITORI Group. This would not have been possible

environment remains as uncertain as ever, but I believe that itis the “ability to respond to changes” in such times of need thatwithout our stakeholders including customers who havepurchased our products. I wish to express my heartfelt
appreciation to all of you.
In ﬁscal 2020 we faced a once-in-a-century crisis as a result

is indispensable to enable the growth that will empower us toachieve our mission and vision. It was a year of striving to
respond to these changes by reassessing the way we haddone things in the past, rejecting the status quo and engagingof the COVID-19 pandemic. Countermeasures such as staying
at home and travel restrictions caused the stagnation of

in innovation, and thinking anew about how we could grow in
the future.

economic activity and sluggish personal consumption, leading
to major changes in the structure of society and theconsumption itself. At NITORI Group we were forced to takeactions such as reducing opening hours and temporarily

Ever since its founding, NITORI Group has grown by turning
difﬁcult situations into opportunities. Even in an unprecedented
situation such as the one we face now, the Group’s
determination to overcome the challenges and achieve its

closing some stores in April 2020. However, we continued
operating while implementing anti-infection measures tomission remains unchanged. It is this mission that lies at theroot of our business activities and is our driving force. We will

enable our customers to shop safely. Our business

continue to grow with the aim of achieving it.

Continuing to evolve as we strive to achieve Vision 2032
NITORI Group has always upheld its mission of enrichinghomes around the world, united by the determination to
improve customers’ lifestyles as it has progressed. And when
we examined our mission anew, we felt that the business of
SHIMACHU, which runs a home improvement enterprise
including exterior goods, could be regarded as an extension of
the NITORI Group’s furniture and interior home furnishingbusiness. Determined that SHIMACHU would beindispensable in providing even greater enrichment to a large

model with a view to worldwide expansion (see p.5 Global
Business Development: Accelerating Store Openings). In ﬁscal
2021, we are planning to enter the Southeast Asian market in
addition to opening 21 stores in Eastern Asia, and one store in
the U.S.
Human resources are the foundation supporting NITORIGroup’s growth. My aim is to create a company in which all
employees can fulﬁll their potential. I want to increase thenumber of employees who work not for the sake of thenumber of customers, we recently integrated our managementwith that of SHIMACHU (see p.3 Management Integration with

Company, but for the sake of their own growth, and can extend
the possibilities of their careers themselves. That is why we

SHIMACHU CO., LTD.). From now on, we will move forward
together as we work to achieve our mission and vision.
NITORI Group is currently implementing its second 30-year
plan, aiming to achieve its vision of 3,000 stores and 3 trillion

are cultivating curiosity through transfer-based education,
among other initiatives, to create an environment in which
employees can demonstrate their individual capabilities to thefullest, while also developing an educational framework andyen in net sales by 2032. In doing so, the key issue is the
expansion of our overseas business. We have pursued

systems. If our employees grow as individuals in order to fulﬁll
their potential, that will ultimately lead to sustainable growth foroverseas expansion ever since we ﬁrst made a start by
opening an overseas store in 2007. However, in the past two
years, instead of accelerating store openings, we launched theJapan-China Joint Project to Strengthen Global Business

NITORI Group as well. We will therefore continue engaging
actively in education as a form of investment in the future.
NITORI Group will continue working as one to realize its
mission of enriching homes around the world, and to provide(lasting from December 2018 to February 2020). This was tostrengthen our foundations, and rebuild our systems forenriched lifestyles over the next 50 to 100 years. I wish to
thank all of our stakeholders for their continued support in our

promoting overseas businesses, in order to accelerate
overseas store openings by reﬁning our own unique businessendeavors.

08

About NITORI GroupOur Value Creation Journey
Mission Statement

NITORI Group’s philosophy of doing everything in-house, making it possible to offer the unexpected.
We control everything, from product planning to manufacturing, logistics, and sales.

Enriching homes around the world

Sourcing that expands across the globe to achieve low prices
Achieving high quality by working closely with the suppliers providing directions andmanagement on the manufacturing process at overseas plants.
Conducting trading operations in-house. Achieving cost reductions by creating
our own distribution network from the import of products to the delivery to our customers.

The needs of the times and our value offered“To bring America’s enriched
lifestyles to Japan.” —this was
our starting point.

widely accepted “One-room
coordinated interior design.”

Achieving lower prices for expensive
items with product development fromthe customer’s perspective.

The observation tour of America
in 1972, had a major influence on
NITORI. The stores there
supported a luxurious everyday
lifestyle, offering
customer-oriented products atoverwhelmingly low prices thatwere in lineups unified in quality,
color, and style—this was thestarting point of NITORI Group.

We stopped displaying productsby type, which is theconventional method, and set up
room displays representing life
scenes for each room of thehouse, such as the living/dining
room, bedroom, and kid’s room.
Before any other company, we
created sales floors where
customers could experience
coordinated living spaces.

Feather comforters once costmore than 100,000 yen. By
reevaluating raw materials,
NITORI Group was able to cut
the price to under 10,000 yen
while still maintaining its quality.
In the same way, we havecontributed to lower prices forfurniture, such as sofas andbeds, as well as randsels (schoolbags).

Quality andFunctionality

Affordability“Offering theUnexpected”

Present-day onward~

Aspirations moveto the global stage

Implementing price cutseven during recessions
with an affordability that has value.

Balancing economic andenvironmental value with more
efficient manufacturing and logistics.

Pursuing higher functionality indaily essentials extending totheir materials.

In 2008, when oil prices skyrocketed,many companies also resorted toraising the prices of their products,
but that is when NITORI made its
Price Cut Declaration. It was ourdesire to give back to our customers
when the economy was experiencing
a recession. More than 5,000 items
were cut in price by 20% on averageby 2012, garnering great support fromour customers.

NITORI Group is making efforts tobalance economic and environmental
value by pursuing more efficientmanufacturing and logistics withmethods such as mattresscompression technology which leads
to smaller package sizes and bettercontainer loading efficiency.

We have rapidly expanded our lineupof N Warm products (launched in2011), which use moisture-absorbing,heat-generating materials, and N
Cool products (launched in 2012),
which use materials that are cool to
the touch, while also enhancing theseproducts functions. The products arevery well regarded by our customers.

Special Feature 1
Management Integration
with SHIMACHU CO., LTD.

p.3
Special Feature 2
Global Business
Development:
AcceleratingStore
Openings

Coordination

p.5

Domestic nationwide development/
Overseas expansion

Establishment of a new business model that integrates manufacturing, distribution, IT, and retail

1967

1986

2003

2007 Overseas

2009

2014

NITORI Furniture StoreestablishedStarted direct import ofoverseas products

Achieved 100 stores and¥100 billion in net sales

Opened KaohsiungDream Mall Store

Opened Wuhan
Star City StoreFounding spirit

Adding cost competitivenessthat is one step ahead

Achieved 200 storesand ¥200 billion in
net sales

2008

2013

Price Cut
Declaration

Opened the first
store in the U.S.

Opened Printemps
Ginza Store as thefirst store inside a
department store“To bring the comfortableand enriched living of the
U.S. to Japan”

1973

1994 Overseas

2004

Began operating
an overseas factory

Established NITORI-net

Break through from being
just a furniture store

Number of stores

09

7

18

21

24

29

37

50

0
0

0.4
4.2
0

2.9
29
1
0.1

9.0
90
4
0.4

13.2
132
0.9
9

175
17.5
12
1.2

193
19.3
15
1.5

256
25.6
18
1.8

348
34.8
2.0
20

489
48.9
35
3.5

1967

1973

1979

1986

1990

1992

1994

1996

1998

2000

73

63.2
632
3.8
38
2001

73

82

787
78.7

882
88.2

71
7.1

89
8.9

2002

2003

100

116

130

145

189.1
1,891
108.7
1,087
13.0
130

2004

1,294
129.4

15.2
152

2005

162

217.2
2,172

19.0
190

2006

2007

244.0
2,440

217

286.1
2,861
47.4
474

244

314.2
3,142
535
53.5

268

331.0
3,310
59.1
591

387.6
3,876
3,487
348.7

6,422
642.2

608.1
6,081

7,169
716.9

138.4
1,384

5,720
572.0
1,095
109.5
103.0
1,030

94.8
948
87.5
875

75.0
750

621
62.1

63.4
634

2013

2014

67.9
679

33.9
339

1,567
156.7
231
23.1

188

523

512.9
5,129

4,172
417.2

722

Overseas

The new factory in
Ba Ria-Vung Tau,
Vietnam began
611
operation
576

4,581
458.1

331

Ordinary income (billions of yen)

2017

420

300

Note: Numeric figures are from the financial statement announcement

3

2015

373

Achievement of total coordination

15

Overseas471

Opened large stores which soldproducts that make daily life moreenjoyable and convenient

Net sales (billions of yen)Overseas

Price cuts on 1,000
items following the
global financial crisis

Implemented the online
sales business

Established factories
overseas in order to achieve
low prices on products withJapanese quality

Direct purchase frommanufacturers started

1

Globalization and expansion of business areas

26.5
265

2008

2009

2010

2011

2012

2015

2016

2017

2018

2019

2020

2021 (FY)10About NITORI Group
Message from the President

Promoting acceleration of global
business development andexpansion of business areas toachieve Vision 2032
Summary of Fiscal 2020
Despite the difficult environment, NITORIGroup achieved sales and profit growth forthe 34th consecutive year
The social environment in ﬁscal 2020 was challenging due
to the COVID-19 pandemic. With the establishment of a “newnormal” way of life that involved spending more time at homethan before, along with widespread teleworking, the so-called
stay-at-home consumption grew. Sales increased fororganization and storage products, kitchen and dining
products, and home ofﬁce furniture such as PC desks anddesk chairs. In terms of channels, the growth in e-commercebusiness was particularly remarkable. We at NITORI Group
were highly aware of our role as part of the social
infrastructure responsible for reliably supplying daily
essentials, and we continued operating our stores, while
implementing anti-infection measures to ensure peace of mind
and safety for our customers and employees. I believe that ourcustomers supported and appreciated this approach.
Due to the factors above, our results for ﬁscal 2020 on aconsolidated basis were: 716.9 billion yen in net sales (an11.6% increase year on year); 137,687 million yen in operating
income (a 28.1% increase year on year); and 138,426 million
yen in ordinary income (a 26.4% increase year on year). We
therefore achieved sales and proﬁt growth for the 34th
consecutive year. Compared with ﬁscal 1987, when our sales
and proﬁt growth started, we have 45-times more stores, ournet sales are 69-times higher, and our ordinary income
became 276-times higher. We also achieved higher net sales
per store and proﬁtability.
Net sales/Ordinary income
Net sales

Ordinary income(billions of yen)

8,000

7,169 1,384

6,000
5,129

875

6,422

6,081

5,720
948

1,030

1,500
1,200

1,095

900

4,000
600

Toshiyuki Shirai

Representative Director &President (COO)
11

2,000

0

300

2017

2018

2019

2020

2021

0

(FY)

Strategy to Achieve Vision 2032
Direction of growth strategies and approachto corporate growth
We now have around 10 years left to realize Vision 2032,
which requires us to achieve 3,000 stores and 3 trillion yen in
net sales in order to fulﬁll our mission of enriching homesaround the world. We have strived to achieve these goals bydramatically accelerating the growth of our overseas businessand further developing our existing domestic business throughcreation of destination stores. These efforts have been
supplemented by another growth driver in the form of thehome improvement business derived from a new format
created by rapidly achieving synergies with SHIMACHU, thecompany in which NITORI Group integrated its management
during ﬁscal 2020. As a result, I believe that the path toachieving our vision is now clear. While each of these is anindependent strategy, in combination they form an evenstronger growth strategy by generating a multiplier effect. In
addition to NITORI’s existing furniture/home fashion format, it
will also become possible to offer a home improvement format,
and a combined furniture/home fashion/home improvement
format. Thus, the options available to meet customers’ needs
will increase not only in Japan, but also in other countries inwhich we operate as we pursue further store openings
overseas. Moreover, our integration and fusion withSHIMACHU has also augmented the experience and knowhow of the NITORI Group’s human resources, who underpin
and implement these strategies. Believing that humanresources are the key to corporate growth, NITORI Group has
invested effort in creating an organization that boasts a wealthof elite employees, and in educating its employees. We will
make the most of both our human resources and ourorganization as we forge ahead to achieve Vision 2032.

Brand) products planned in-house account for 90% of NITORIGroup’s products, and we procure these products overseas.
The manufacturing process is handled by a combination of ourown factories and collaborating factories located primarily inother Asian countries. To address risks that threaten reliablesupplies, NITORI Group is reconsidering the countries whereits production takes place and decentralizing production
locations for each of its products, aiming to build a production
system that will allow it to procure products from multiple
suppliers. We will continue to reinforce our system for supplying
products reliably in order to provide customers withenvironments where they can shop safely and buy as much as
they want of whatever they want whenever they want,regardless of the situation.
I believe that economies in general, and customers’
consumer behavior and attitudes in particular, have beentransformed due to the experience of enduring COVID-19
countermeasures for so long, and they will not return to how
they were pre-pandemic. Setting our sights on the postcoronavirus world, NITORI Group will respond to such changes
in the economic environment and continue working as one toachieve our mission and our medium- to long-term vision.
Looking back on fiscal 2020
To achieve its mission of enriching homes around the world,
NITORI Group set three priority policies for realizing its
medium- to long-term vision of 1,000 stores and net sales of
1 trillion yen in 2022, followed by 3,000 stores and net sales of
3 trillion yen in 2032.
(1) Establish a Group growth trajectory and new endeavors(2) Provide a comfortable lifestyle via our merchandise, stores, andservices(3) Rebuild the company organization to sustain a global chain store
systemWorking to achieve our vision in a
post-coronavirus world
The worldwide spread of COVID-19 had a severe impact on
economic activity in Japan and elsewhere. At the same time,
the latent risks inherent in a range of situations became
apparent.
Such risks are too numerous to mention, but they include therisk of sudden changes in overall demand following stagnationof economic activity or rapid recovery, the risks caused by
rapid changes in customers’ needs as a result of alteredbehavioral patterns, and the risks that could arise from
disruption to supply chains, including overseas procurement
and production activities, or distribution.
Of all these risks, the one that would have the greatest
impact on NITORI Group’s business activities is the risk relating
to overseas procurement and production activities. PB (Private(1)
Establish a Group
growth trajectory andnew endeavors

Three Priority Policies to(2)(3)
Achieve Our Vision
Provide a comfortable
Rebuild the company
lifestyle via ourorganization to sustain a
global chain store
merchandise, stores,
and services
systemBased on these policies, we determine priority issues every
year, as we make steady progress toward the achievement ofour vision.

12About NITORI Group
Message from the President[Table 1]

Priority issues for fiscal 2020
1

Promoting coordination suggestions and O2O

2

Global business development and expansion of business
areas

3

Enhancement of product development, production
system, and quality control system

4

Rebuilding domestic distribution centers

5

Improvement of operational productivity for the entire
company

6

Promoting human resources development toward thefutureWith regard to the ﬁrst priority issue of promoting
coordination suggestions and O2O, we promoted coordinationsuggestions by reorganizing product categories andcomposition to make suggestions speciﬁc to individual
coordination series. We applied this approach in the Narimasu
and Soka NITORI stores, which we positioned as new prototype(standard) stores, as well as in other stores in the Kanto region.
We also focused on creating sales floors that are moreenjoyable for customers in terms of total coordination, inparticular by strengthening presentation. As a result of these
efforts, the percentage of sales floors displaying coordination
grew dramatically, from 25% in ﬁscal 2019 to 60% in ﬁscal
2020. As initiatives to promote O2O, we offered customers aneven more convenient shopping experience by, for instance,
awarding additional points to NITORI app members when theybought products, and adding the “Size with Memo”, a room-size
measurement tool, as a new app function. The number of
NITORI app members as of the end of ﬁscal 2020 was

9.08 million. We will maintain our focus on improving the app’s
functions, and services for app members, to reach 25 million
members by ﬁscal 2025.
With regard to the second priority issue—global businessdevelopment and expansion of business areas—this was ayear in which we took on many challenges. They included
initiatives to accelerate store openings overseas, themanagement integration with SHIMACHU, and increasing thenumber of in-store shops of the N+, apparel brand for women.
The number of N+ shops increased from 4 as of February 29,
2020, to 17, as a result of opening shops inside NITORI stores,
and in the Kansai area. During ﬁscal 2021, we will also open
NITORI HOME’S, an integrated store of NITORI andSHIMACHU HOME’s, as well as NITORI’s own restaurant
chain, NITORI Dining Everyone's Grill. I believe that NITORIGroup’s attitude and DNA, which inspire us to continue striving
to achieve our mission and vision, will remain indispensable tothe sustainable growth of the Group, and will continue to behanded down from generation to generation well into the future.
p.3 Management Integration with SHIMACHU CO., LTD.
p.5 Global Business Development: Accelerating Store Openings

13

Specific initiatives

1

Establishing market dominance within Japan andaccelerating creation of destination stores●Setting targets higher than the previous fiscal year for NITORI, Deco
Home, and the online sales business●Proactively opening NITORI and Deco Home stores

2

Reaccelerating growth with a view to expanding
business scale overseas after strengthening our
foundations●Opening 21 stores in Eastern Asia
●Opening a store in the Southeast Asian market●Focusing on e-commerce in the U.S.

3

Transforming the NITORI business foundation with afocus on distribution, IT, and the organization●Developing and rebuilding optimal distribution centers●Improving operational processes and productivity●Pursuing DX (digitalization) to transition to a new business model as a
strategy for the future by developing an e-commerce mall, taking steps tomerge online with offline, etc.

4

Undertaking sustainability activities and propagatingsuch activities inside and outside the Company, taking
advantage of NITORI’S strengths as a manufacturingdistribution-IT-retail business●Achieving the kind of sustainable management that suits NITORI Groupby creating sustainable growth as a company, as well as environmental,social, and economic value

Rapidly achieving synergies through the management
integration with SHIMACHU●Developing SHIMACHU toward chain store management and aiming to
improve its figures●Establishing the Integration Promotion Committee●Developing PB for SHIMACHU products●Opening an integrated SHIMACHU-NITORI store

5

In ﬁscal 2021 we set ﬁve priority issues (see table 2) basedon the three priority policies for achieving our medium- to longterm vision. To address the second priority issue—
reaccelerating growth with a view to expanding business scale
overseas after strengthening our foundations—we are taking
measures such as accelerating our store openings in Eastern
Asia(see p.5 Global Business Development: Accelerating
Store Openings). Meanwhile, the third priority issue—
transforming the NITORI business foundation with a focus on
distribution, IT, and the organization—entails developing an
optimal network of distribution centers and improving logistics
to advance low-cost operations in stores. We are planning toinvest a total of around 200 billion yen by 2025, to set up eightof our own new distribution centers across Japan. As the ﬁrst
step in rebuilding our network of distribution centers, westarted construction of a new center in Ishikari City, Hokkaido,
in May 2021. We are also enacting measures to cut actual
distribution costs, aiming to further reduce the distribution
expense ratio. We are addressing the ﬁfth priority issue—
rapidly achieving synergies through the management
integration with SHIMACHU—by taking advantage of NITORIGroup’s strengths as a manufacturing-distribution-IT-retailbusiness to improve operational efﬁciency. We operate ourbusiness with the aim of providing comprehensive homerelated products and services by making the most of the twocompanies’ experience and strengths to offer a wider range of
products to customers (see p.3 Management Integration withSHIMACHU CO., LTD.)NITORI Group’s Sustainability[Table 2]

Priority issues for fiscal 2021

Our priority issues for fiscal 2022

NITORI Group places the highest priority on resolving
customers’ frustrations and inconveniences, and acts
accordingly. This attitude also applies to our initiatives relating
to ESG and the SDGs. We believe that leveraging our uniquebusiness model that integrates manufacturing, distribution, IT,
and retail in creating environmental, social and economic
value to address environmental and social issues in the worldis exactly the kind of sustainable management that suits
NITORI Group.
In February 2021, we newly set up the Sustainable
Development Goals Promotion Ofﬁce to further strengthen
NITORI Group’s system for promoting sustainable
management. We are pursuing initiatives to augment ourdisclosure of information appropriately in line with the changing
times and to resolve the social issues we are expected toaddress as a company. In doing so, we are guided by oursustainability policy of aiming for a better future by resolving
the issues of the world while taking steps toward achieving our
mission. As the ﬁrst step toward undertaking these initiatives,
we identiﬁed seven key sustainability issues (materiality)
regarding the sustainable management we are targeting (seep.29 NITORI Group’s Sustainability). These issues wereidentiﬁed following discussions by the Internal Board of
Directors and the Board of Directors, considering the opinions
of external experts, and they are of crucial importance for
NITORI Group’s sustainable growth.
The relevant departments come together to hold regularmeetings of the Sustainability Management Promotion
Committee as a forum for discussion of the seven key
sustainability issues (materiality). The committee’s objectives
are to share information and facilitate related activities.
Information is shared not only with employees at headquarters,
but also with employees working in stores. To encourage
participation in the activities, we are investing effort in building
awareness within the Company through measures such asdelivering information about NITORI Group’s ESG and SDGs
initiatives via the display screens in each store. Young
employees in particular have been very interested in theseenvironmental and social issues in recent years, and they now
ask numerous questions at the monthly dialogues between
store employees and the management and executives. I amvery pleased and heartened that our young employees whowill be playing an important role for our future growth as acompany demonstrate awareness of sustainability, ESG, andthe SDGs. All of our employees—not only those inmanagement or working at headquarters, but also young
employees working in stores in Japan and overseas—are
playing their part to enable the Group to work as one to tackle
these issues in order to achieve sustainable growth and thekind of sustainable management that suits NITORI Group.

Message to Stakeholders
I would like to take this opportunity to reiterate our apologies
for the considerable worry and inconvenience caused to ourcustomers and many other stakeholders due to the asbestos
in excess of legal standards contained in some of the NITORIGroup’s diatomite products, which resulted in our customers
being required to cooperate with a voluntary recall. Being acompany that puts customers ﬁrst, this is an unacceptable
matter and once again, I deeply apologize for the tremendous
trouble and inconvenience caused. We are now reinforcing ourquality control system further and working to recover trust.
NITORI Group is steadily executing the growth strategy forachieving our medium- to long-term vision. We sincerely hopethat our customers, our shareholders and investors, and all ourother stakeholders will continue to grant us their understanding
and support.

14

About NITORI Group

About NITORI GroupNITORI Group TodayNITORI Group has continued to provide products tailored to customer needs, based on its concept, which
has remained consistent since its founding – to bring the comfortable and enriched living of the U.S. to Japan.
NITORI Group of “today” is a midway point on its journey into “tomorrow,” as it looks to achieve its vision.

Net sales

Number ofcustomers

Number ofapp members

1million
02

716.9
billionApprox.

¥

9.08
million*Number of customers who have purchased our products

Number of overseas
business partners

651stores

69stores

Vision 2032

Vision 2022

2stores

Asia

Japan

1,000

Approx.

U.S.

stores770
suppliers

1¥ trillion*Mainly in 12 countries and regions

Number ofannual deliveries

Number of containers
handled annually(billions of yen)

600.0

(billions of yen)(billions of yen)

716.9

1,000

375.0

331.4

354.3

750

250.0

500

200.0

125.0

250

2019

2020

2021

921

411.7

0
(FY)

2019

2020

2021

0
(FY)

681

FY2025

Medium- to long-term strategy

1. Boost the growth of existing businesses

Net income attributable to owners of parent

500.0

3

¥ trillion

Five-year plan

*Number of full and part-time employees(calculated by converting standard 8 hour
workday as 1) is 36,669 (including 18,269
average part-time employees)

400.0

0

15

608.1

50,276Gross profit

Enriching homesaround the world

stores

FY2021*Numeric figures are from Fiscal 2021

Net sales

3,000

Mission Statement

NITORI Group’s five-year plan up to fiscal 2025

Number of employees of
the Group177
thousand TEU

3.1million
642.2

To achieve our mission, NITORI Group promotes the second 30-yearplan formulated in 2002, which aims for 3,000 stores and 3 trillion yen in
net sales by 2032. We formulated a new five-year plan for the period up
to fiscal 2025 to ensure the implementation of the 30-year plan.

Approx.

Store operations

800.0

To Achieve Our Mission and Vision

Redevelopment of the domestic dominant strategy
Measures to integrate online and offline
Acceleration of coordination strategy
Development into an e-commerce mallAcceleration of store openings in China
KPI: Over 200 million purchasing customers
1,400 stores across the globe
25 million app members¥150 billion in e-commerce sales

2. Logistics strategy

713

Optimization of site placement fromthe customer’s perspectivee
Task process reform
Investment: Over ¥200 billion in five years

1. Full-fledged expansion into
global business
2. Comprehensive lifestylesuggestions
3. Business foundation reform
through DX strategy
4. M&A and alliance to expand
business fields

3. Promote group synergy and alliance

2019

2020

2021

(FY)

Early achievement of synergy withSHIMACHU CO., LTD.
Opening of more N+ stores

16

NITORI Group's Strength
Value Creation Business Model

A manufacturing-distribution-IT-retail business:
NITORI Group’s unique business model provides
value by “offering the unexpected”
60% of offerings are coordinated
Proposing interior coordination toenrich lifestyles

10,000 items handled annually

We develop products with unified colors,
designs, and style from scratch so that
our customers can easily enjoy total
coordination in line with theirpreferences. We are providing society
with guidance for a new lifestyle thatcoordinates naturally.

Product planning that creates
customer satisfaction
We investigate and analyze products
from the perspective of those using andpurchasing them. Our Merchandising
Department staff members travel toeach region to study trends in addition
to conducting thorough market
research, and we are developing
original products in our pursuit ofcomfortable lifestyles for our customers.

Product
Development

Approx.160 in-houseengineers

Approx.770 overseas manufacturer business partners
Sourcing that expands across the globe

Approx.100 million carpets produced using
recycled materials annually

In order to achieve low prices and adequate
quality, we promote vertical merchandisingthat extends all the way back to our raw
materials. We actually visit the sites
ourselves to gather information on
production localities and conduct
negotiations and contract with suppliers
directly.

Building a solid production system with
our own and collaboration factories
NITORI Group provides direction and management for all manufacturing processes of the
products we manufacture, even at partner
factories. In addition, we have our own factories
where we are enhancing our manufacturingfunctions. This production system is thecornerstone of NITORI Group’s unique ability todevelop products with quality and functionality.

Raw Material
Procurement

Product
Planning

Development and operation ofthea core IT system to support
the Group
The business model thatcomprises the NITORI Group’s
greatest strength is supported by
the IT Division. Not only does thedivision develop, operate, andmaintain NITORI’s core IT system,
it also provides other support suchas improving the efficiency of wide
range of tasks and developing
tools for enhancing standards ofcustomer service in stores.

Leveraging our solid foundation of human resources and global network of partner companies, we haveestablished all operational functions inside NITORI Group to create a manufacturing-distribution-IT-retail business.
We are endeavoring to evolve our customer-oriented business model in order to continue creating value by “offering
the unexpected.”

SystemDevelopment

Manufacturing

We control everything in an integrated
manner, from product planning to
manufacturing, logistics, and sales.
This is our system for creating productsthat “offers the unexpected.”

Taking responsibility forthe quality of all products

Our three priorities in“offering the unexpected”
Affordability
Offering the Unexpected

QualityStores numbered 722 at the endof fiscal 2020

17

Safety and quality areassessed from every angle toensure that customers can use
our products with peace ofmind. Only products that meetstringent standards enter
commercial production.

Trade
Sales (Online)

We are making efforts to create attractive
sales floors and enhance standards ofcustomer service so that customers can fully
appreciate the enjoyment of shopping. We
are opening stores not only in the suburbs,
but also in city centers and in areas aroundstations to provide enriched lifestyles to evenmore customers.

Quality Control

Coordination

Sales (Stores)

Creating stores that are easy tovisit and easy to shop at

Approx.1,000 Development
Technology Evaluation
Meetings held annually

Logistics

177,000 TEU of containers
handled annually
Building our own customs clearance system

Approx.9.08 million app members in fiscal 2020
Proposing more convenient ways to shop

We are proposing more convenient ways to shop to better
suit customers’ lifestyles, such as the NITORI app and ourservice that allows customers to pick up orders they makeonline at our stores. We are endeavoring to create aconvenient and comfortable service by engaging in digitalmarketing, including by adding useful features to the app.

3.1 million deliveries annually
A distribution network that enables delivery to customers all over Japan
We have built our own distribution network from theimport of products to their delivery to customers. We are
pioneers in implementing the leading technology, such as
the robot storage system and devanning assist machine,
to achieve greater work efficiency and lower costs.

By conducting all tasks related toimporting, including applications,permits, approvals, and contracts,
internally we are able to significantly cut
costs, and at the same time we areestablishing a system that ensures thesmooth supply of products to domestic
distribution centers.

18

NITORI Group's Strength
Product Development and Coordination

Focusing on productdevelopment to enrichcustomers’ lifestyles

NITORI’s coordination
continues to evolve

Developing new products and extending our product lineup

Junichi Yoshima
General Manager
Merchandising Division

Case1

In developing products on a day-to-day basis, NITORI Group places the highest priority on
resolving customers’ frustrations and inconveniences and meeting their various needs. As part ofefforts in this regard, we were quick to extend our ranges of products for children and babies,
electronic appliances, and products designed for use during remote working. It is precisely
because we are able to handle everything from market research to sales in-house, that we canproactively develop products that add enrichment and convenience to customers’ day-to-day lives
at affordable prices.

Resolving customers’ frustrations and inconveniences through productdevelopment based on thorough market research

NITORI Group focuses on product development that
“offers the unexpected” by providing products of appropriatequality at low prices in order to continue proposing moreenriched, comfortable lifestyles. When doing research on
design and style trends, we attend exhibits in Asian
countries, Europe and the U.S., and visit actual stores tothoroughly research product materials, colors, and sales
floor trends. Within Japan, we conduct thorough researchfrom all angles, including studying trends among
competitors and purchasing trends among customers at ourown stores, in addition to studies based on home visits andon surveys to people inside and outside NITORI. Based onthese surveys, our buyers formulate the product lineup andthe merchandisers make it a reality in the form of products.
Product development meetings held with the participation of

the management and Merchandising Division employees
determine which products should be developed, enabling
speedy development. We will continue striving to create
products that meet customers’ lifestyle needs by leveraging
our strength of possessing all capabilities from market
research through product development to manufacturing
and sales.

Interior Design for Every HomeIn ﬁscal 2020, we announced our new ethos, which
expresses our determination to achieve our mission. To
enjoy coordinating home interiors will make lives that havebecome convenient, even more enriched. NITORI’s duty is
to lead and to make our customers realize this idea. We willcontinue to use variety of methods including our stores,
NITORI-net, and the NITORI app to promote coordinationsuggestions, aiming to enrich customers’ homes.

Case3

For further enhancement

19

Case2

Offering total coordination through two brands withdifferent price ranges

Our total coordination initiatives focus particularly on two brands with different price ranges—our DAY+Value and & Stylelines. The DAY+Value brand proposes products with basic designs and colors. The brand’s price range enables a wide varietyof customers to try coordination easily. With the mid-priced brand & Style, we are taking coordination to the next level—style
coordination—by adding the elements of shape, materials, texture, and ﬁnishing to the arrangement of colors and patterns. We
have, moreover, made the NITORI name synonymous with coordination for everything from furniture, soft goods such as
curtains, to hard goods such as items of practical use. In ﬁscal 2020 the proportion of sales floors displaying coordinatedproducts was 60%. We are aiming to increase this to 80% in ﬁscal 2021. NITORI Group will continue to promote coordinationsuggestions.

For further enhancement

Improve the system for raw material
procurement to reduce costs, and“offer the unexpected”

Purchase raw materials ourselves and promote consolidation andshared use of raw material factories to rigorously cut costs during productdevelopment as a means of increasing the gross proﬁt margin.

Promote product development
targeting coexistence with theenvironment and society

Continue to develop products that contribute not only to enhanced
convenience for customers, but also to reducing environmental load,
through the development and sale of environmentally friendly functional
products (green products).

Increase coordination suggestions
and content utilizing the internet andthe latest technologies

Launched the virtual showroom in March 2021, enabling customers toexperience NITORI’s coordination suggestions from their own homes.
NITORI app will continue to increase contents going forward.

Promote coordination-related
education in-house

Use the NITORI Color Coordination School (NCCS) and educational
videos to develop human resources who can employ their knowledge
regarding coordination to suggest products and provide customer
service.
20

NITORI Group's Strength

NITORI Group's Strength

Manufacturing

Quality

Deploying verticallyintegrated merchandising on
a worldwide scale

Masanori Takeda

Director
General Manager of Global
Merchandising Division
General Manager of Global Sales
Promotion Ofﬁce
In charge of Overseas Sales Business

Case

An overseas production system that supports reliable supply

Setting our own quality standards as the basis to improve and reform quality

NITORI Group imports approximately 90% of its products from overseas. Of these, around
20% are produced in the Group’s own overseas factories. We have increased our own
production sites overseas, starting with our Indonesian factory in 1994. In productmanufacturing, vertically integrated merchandising enables us to control all processes in-house,
including product planning, raw material procurement, production, and quality control. We arealso dispersing risk by increasing our production sites. NITORI Group’s manufacturing willcontinue to further extend its reach, spanning national borders and multiple regions to deliver
better products to customers all over the world.

Our philosophy of product safety is that the responsibility of the manufacturer for product safety
and the responsibility of the seller for product safety are inseparable and are not allowed to be
separated or left to others. In line with this philosophy, we are aiming to create a system for
supplying products of reliable quality all over the world through united collaboration with ourbusiness partners. Since ﬁscal 2018, our Product Quality Control & Improvement Ofﬁce in Japan
has been leading role in quality control activities across the Group as a whole, assuming
responsibility for determining relevant regulations, as well as auditing and education, as it started
to develop a global quality assurance system. We will continue working with our business partners
to ensure that quality is further improved.

Curtain-producing factory constructed in Ba Ria-Vung Tau, Vietnam

Aiming to provide products that “offer the unexpected” bybalancing low prices with high quality, NITORI Grouppursues vertically integrated merchandising consistently
and systematically throughout the entire process from raw
material procurement to putting the ﬁnishing touches on
end products. Our own manufacturing sites overseas help
us to supply products reliably. Our Hanoi Factory produces
mainly furniture, while our Ba Ria-Vung Tau Factory
produces not only furniture, but also N Cool products andbedding. In this existing factory in Ba Ria-Vung Tau, wehave gradually started operations of a new curtain factoryfrom July 2021. Plans call for this new factory to initially
produce 800 sets of curtains per day. In the future, it willcontribute to NITORI Group’s overseas production system

as a factory producing not only curtains, but also fabric forsofas and other products. Meanwhile, SIAM NITORI in
Thailand is manufacturing carpets and rugs from recycledplastic bottles. We will continue to actively develop
production sites geared to a global production system, as
we seek to produce more products in-house.

For further enhancement
Enhance productivity at SIAMNITORIHOME DECO start producing
window-covering products otherthan curtains
Related topic: p.36

21

Product safety andquality control with our sights
set on the world

Renovate and extend factories and revamp rug and carpet tile lines.
Started producing HOME DECO custom-made shades in May 2021, and plansfor production of custom-made rollers shades and blinds to start in 2022 or later.

Seiichi EndoManager
Product Quality Control &Improvement Ofﬁce

Case

Building a global quality control system and localizing
product evaluation overseas

As NITORI Group accelerates store openings overseas,
the number of globally common products is increasing. The
Product Quality Control & Improvement Ofﬁce is currently
working in stages to ensure the shared implementation of
globally common quality control standards. In addition, wehold Development Technology Evaluation Meetings in which
we evaluate product safety and reliability and decide
whether or not to introduce certain products. This is doneby analyzing the actual product or parts to predict andeliminate any potential defects, failures, or risks due tomisuse. As part of our efforts to enhance local qualityrelated activities, we are taking proactive steps to holdthese Development Technology Evaluation Meetings in the
countries where our products are produced. This would

offer three main advantages: (1) business partners could
participate directly in evaluation meetings so that any issues
could be explained to them using the actual product or part,
thereby enabling appropriate improvements anddevelopment to be undertaken quickly; (2) business
partners could use the issues for improvement pointed out
to them as standard speciﬁcations, and reflect these in theirsubsequent product development, leading to greater
product safety and faster development; (3) the time required
for transportation, and costs incurred, when holding
meetings in Japan could be saved. The number of
evaluation meetings held at production sites overseas inﬁscal 2020 was 127.2% of the previous year’s ﬁgure,including educational training for overseas NITORI staff.

For further enhancement
Undertake reforms following thediatomite issue
Create a new system to prevent
products containing hazardous
substances from being released into
the market

Aiming to prevent products containing substances hazardous to the human bodyfrom being released into the market, we are collaborating with a third-party
inspection agency to revise our “negative list” of standards relating to restricted
substances and enforce bans, or restrictions on the amounts, of the relevant
substances in products. We also set up a new Planning & Design Evaluation
Meeting to shift to a system that makes evaluation a prerequisite for commercial
production of products featuring new materials or new functions.
22

NITORI Group's Strength
Logistics

A distribution network that cuts
costs and improves operational
efficiency

The distribution platform that supports NITORI’s manufacturingdistribution-IT-retail business
Home Logistics Co., Ltd. plays an important role in handling the logistics that are indispensable
to NITORI Group’s unique business model integrating manufacturing, distribution, IT, and retail.
However, we face many issues including driver shortages, rising labor and transportation costs,
and the increased work involved in shipping goods bought online as a result of stay-at-homedemand. Our key role is to resolve these issues, achieve even lower-cost operations, and work
toward standardization.
We will utilize our information assets accumulated throughout the supply chain and pursue
reforms targeting overall optimization, including developing our network and combining different
forms of transportation.

Hiroyuki Yanagawa

Representative Director &President
Home Logistics Co., Ltd.

Case 1

A one-stop shipping system that smoothly connects production locations
with customers

NITORI Group imports approximately 90% of its products
from overseas. The Group imports products into Japan
from 73 ports in 15 countries around the world, and total
container volume reached 177,000 twenty-foot equivalent
units (TEU) for the year in ﬁscal 2020. The volume of cargohandled is increasing each year, making NITORI Japan’slargest distributor operating as a single business enterprise.
We are also making substantial cost savings by building ourown distribution network and conducting import-related
tasks in-house. Overseas, we have two large distribution
centers in the Asian region, in Taicang and Ho Chi Minh,where we optimize inventories by supplying the exact
Overseas distribution

volume of products required when and where they areneeded. The Taicang distribution center, which started
operating in October 2018, is the Group’s largest distribution
center and plays a key role globally, including undertaking
trading and logistics overseas. In Japan, we have built a
network across Japan that can deliver products anywherein the country, comprising 12 distribution centers withstorage capability, 11 shipping centers, and 78 furnituredelivery centers. Home Logistics is responsible for providing
high-quality logistics through integrated distribution thatmakes the most of NITORI Group’s economies of scale.

Case 2

Digital transformation of logistics operations

In 1980, we introduced the Japanese distribution
industry’s ﬁrst automatic warehouse system in our Sapporo
distribution center. Since then, NITORI Group has beenproactive in introducing the latest technologies andequipment, aiming to expand services and improve
convenience for customers. However, if NITORI Group is tomaintain sustainable growth globally, it needs to deal withchronic labor shortages. That will require it to do even more
to boost the efﬁciency of the distribution network as awhole, improve work environments, and standardize
operations. In 2016, we introduced an automatedwarehouse picking system called AutoStore, featuring highstorage density and high-speed product loading andunloading, at our East-Japan Ecommerce Fulﬁllment
Center, which handles shipping for online sales. Even after
this installation, due to manual packing process, overall
operational efﬁciency did not improve greatly. Moreover, the
new external factor of soaring shipping costs presented an
additional problem. Accordingly, in February 2021, we
introduced the German-made automated packaging
machine, VARIO558. With VARIO558, products are placedin a special cardboard box, which is loaded into theautomated packaging machine. The machine thenautomatically measures the height of products, make a boxof the right height around them, and seals the box. The
East-Japan Ecommerce Fulﬁllment Center ships around3.02 million orders annually (as of ﬁscal 2020), and by using
packaging machines for small items such as pillows, towels,and cutlery, we expect to increase the productivity of
packaging operations by 10%. Furthermore, the appropriate
sizing of packages will also enable us to reduce shipping
costs. Through this type of new capital expenditure, we arelightening the load for workers and focusing on creating a
positive work environment for our employees.

Domestic distribution

23

Domestic
distribution
centers
Receives and storesproducts and supplies
them based on orderinformation. 12 sites
nationwide.

For further enhancement

StoresNITORI-net
Shipping centers
11 sites nationwide

Delivery centers
78 sites nationwide

Our delivery experts will
deliver large furniturethat requires assembly
and installation.

Customers

Two sites:
Taicang and Ho
Chi Minh

Container yards

Overseas
distribution
centers

Customs clearance

Overseas factories

Achieve cost reductions and unhindered supply of products by managing all processes in-house, from application to contract

Rebuild the domestic distribution
center network, cutting costs
through increased efﬁciency, andreducing environmental impact

Plans call for Japan to be divided into eight zones by 2025: Hokkaido,
Tohoku, North-Kanto, South-Kanto, Chubu, Kinki, Chugoku-Shikoku, andKyushu. Approximately 200 billion yen will be invested to set up eight ofour own new distribution centers of 66,000–165,000 m2 in size. As theﬁrst step, construction of the new distribution center started in Ishikari City,
Hokkaido, in May 2021.

24

NITORI Group's Strength

NITORI Group's StrengthStore Openings

StoresOffering enriched homes to many people
by expanding our network of stores inJapan and overseas

Improving our ability tocreate attractive sales floors
and provide suggestions to our customers

Making more people’s lives comfortable and convenient

Manabu Nakamura

General Manager
Store Development Division

Case

Up until now, NITORI Group has opened stores with the following NITORI, NITORI EXPRESS,
and Deco Home formats, offering a variety of suggestions regarding housing to people in local
communities. In recent years, we launched the N+ women’s apparel brand and NITORI Dining
Everyone's Grill, a restaurant business. Through such endeavors, we aspire to make contribution
not only in the home-related sphere, but also in clothing and food. With regard to NITORI stores,in the past 15 years, we have gained the capability to open stores also in small market areas withpopulations of 100 thousand or less. We are pursuing dominance by opening stores not only inurban areas, but also in provincial cities, where we previously had no stores. Through thisapproach, we are enriching homes for people in every region of Japan and providing anenvironment that enables anybody to buy the products necessary for daily living wheneverneeded.

Proactively opening stores in small market areas and urban areas

Looking ahead, Japan’s population is expected tocontinue aging, and declining in size. Under suchcircumstances, we will still open stores in the suburbs, but
we are also proactively opening stores in market areas withlow populations, and in urban areas, where it has been
difﬁcult to open stores in the past. In December 2020, we
opened a NITORI store in Nakashibetsu, Hokkaido. Thiswas possible because we had accumulated the know-how
necessary to address various location-related requirements
and the needs of market areas with low populations whencreating and operating stores. In addition, we are opening
small-format stores, including NITORI, Deco Home, and
NITORI EXPRESS in urban areas where cars are notrequired, such as in department stores and shopping
centers near station, thereby enhancing convenience forpeople living in these areas. Looking ahead, we willcontinue to expand our store network, aiming to make life
more convenient, comfortable, and enriched for customers
in all regions throughout the country.

25

Store Openings in Japan during Fiscal 2020
Number of stores as of the end ofﬁscal 2020

722stores

Increase to

3,000 storesin 2032(651 stores in Japan)
450
stores17

stores106

stores17

stores61

stores71 stores overseas
Eastern Asia

U.S.

storesstores69

2

Improving our ability to create attractive sales floors and provide
suggestions to our customers

Mitsuyoshi Kubota
General Manager
Store Operations Division

Case

Stores are crucial contact points that connect local customers with NITORI Group. The
COVID-19 pandemic temporary caused closures and reduced opening hours among our stores
during ﬁscal 2020, and we also noticed changes in customers’ shopping habits. Prioritizing safetyof our customers and employees, we strove to create clearly laid-out sales floors that madeshopping easy so that customers visiting stores could enjoy their shopping. We will continue
improving our ability to create attractive sales floors and provide suggestions to customers, aiming
to make stores that customers want to shop again at.

Creating attractive sales floors to make stores that customers
want to return to

As the COVID-19 pandemic persists, the increase in timespent at home has prompted more customers to become
interested in coordination and in reorganizing their homes.
Under such circumstances, it is crucial that we continue tosuggest new discoveries and enriched lifestyles by meansof attractive sales floors. NITORI Group’s products are
unique in the way they are planned: designs and shades ofcolor are uniform, making it easy for our customers tocoordinate. On our sales floors, various types of products,
including furniture, fabrics, and household items, are
combined in groups, arranged in position, and shown totheir best advantage to offer customers suggestions for
total coordination. In addition, we are creating sales floors
incorporating small-scale coordinated displays. For

example, on the towel sales floor we are providing
coordination suggestions by displaying othercomplementary washroom items such as soap dispensers
and cups. NITORI Group will continue to provide attractive
sales floors and spaces where even more customers canenjoy shopping.

For further enhancement
Accelerating
store openings
overseas

Keep developing new products
and sales floors to enrich ourcustomers’ lifestyles.

NITORI started selling air conditioners in ﬁscal 2020. Furthermore, NITORI
created sales floors where simple electric appliances with a uniform design
were brought together in one place, making it easy for our customers to makea purchase. Future plans call for the roll-out of electric appliances targetingfamilies, and the expansion of sales floors selling products for children andbabies, which are increasingly in-demand.

26

NITORI Group's Strength

A Wide Range of Business Fields

Online Sales & O2O

N+

Seamlessly connecting stores ande-commerce to offer our customers a
shopping experience that meets their needs

Responding to changes in consumption trends
In ﬁscal 2020, sales for NITORI Group’s online shopping business came to 159.2% of theprevious year’s ﬁgure, marking substantial growth. Meanwhile, the number of NITORI app
members surpassed 9 million. Online sales demand is growing from day to day, while customers’
offline consumer behavior (at actual stores) and online consumer behavior (via online sales sites
and apps) is becoming seamless. Against such a backdrop, we are making the most of thestrengths of NITORI Group, which has stores and a distribution network across Japan, to offer avariety of options throughout the process from ordering products to receiving them. We willcontinue offering our customers suggestions for a more convenient and comfortable shopping
experience.

Hiroshi Nagai

General Manager
Sales Planning Ofﬁce

Case

The NITORI app continues to evolve

The NITORI app, launched in March 2014, functions as a
key hub that enables us to offer customers a convenientand seamless shopping experience with no dividing line
between offline and online. In 2018 we augmented the app
with the Tebura de Shopping (meaning empty-handed
shopping) function, which creates a wish list whencustomers scan the barcodes of products displayed instore. This enables customers to complete the entire
process from ordering to delivery without having to carryproducts around inside the store. Alternatively, customers
can research products at home, then easily buy them all
together online or in store. In 2019, we introduced the
Search by Photo function, which enables customers to use
a photo to search for a product. In 2021, we plan to add

For further enhancement
Offer new shopping experiences bypromoting digital transformation

Virtual showroom set up on
NITORI-net in March 2021

27

Reached9 million members

Target for fiscal 2021:(Million members)
13 million
13.00
9.08

3.50
Feb. 2019Feb. 2021

Corporate Sales and Interior Renovation Businesses

Nitori Public Co., Ltd.

NITORI has cultivated strengths in developing products andsuggesting coordination through its residential furniture and homefashion businesses. The Corporate Sales and Interior Renovation
Businesses draw on these strengths to propose interior design ofofﬁce spaces for corporate customers and total renovation services
for households, respectively. In the showrooms for thesebusinesses, we employ XR (extended reality) and many other latest
technologies, endeavoring to create showrooms beﬁtting the era ofdigital transformation.

Nitori Public is an integrated advertising agency. In addition to
conducting advertising and sales promotion for NITORI Group
companies, we also work in a wide range of business for othercompanies. Nitori Public handles everything from corporate
branding strategy through implementation of advertising and sales
promotion campaigns to event planning and management. Other
businesses include operation of a travel business and a Japanesestyle hotel called Ginrinsou in Otaru, Hokkaido, as well as a
restaurant business. Nitori Public plays a part in enhancing thevalue of the Group.

Nitori Facility Co., Ltd.

NITORI MALL Business

Nitori Facility is responsible for waste disposal, cleaning, andsecurity, as well as for insurance services as an insurance agency
for NITORI Group. Our aim is not only to maintain and manage
facilities, but also to consider optimization for the Group as awhole, in order to reduce costs and improve efﬁciency, as well as
enhance provision of beneﬁts for employees.

To enable our customers to fully appreciate the NITORI MALL
concept of “an abundance of products and affordable prices,” wecreated a mix of shops focused on large specialty stores in eachcategory with the ability to pull in a broad spectrum of customers,
including popular stores selling apparel or household items, andrestaurants. By developing the NITORI MALL business, we willkeep on contributing to enriched lifestyles for local customers.

NITORI Dining Everyone’s Grill

5.22
Feb. 2020

Launched in 2019, N+ is NITORI Group’s apparel brand for women. Inspired by theconcept of “total coordinated clothing for adults,” the brand proposes affordable priced
fashion that is comfortable to wear and can be easily color coordinated. Looking ahead,
we will increase the number of N+ stores and further extend the range of PB (private
brand) products to provide our customers with attractive products at even more
affordable prices.

Feb. 2022

contents to the app that will enable customers to enjoybrowsing many interior coordination images according totheir preferred style and room type, and provide a smoothconnection straight to purchasing. Taking advantage of
evolving technologies, NITORI Group will continue topursue an O2O strategy that enables us to offer ourcustomers suggestions for an enriched lifestyle.

The new showroom utilizes 3D video of coordinated rooms in actual
stores to offer customers 360-degree views, enabling them to easily enjoy
an online shopping experience almost identical to the in-store experience
anytime and anywhere. The virtual showroom is linked to NITORI-net, so
customers can progress straight to purchasing. NITORI will keep offering
new shopping experiences by promoting digital transformation.

NITORI Dining Everyone's Grill is NITORI Group’s restaurant business, which Nitori
Public started in March 2021. The guiding concept is “to provide service that offers
the unexpected and ensuring customer satisfaction in terms of both flavor and price.”
It procures only carefully selected ingredients, and by ensuring operational efﬁciency
it has succeeded in developing menus that combine high quality with reasonable
prices. The business will accelerate the opening of new restaurants and develop newmenus, working together with NITORI Group to achieve the mission and vision.

Establishing second and third pillars to
support medium- to long-term growth

NITORI Group operates a range of businesses to enable customers to experience enriched lifestyles. Having
supplemented its established business by launching the N+ apparel brand and the NITORI Dining restaurant business, theGroup is now able to offer proposals to customers in all three of the clothing, food, and home-related businesses. We willcontinue extending the strengths cultivated within the Group into new business domains as we endeavor to achieve our
mission and vision.

28

NITORI Group’s Sustainability
Sustainability Policy

Taking steps toward achieving our mission while resolving
the issues of the world, aiming for a better future.

Mission Statement

Enriching homes around the world

NITORI Group has continued to maintain its shared corporate philosophy of enriching homes around the world and continues its endeavors
as a corporation to provide products and services focused on “offering the unexpected.” The Group’s unique business model that integrates
manufacturing, distribution, IT, and retail was developed precisely during this process.
Applying this business model, we reduced costs drastically, maintained appropriate quality, and developed products and services from thecustomer’s perspective by denying the way we operated in the past and repeating improvement and reform at every stage from planning to
manufacturing, logistics, and sales. We pursue contribution to customers’ enriched lifestyles by “offering the unexpected,” featuring
unprecedented affordability, quality (functionality), and coordination.
In addition, NITORI Group takes advantage of the control capabilities, ability to gather information, and know-how throughout the entire
supply chain, which are the fruits of our unique business model that controls all aspects. This enables us to carry out every task more
efficiently and pursue the right business for the society at all times, based on the idea of optimization for the whole. Such a stance leads toEnvironmental
value

the creation of new value that helps us to address ESG issues, as well as to achieve the SDGs and solve other environmental and social

Social value

Creation of Shared Value

issues.
We will continue to place the highest priority on “resolving customers’ frustrations and inconveniences” in our never-ending journey ofachieving our mission. By focusing our efforts on the external environment and change in the times and by transforming and challenging
ourselves, we will achieve sustainable corporate growth, expand environmental and social value, and work toward a better future, to achieve
the sustainable management that suits the characteristic of NITORI Group.

Economic
value

Product
Planning

Product
Development

Raw Material
Procurement

Sustainability Management Promotion System
Manufacturing
Board of Directors

SystemDevelopment

Quality
Control

GovernanceInternal Board of Directors
Sustainability Management Promotion Committee

Information collection and promotion

Sales (Stores)

Trade
Sales (Online)

Sustainable Development Goals Promotion Office

Logistics

Stakeholders
Coexistence of humans
and nature by making aneffective use of natural
resources

Conservation of theecosystem by solving theocean plastic issue

Reduction in CO2 emissions by making an
efﬁcient use of energy

Environment

I want affordable andvaluable products

I want a comfortable andfulﬁlling lifestyle

We want to achievesustainable growth

We want to contribute toenriching society for the
future generations

I want to buy productsthat are safe andsecureI want to choose a company
that considers people,
society, and environment

We want a work
environment where
empowerment anddiversity are respected

We want to support
companies that we canforesee sustainablegrowthCustomers

Suppliers, local
communities, employees,
shareholders and investors

NITORI Group’s customer-oriented, unique business model that integrates
manufacturing, distribution, IT, and retail
Resolving issues around the world through our business model
29

Information disclosure

Response to environmental
and social issues

GovernancePublic Relations Division

Related departments

Legal OfficeSustainability Management Promotion Committee
meeting

Building a sustainability management promotion system led by the Board of Directors
We set up the Sustainable Development Goals Promotion Office to further strengthen NITORI Group’s efforts centeredon sustainability, ESG, and SDGs.
As global efforts centered on ESG and SDGs accelerate, NITORI Group believes that it is essential for its accelerated
global business development and sustainable growth to focus on the external environment and respond in a flexible
manner.
Under the management system led by the Board of Directors, the Sustainable Development Goals Promotion Office willtake the initiative in collecting and organizing information on past efforts, ensuring appropriate information disclosure, andpromoting the expansion of efforts businesses are expected to make to resolve environmental and social issues. We willcontrol initiatives centered on ESG and SDGs in our business activities in a systematic manner and create greater sharedvalue, thereby continuing to pursue sustainability management.
In addition, we launched the Sustainability Management Promotion Committee in fiscal 2019 as a platform to recognize
the importance of such initiatives as the entire Group and create opportunities to share information and promote activities.
The Committee holds companywide meetings regularly.
30

NITORI Group’s Sustainability
Sustainability Framework

Approach to Sustainability – Strategy to Achieve Our Mission and Vision –Key Sustainability Issues (Materiality)

NITORI Group will promote sustainability management as an essential element of corporate strategy to achieve our mission and vision (see p.1 and 16).
By taking advantage of our business model that integrates manufacturing, distribution, IT, and retail, we will address social issues throughout the entire
supply chain as expected, create value to be shared with our stakeholders, and develop a medium to long-term growth strategy out of the efforts, which willlead to the achievement of our mission and vision.
To achieve sustainable growth in a business environment with increasing uncertainty, it is also important to strengthen the business foundation that
supports medium- to long-term growth realized by addressing ESG issues.
In the face of environmental and social issues, such as climate change, we will weigh risks and opportunities, address ESG issues not only in Japan but
across the globe, make our business model more resilient, and fulﬁll our corporate social responsibility.

To link sustainability initiatives more closely with management strategy and achieve its mission and vision (see p.1 and 16), NITORI Group reviewed
environmental and social issues based on the importance for stakeholders (see p.29) and the Company and identiﬁed key sustainability issues.

Mission Statement

Enriching homes around the world

Vision 2022

Growth of
NITORI Group

SystemDevelopment

Manufacturing

Quality
Control

Governance
Sales(Stores)

Trade
Sales
(Online)

Logistics

Expansion ofopportunities

Product
Planning

Response torisks andopportunities

Risk reduction

Initiatives toContribution toaddress
stakeholders
environmental
and social
issuesRaw Material
Procurement

Enhance theorganizational
strength andsupply chain fromthe perspective of
ESG issues

Avoid negative
impacts fromworking on ESG
issuesStrengthen our business model by approaching from both ways

31(2) Prioritization(3) Identification

The Sustainability Management
Promotion Committee takes the lead in
making a list of a wide range ofenvironmental, social, and economic
issues, referring to the GRI Standards(international guidelines for sustainability),
SDGs, etc.

Priorities are set based on the
Company’s ratings given by SRI
assessment bodies, impacts on
stakeholders, importance to our business,etc.

Key sustainability issues are identiﬁed inlight of external experts’ opinions and after
discussions by the Internal Board of
Directors and the Board of Directors.

Seven key issues NITORI Group should work on for its sustainability management

NITORI Group’s Approachto Sustainability
Product
Development(1) Recognition of issues

Key Sustainability Issues (Materiality)

Vision 2032

1,000stores ¥1trillion 3,000stores ¥3trillion

Creation ofshared value

Process for identifying key sustainability issues (materiality)

No.

Key sustainability issues(materiality)

NITORI Group’s approach1

Contribution to enriched
lifestyles by “offering theunexpected”(1) Pursue affordability, appropriate quality (functionality), andcoordination(2) Resolve customers’ frustrations and inconveniences(3) Offer new value that further enriches lifestyles (products andservices that can lead to solutions to environmental and social
issues)2

Product safety and security
through comprehensive
quality control(1) Quality control and product safety measures as a manufacturer(2) Share with suppliers ideas and initiatives to build a culture of
product safety

3

Promotion ofenvironmentally friendly
business(1) Carry out all tasks more efficiently throughout the entire supply
chain(2) Make effective use of all raw materials(3) Make effective use of recycled materials through innovation(4) Disclose and reduce CO2 emissions from business activities

4

Fair and honest trade andrespect for human rights inthe supply chain(1) Supplier contracts based on strict standards and on-site
investigations(2) Establish true partnerships with suppliers
Fair and honest trade, respect for human rights, work
environment creation, etc.

5

Contribution to local
communities(1) As a company that offers lifestyle infrastructure, expand thestore network and create stores supported by customers(2) Expand into global business (open stores and create
employment)(3) Disaster assistance and social action programs in fields otherthan the main lines of business

6

Creation of rewarding work
environment and promotionof diversity(1) Education system that allows employees to realize self-growth(2) Transfer to a variety of occupations in a wide range of businessfields(3) Create a comfortable environment where everyone can work ingood health with peace of mind

7

Effective corporate
governance(1) Build a foundation that supports medium- to long-term corporate
growthCreate decision-making systems and a basis for active discussions(2) Strict compliance(3) Build a robust risk management system

Relevant SDGs

Planning andDevelopment

Offering new value with productsbalancing comfort and environmental
consciousness

p.33-34

Human
Resources
Development

Creation of an organization with awealth of elites

p.43-45

Procurement
andManufacturing

Contribution to environmental preservation and recycling-oriented society witheffective use of resources and recycling

p.35-36Work
Environment

Aiming for a comfortable work
environment where everyone
works in good healthp.46

Procurement,
Manufacturing,and Quality

Offering safety and security and achieving
sustainable growth with suppliers throughcorrect manufacturing and responsible
procurement

p.37-38

Diversity

Respect for human rights anddiversity
Enhancement of work-life balance

p.46

Logistics and
Trade

Reduction of CO2 emissions and realizationof comfortable workplace by improving
business productivity, such as transportation efficiency

p.39-40

Local
Contribution
Activities

Hand-in-hand with our customers

p.47

Sales

Contribution to convenient and enjoyable
shopping experiences for customers
through expansion of store network andpromotion of O2O

p.41

Governance

Building a foundation that
supports medium- to long-term
growthp.48-59

Initiatives centered on SDGs

New Fields ofBusiness

Aiming to be a company that makes
comprehensive lifestyle suggestions

p.42

ESG
Information

Sustainability data bookp.60-62

To achieve our mission and vision, NITORI Group will focus on business activities rolled out through its business model based on the customer’s
perspective and contribute to the achievement of SDGs through all corporate activities, including value creation with various stakeholders.
Of the 17 goals that constitute SDGs, we judge that there are high relevance and compatibility with 13 goals (3, 4, 5, 7, 8, 9, 10, 11, 12, 13, 15, 16, and 17),and we will thus promote our initiatives aimed at contributing to the achievement of these goals.
32

NITORI Group’s Sustainability

NITORI Group’s

Product
Development

SystemDevelopment

E SG
Manufacturing

Quality
Control

Governance

Sales (Stores)

Trade
Sales (Online)

Environmentally friendly functional products

Materiality 3

Promotion of environmentally conscious business

Offering new value with productsbalancing comfort andenvironmental consciousness

Logistics

Recognition of issues and creation of shared value
Social issue

Examples of NITORI Group’s initiatives (linked to SDGs)

Contribution to enriched lifestyles by “offering the unexpected”

Comfortable lifestyles for both summer and winter ×
Energy saving

Raw Material
Procurement

Product
Planning

Materiality 1

NITORI Group

Shared value
Customers

In addition to comfortable lifestyles, contributing tohousehold ﬁnances through reduced costs as aresult of lower electric power usage“How can we get a comfortable night’s sleep without using air-conditioning in the summer
and the winter?” This question led to the development of the moisture-absorbing, heatgenerating N Warm series (launched in 2011) and the N Cool series using materials that feelcool to the touch (launched in 2012), which started from bedding items. We were able todevelop products that are sufﬁciently functional while also being low priced and of appropriatequality by managing the proportion of different thread materials at the raw material
procurement stage. We took advantage of this, and as a result, the product was a major hit. In
cumulative total, we have sold over 53 million units of N Cool series and approximately 34.8
million units of N Warm series.
Furthermore, using N Cool and N Warm reduces the use of air-conditioning at home and contributes to the reduction of energy use. In response tocustomer needs, we are expanding the product series beyond bedding items. We will further contribute to comfortable lifestyles of customers, including
babies and pets, and to environmental impact reduction.

Expansion of N Cool and N Warm product series
FY

2011

NITORI Group
Importance of environmental
considerations through the entire
product life cycle in response to thepressing issue of climate change

Development and sale of productsthat combine comfort for customers
and a reduced impact on theenvironment

Sustainable growth by offering convenience forcustomers and capturing needs of next-generation
consumers

Global environment

Reduction of environmental impact through reduced
energy usage

Spirit of “offering the unexpected” found in products that are good for bothcustomers and the environment
NITORI will accurately analyze customers’ needs and social background of the times and create products tailored to them. We believe that ourendeavors as a corporation to resolve customers’ frustrations and inconveniences will eventually result in reduced environmental impact and resolution ofsocial issues. NITORI Group will achieve its objective of resolving customers’ frustrations and inconveniences and enrich people’s day-to-day lives, whileat the same time promote the development of environmentally friendly functional products (green products), the use of which reduces electricity use andother types of environmental impact. Environmentally friendly functional products are developed based on designs that are both low priced and highly
functional, while at the same time being environmentally friendly, and as a result, contribute to reduced environmental impact, such as lower CO2
emissions, as well as to making a positive contribution to customers’ household ﬁnances by saving energy and resource usage.

Visualize the level of environmental friendliness to show functions in an easyto-understand way and enable easier product selection for customers
NITORI Group strives to communicate product functionality to customers in an easy
way to understand. Showing the thermal insulation and heat retention effects of curtains,
for which we won a Good Design Award 2020, is an example of such efforts. Speciﬁcally,in collaboration with Teijin’s laboratory, we quantiﬁed the functions of each curtain bybuilding a 10m2 laboratory in an all-weather type environment control chamber andmeasuring thermal insulation and heat retention effects under different conditions,
including insolation levels. This enabled us to make clear speciﬁc functionality, energysaving effects, etc. of curtains, which had been vague, and show them on POP displays
for each product. Customers can see speciﬁc functions before purchasing, which enables
them to purchase a product after picturing and comparing energy-saving effects and levelsof contribution to the reduction of environmental impact, in addition to thermal insulationand heat retention effects from the use of the products. By correctly proposing andoffering products customers really want, we will expand initiatives to reduce environmental
impact, together with customers.
Details: News release on winning a Good Design Award 2020
33

Sales started(bedding and
rugs)

2012

2013

2014

2015

2016

2017

Sales started(bedding only)
N Cool andN Cool Super

Line expands torugs and livingroom accessories

Line expands tokids products

Sales of N Cool
Double Super
launched

Line expands toloungewear

Line expands
to pet products

Sales of N Warm
Super launchedLine expands toliving room
accessories

Line expands
to kids productsLine expands topet products

2018

2019

2020
Sales of N Cool CottonLine expands toseries made frombaby products 100% cotton launched(baby products)

Line expands tobaby products
Sales of N Warm
Moist launched

Sales of N Warm
Double Moist
launched

Sales of mattresstoppers withoutanchor bands
launched

Take in sunlight but block vision and cut ultraviolet lightand outside air × Energy saving“I am concerned about privacy, ultraviolet light, and outside air, but I want to take in light in theroom.” Customers hope to ensure privacy protection, keep a comfortable room temperature, andtake in sufﬁcient sunlight. NITORI’s ECONATURE™ functional lace curtains satisfy such needs.
The curtains use new materials, thread that insulates heat but allows light to pass through, andkeep the room light by taking in sunlight while making it difﬁcult to see inside the room and keeping
privacy. In addition, they cut outside heat in the summer and cold air in the winter. As the room
temperature becomes less affected by outside air, air conditioning and heating efﬁciency at homeincreases, which leads to energy saving.

Take home on the day of purchase × Reduce CO2
emissions“Bed mattresses are too big to take home by ourselves.” We wanted to change this common
conception. The solution was to compress the mattresses. By adopting NITORI Group’s uniquecompressing technology and reducing the packing size to 25%, we made it possible to take theproducts home on the day of purchase. Customers can start using them right away, without paying
shipping fees or waiting until the product is delivered. Furthermore, reducing the packing size, inthe best case, quadrupled the number of products that can be loaded in a container or a truck fortransportation. The signiﬁcant enhancement of product transportation efﬁciency has led toreduction in transportation costs and CO2 emissions associated with transportation.
All-weather type environment control chamber

Related topic: p.40
34

NITORI Group’s Sustainability

NITORI Group’s

Product
Development
Product
Planning
SystemDevelopment

Raw Material
Procurement

E SG
Manufacturing

Quality
Control

Governance

Sales (Stores)

Trade
Sales (Online)

Logistics

Materiality 1

Examples of NITORI Group’s initiatives (linked to SDGs)

Contribution to enriched lifestyles by “offering the unexpected”

Recycling and effective use of resources

Materiality 3

Promotion of environmentally conscious businessContribution to environmental
preservation and recyclingoriented society with effective
use of resources and recycling

Recognition of issues and creation of shared value

Manufacturing carpets and rugs with recycledplastic bottles
SIAM NITORI, a Group company which runs its own factory in Thailand, is the sole factory using special technology to manufacture carpets and rugs
with recycled polyester made from plastic bottles and supplying them to Japan. One carpet approximately 10m2 in size, can be made with recycled
polyester extracted from approximately a hundred 500ml plastic bottles. The factory recycles approximately 100 million plastic bottles a year.
Approximately 3,750,000m2 (equivalent to 80 Tokyo Domes) of carpets are manufactured from those plastic bottles. In the manufacturing process, acoloring method that does not produce sewage is adopted. The business is thus conducted in an environmentally conscious manner. This initiative also
contributes to reduction in the use of ﬁnite resources, such as fossil fuels, because synthetic ﬁber derived from petroleum, which is typically needed in
manufacturing carpets and rugs, is not used. While the use of recycled materials normally increases costs and selling prices, NITORI Group
manufactures affordable, high-quality products with its unique technology, implementing radical cost reduction strategies. In the future, we will expand theuse of recycled ﬁber in products other than carpets, and promote initiatives for further reduction in environmental impact toward a creation of a recyclingoriented society.
Related video: “We make carpets from plastic bottles” (NITORI’s official YouTube channel)

Social issue

NITORI Group

Shared value

Plastic bottle recycling process (Involved in the entire process)Customers

Number of recycled plastic bottles at SIAM NITORI(From joining Group in May 2018 to ﬁscal 2020)●Valuable product at a more affordable
price●A new choice called ethicalconsumption
Due to the old social systems based on large-volume
production, high-volume consumption, and highvolume waste, ﬁnite resources are being consumed
and the amount of waste has been increasing. Goingforward, we are expected to make effective use oflimited resources and take measures to reduce theamount of waste.

●Environmental conservation witheffective use of resources●Contribution to recycling-oriented
society with active utilization ofrecycled material●Initiatives to reduce waste

Global environment●Environmental conservation(Reduction in the amounts of natural
resource use and waste)●Creation of a recycling-oriented
society

Utilization of recycled materials

Crush plastic bottles
into chips

Fuse, dye, andflocculate the chips

Twist into threads andmake carpets

Approx.
300 million

Carpets and rugs shipped in ﬁscal 2020

Approx. 930
thousand units

Usage volume of recycled polyester in soft goods
including those from SIAM NITORI (Fiscal 2020)

Over 12,000t
in totalComposition ratio in above virgin materials (%)

31%

Effective use of resources
Making full use of finite resources, without wasting
We, a company involved in all processes from manufacturing to sales, consider it a corporate
responsibility and an important mission to recognize the ﬁnite nature of resources, especiallytimber, and to be conscious of the sustainability of resources. Making full use of resources, without
wasting, and promoting recycling are directly linked to reduction in the amounts of resource use
and waste in the product life cycle, in addition to lower product prices from cutting manufacturingcosts. In addition, we not only ensure comprehensive quality control in the product manufacturing
process but also work to protect the environment by preventing and reducing air and waterpollution, as well as thoroughly controlling chemical substances.

NITORI’s environmentally conscious manufacturing
Under the slogan of “Good for the future. Good for everyone,” NITORI Group develops productsthat are made through environmentally friendly initiatives in each process of manufacturing,transportation, and use, positioning them as “Nitori’s ecology.” When manufacturing, we use
recycled materials and protect ﬁnite resources. For transportation, we reduce packing size and cut
CO2 emissions. We develop functions that link product use with energy saving. As NITORI Groupis involved in all processes from the upstream to the downstream, the Group takes responsibility
not only as the seller but also as the manufacturer and sets its own environmental standards. We
will continue to expand environmentally friendly products that meet the “Nitori’s ecology”
standards.

As a manufacturer and seller of a variety of products that use timber and other kinds of natural resources, it is essential for us to reduce the use of
those resources and work on cost reduction and environmental conservation. NITORI FURNITURE, an overseas factory that mainly manufactures
furniture, recycles almost all scrap timber, which is normally disposed of, and use it as raw materials for products. Also, in polyurethane manufacturing,almost all scraps from the sofa and mattress manufacturing process are recycled, and made into recycled polyurethane. By making full use of limited
resources and reducing waste to the minimum, we not only cut raw material costs but also the amount of waste incinerated and contribute to the reduction
in CO2 emissions.

Scrap timber

Assemble scraps and utilize
them as components

Scrap polyurethane from the
manufacturing process

Produce recycled polyurethane

Reducing plastic waste by changing cushioning
materials for packaging
Cushioning materials for packaging protect products from impact during transportation anddelivery and maintain the quality. By replacing polystyrene (plastic) cushioning materials, usedmainly for furniture, with recyclable cushioning materials made from paper, NITORI Group reduced
the amount of annual polystyrene (plastic) waste from stores and delivery centers by approximately
78%. This also leads to reduction in plastic waste after purchase.
Conventional
polystyrene cushioning
materials

35

Recyclable
cushioning materials

36

NITORI Group’s Sustainability

NITORI Group’s

Product
Development
Product
Planning

SystemDevelopment

Raw Material
Procurement

E SG
Manufacturing

Quality
Control

Governance
Trade

Sales (Stores)
Sales (Online)

Logistics

Materiality 2

Materiality 3

Product safety and security throughcomprehensive quality control

Promotion of environmentallyconscious business

Materiality 4

Materiality 5

Fair and honest trade and respectfor human rights in the supply chain

Contribution to local communities

Offering safety and security andachieving sustainable growth with
suppliers through correct
manufacturing and responsible
procurement

Recognition of issues and creation of shared value
Social issue

NITORI Group

Shared value
Customers●Purchase of products that are safe andsecureNITORI Group●Protection of workers’ rights and creation ofsafe and secure work environment●Quality issues in the supply chain, typiﬁed bysilent changes●Human rights and work environment issues
across the supply chain●Comprehensive quality control and creationof work environment in the Group’s own
factories●Supplier contracts based on the Group’s own
strict standards and on-site investigations●Share with suppliers ideas and initiatives tobuild a culture of product safety●Offer product safety and security●Improved productivity●Sustainable growth with suppliers

Global environment●Improved quality control technology andproductivity●Work environment where employees canwork with peace of mind

Pursuing correct manufacturing and responsible
procurement
NITORI Group considers affordability, quality, and coordination as the most important factors inmanufacturing. Quality means that measures are taken to ensure appropriate functions and product safety,
and that products are made through the correct manufacturing process (in terms of sincerity, respect forhuman rights, compliance, occupational safety, environmental protection, etc.). We aim for sustainable growththroughout the entire supply chain by explaining to and sharing with not only our own factories but also
suppliers, who are our partners in achieving the mission, the importance of being environmentally conscious
and fulﬁlling social responsibilities, as well as our ideas to create a culture of product safety.

Examples of NITORI Group’s initiatives (linked to SDGs)
Responsible Procurement

Comprehensive quality control through the United
Collaboration System with overseas suppliers
NITORI Group currently does business with approximately 770 overseas suppliers. We not only ensure compliance in relation to suppliers, who are ourpartners in achieving the mission, but also share with them ideas and management methods to build a culture of product safety. In the following
processes, strict standards have been set and PDCA cycles implemented. We establish true partnerships with suppliers and aim for sustainable growth
together.
Investigations and contracts / Product development
and quality activities
Selection of new suppliers, on-site investigations, andconclusion of contracts
We set our own strict standards, select suppliers after carrying out on-site
investigations, and conclude contracts that include quality assurance.

When developing products, we evaluate products based on the Failure, Mode, Effect,
Analysis (FMEA) method using the Risk Priority Number (RPN), with the aim ofpreventing accidents, defects, risk due tomisuse, and other problems before theyoccur.

Checking laws and regulations

Analysis of defective products

Development Technology Evaluation Meetings

Development Technology
Evaluation Meetings

Constant plant audits and emergency audits in response toaccidents (compliance audits)
Constant plant audits●To reduce defective products, we check whether the supplier’s quality control
system meets NITORI Group’s requirements based on the Sangen Principleof visiting the actual site, observing the actual parts, products or item,
determining the actual situation, and propose improvements. (In ﬁscal 2020,
we proposed improvements 426
times in total.)●For each incident, an audit is carriedout from a wide range ofperspectives, including humanfactors; underlying 5S issues, suchas inspection systems, tools, andother arrangements; and response tosocial issues (child labor and forcedlabor issues, etc.)*Troubles raised by customers

37

Building a cultureof product safety

Our employees enjoying meals at
the NITORI FURNITURE cafeteria

Check before mass
production / On-site witness
for mass production●Collect defective products from the market and conduct analysis in the Quality
Improvement Meeting (QIM). Determine the cause and countermeasures, andsubmit an improvement request to the manufacturing factory

We check hazardous substances content,
the Household Goods Quality Labeling Act,
the Food Sanitation Act, the Electrical
Appliances and Materials Safety Act, etc.

Constant plant audits

Product check by the quality control
division before packing

Check before mass production / Onsite witness for mass production●Final check on products that are to be mass
produced (speciﬁcations, laws and regulations, andquality)●Supervision of important points in the process●Share and take measures against defects in the
production process●Check and follow up improvements on issues
pointed out

Initiatives to ensure comprehensive quality control andimprove work environment in the Group’s own factories
NITORI Group is a manufacturer that has its own factories at one domestic and three overseas locations,where total of over 10,000 employees work. Each factory commits to quality control in the manufacturing
process. For example, the factory in Vietnam (NITORI FURNITURE) conducts voluntary audits mainly on
quality control, led by an independent local department that specializes in quality control. Employees also
participate in “Product Safety and After* Sales Service Reduction Meetings,” where employees gather
customer’s voice to make improvements and reforms, and Nitori World Circle (NWC) activities (NITORI Group’s
unique small group activities where employees identify issues from everyday tasks and make improvements
and reforms). To improve quality and productivity, they carry out tasks every day with high motivation. In
addition, departments specialized in factory control monitor occupational safety and attendance, based on
NITORI Group’s belief that creation and improvement of work environment leads to stable quality. The purposeof their strict checks includes ensuring that there are no risks that may lead to accidents and that employees
are taking sufﬁcient break times. Furthermore, free meals are served in the factory cafeterias, and the ﬁlling,
tasty meals are well received by our employees. Our own factories create employment in local areas andcontribute to the development of local communities. The factories’ initiatives to ensure comprehensive quality
control and improvement of work environment are and taken advantage of, as precious know-how, in building
partnerships with overseas suppliers.

Mass production quality check activities

NITORI Group considers it important to build fair, honest, highly
transparent, and open relationships with suppliers and grow together.
We take thorough measures to prevent “silent change,” where changes
made by the suppliers in material or parts are not notiﬁed to the clients,and make sure that each supplier factory ﬁles an application when there
is a change to the 4Ms (Man, Machine, Material, Method). We also work
to raise suppliers’ motivation by sharing product safety information andgiving awards in the Overseas Management Policy Brieﬁngs and theAnnual Awards Ceremony. In addition, product safety and quality
meetings are held twice a year. We aim to establish true partnerships
with suppliers by signing the NITORI Group’s Business Partner Charterand the Fair Trade Declaration, not to mention agreeing on terms andconditions concerning products and quality. Other matters weemphasize in our communication with suppliers include the importanceof environmental considerations, respect for human rights, andcompliance.

●Review the effectiveness of the countermeasures and keep requesting improvement
until the quality reaches the required level

Market quality analysis activities
Inspection of incoming
products (minor tasks)●Prevent defective product release
into the market by thoroughly
inspecting incoming products●Return products with major defects tocontainers (Total number ofinspections: Approx. 750 thousand)Double check various laws
and regulations, etc.
To strengthen measures to prevent releaseof products exceeding guidelines values ofhazardous substances (formaldehyde,etc.), install facilities with the function tocheck the safety of imported products(Two constant temperature and humidity
chambers are available to measure theemission amount of formaldehyde at the
product stage)

Inspection of incoming products

Constant temperature andhumidity chamber

Improvement andreform proposals
from suppliers
Every year, NITORI Group holds Nitori World Circle (NWC), which isbased on small group activities and aims to identify issues fromeveryday tasks and make improvements and reforms. In ﬁscal 2020, a
total of 415 teams participated from Japan and overseas, of which 91
teams were from overseas suppliers. The activity topics included quality
improvement by involving the secondary supplier, improvement of
production efﬁciency by leveling out
process capability, and approaches
to defective products that reduce
waste rate. In many cases that were
presented, suppliers led
improvements and reforms.
Related topic: p.45

NWC
(Held remotely for FY 2020 due
to the COVID-19 pandemic)

38

NITORI Group’s Sustainability

Raw Material
Procurement

Product
Planning

SystemDevelopment

Manufacturing

Quality
Control

Governance

Sales (Stores)

Trade
Sales (Online)

Logistics

Environmental impact reduction with enhanced transportation efficiency

Materiality 6

Creation of rewarding work environment and promotion of diversity

Reduction of CO2 emissions andrealization of comfortableworkplace by improving businessproductivity, such astransportation efficiency

Recognition of issues and creation of shared value
Social issue

NITORI Group

Shared value
NITORI Group●Expectations to reduce environmental impact inbusiness activities●Increasing transition risks concerning climatechange and business continuity risks due to natural
disasters, etc.
●Soaring logistics costs coupled with labor shortageand inadequate work environment creation acrossthe logistics industry

Examples of NITORI Group’s initiatives (linked to SDGs)

Carry out all tasks more efﬁciently throughout
the entire supply chain●Reduce CO2 emissions in the distribution
process by improving transportation efﬁciency●Reduce energy use by taking energy saving
measures●Create a comfortable workplace for everyone
by saving labor in all tasks and creating a safe
work environment●Reduce distribution costs byimproving transportation efﬁciency●Secure human resources●Improve labor productivity

Global environment●Mitigate global warming with CO2emission reduction

CO2 reduction with downsizing of product packaging
By eliminating waste and improving efﬁciency in all scenesof the distribution process, including trade, transportation,and shipping, we work to achieve environmentally friendly“Green Logistics.” We proceed with downsizing of productpackaging and expansion of the product composition ratio ofassembled furniture to increase the number of products thatcan be loaded per container and per truck, which leads toreduction of CO2 emissions in the distribution process. For
example, compressing the packing size of mattresses toapproximately 25% enhances container and truck loading efﬁciency and reduces the number of containers and trucks necessary for the transportation of
products. As a result of the expansion of types of mattresses to which NITORI Group’s unique compressing technology is applied, as well as the increasein their unit sales, CO2 emissions in ﬁscal 2020 decreased by approximately 3,087t. The Group works to create further economic and environmental
value by integrating manufacturing and logistics and pursue overall optimization.
Related topic: p.34

Improvement of work environment and reduction of
CO2 emissions with introduction of swap bodycontainers
In recent years, long working hours, as well as driver shortages due to aging population, hasbeen a social issue. We recognize that this as an important business continuity issue for Home
Logistics Co., Ltd., which is in charge of NITORI Group’s logistics. As a solution to the issue, we
introduced swap body containers, which make it possible to separate the truck bed from the body.
Warehouse workers, instead of drivers, being able to load and unload trucks has reduced theburden of loading and unloading, which had been the most burdensome part of work for drivers. In
addition, the initiative has improved work environments and workstyles by shortening the distanceand hours one driver runs continually in long-distance truck transportation. Taking advantage ofswap body containers, three companies from different industries launched a joint transportation
project, thereby reducing, throughout the domestic logistics business, air transportation and burden
on drivers. The project reduced the number of trucks operated by 50%, annual CO2 emissions byapproximately 880t, and the time drivers spent on loading and unloading by 12,450 hours annually.
In recognition of the achievement, the MLIT Minister’s Award was given jointly to the threecompanies in the Green Logistics Partnership Conference commendation ceremony, held in
December 2020.

Employees●Ensure a safe and secure work
environment●Ensure a comfortable work environment
for everyone by reducing labor burden

NITORI Group’s promotion of environmentally friendly business to mitigate
climate change
Climate change due to global warming may cause enormous damage to the manufacturing andlogistics operations. Abnormal weather, such as heavy rainfalls and large typhoons, has a serious
impact on the management resources that are essential for a company to carry out business activities,
and its influence extends throughout the entire supply chain. We recognize a range of business
continuity risks caused by climate change and strive to improve efﬁciency and consider total
optimization at all stages of our supply chain, thereby reducing CO2 emissions and mitigating the impact
of climate change. We also recognize the ﬁnite nature of energy essential for our business activities,
and work to improve efﬁciency of and reduce energy use, throughout the entire supply chain.
Related data: p.60, 61
Details: Official website of HomeNITORI Group’s promotion of environmentally friendly business to mitigate
climate change
Climate change due to global warming may cause enormous damage to the manufacturing andlogistics operations. Abnormal weather, such as heavy rainfalls and large typhoons, has a serious
impact on the management resources that are essential for a company to carry out business activities,
and its influence extends throughout the entire supply chain. We recognize a range of business
continuity risks caused by climate change and strive to improve efﬁciency and consider total
optimization at all stages of our supply chain, thereby reducing CO2 emissions and mitigating the impact
of climate change. We also recognize the ﬁnite nature of energy essential for our business activities,
and work to improve efﬁciency of and reduce energy use, throughout the entire supply chain.

Large ceiling fan installed in the
distribution center

39

Optimization ofdomestic
distribution
center network

Expansion of container
round use

We are planning to set up eight of our own new distribution centers
across Japan by 2025. We are expecting to reduce the number of times
and the distance products travel between distribution centers andfacilitate smooth flow of goods. It contributes not only to speedy deliveryof products to customers, but also to
reduction in logistics costs,
improvement in employee work
environment, and reduction inenvironmental impact (CO2 emissions).
Related topic: p.24

The new distribution center
in Ishikari City, Hokkaido, theconstruction of which started
in May 2021

By expanding container round use, which is an initiative to use
imported containers after packages are unloaded in exports thereafter,
an annual total of more than 3,200 containers were used more
effectively throughout ﬁscal 2020. Through this, the annual volume of
CO2 emissions was reduced by 103t.
Conventional
Conventional
methodmethodContainer
Container
round
round
use
use

Empty
Empty

Importer
Importer

LoadedLoadedExporter
Exporter

LoadedLoadedImporter
Importer

LoadedLoaded

Empty
Empty

Empty
Empty
LoadedLoadedPort
Port

Product
Development

E SG

Promotion of environmentally friendly business

Port
Port

NITORI Group’s

Materiality 3

Exporter
Exporter

40

NITORI Group’s Sustainability

NITORI Group’s

Product
Development

E SG

Raw Material
Procurement
Manufacturing

Product
Planning
SystemDevelopment

Quality
Control

Governance

Sales (Stores)

Trade

Sales (Online)

Logistics

NITORI Group’s Sustainability

NITORI Group’s

Materiality 5

Contribution to local communities

Contribution to convenient andenjoyable shopping experiences
for customers throughexpansion of store network andpromotion of O2O

Recognition of issues and creation of shared value
Social issue

NITORI Group

Shared value
Customers●Able to enjoy shopping both offline andonline conveniently●Experience enriched homes and thepleasure of coordination

Local community●Companies are asked to offer ways of
shopping unbound by location or time, as
well as to respond to the needs of every
community●Expectations for smaller market areas due
to an aging population●Seamless links between offline and online●Store openings in market areas with low
populations and urban areas●Creation of products and sales floors
readily available for anyone to enjoy
coordination●Enriched lifestyles for local communities andpeople living there

NITORI Group●Increase in the frequency of customer store
visits●Increase in the number of purchasing
customers

New Initiatives
Following the
Expansion ofBusiness Fields

E SG

Materiality 1

Contribution to enriched lifestyles by “offering the unexpected”

NITORI Group aims to be a company that makes
comprehensive lifestyle suggestions, catering to a range ofcustomer lifestyles and offering comprehensive homerelated services.

Offering homes that more people wantto purchase and live in
Capital and business alliance with KATITAS Co., Ltd., the No.1 seller in the used home purchase andreselling market
KATITAS has more than 100 local outlets across Japan. The company offers quality homes at low prices by integrating research, purchase, renovation,and sales and taking charge of all processes. With virtual home staging, which introduces computer graphics NITORI furniture to panoramic images thatoffer easy online viewing experience, we help customers choose homes by adding ambience and a sense of reality. It not only makes it easier forcustomers to imagine how it would be after moving in but also supports a smooth start after purchasing the house. Facilitating the distribution of usedhomes offers solutions to vacant houses and other social issues, as well as revitalizes local areas. It also contributes to the reduction in environmental
impact. Compared with newly built homes, used homes can reduce CO2 emissions to a quarter and timber use to one seventh. We will keep contributing
to sustainable urban planning through the revitalization of the used home market.
Details: KATITAS’ ESG Report

Examples of NITORI Group’s initiatives (linked to SDGs)
Enriching homes formany more people
We aim to make available products necessary for everyday life anytime, anywhere,
and for anyone. We consider the increasing number of customers as an indicator ofsocial contribution. The number of domestic and overseas stores totaled 722 as of theend of ﬁscal 2020. We are opening stores in unconventional places that have market
areas with populations of 100 thousand or less, as well as in urban areas, thereby
increasing accessibility to brick-and-mortar stores. In the meantime, our e-commercesite NITORI-net proposes more convenient ways to shop by expanding the range ofavailable products and introducing new services, including virtual showrooms, where
customers can enjoy 360-degree views of NITORI’s coordination. Creation of storesand enhancement of services that are supported by customers resulted in an increasein the number of purchasing customers in the pandemic-struck ﬁscal 2020 to 112.8%of the number in the previous year. We thus contributed to enriched homes of a larger
number of customers. As a destination
store in the area (a store where
customers can buy everything they arelooking for at one place), we willcontinue to expand the contribution toconvenient and enjoyable shopping
experience for customers by further
expanding our store network andseamlessly linking offline and online.
Virtual showroom
41

Coordinationfor everyone
We aim to offer readily available, easy coordination foreveryone. Customers can choose products in preferredstyles of coordination. A wide range of colors, patterns,
and shapes enable anyone to ﬁnd natural coordination. In
addition, customers can enjoy choosing a number of
products at affordable prices. NITORI’s stores ande-commerce site thus have a lot of elements that can
upgrade customers’ daily lives. We will continue to beattentive to the precious time customers spend at home.

Approx.1/4

Approx.1/7*1 Source: “Estimation of CO2 Emission from Construction, Renovation and Demolition of Residential Buildings up to 2050,” Table 4 CO2 emissions
per floor area, wooden detached house*2 Source: Forestry Agency, “Current State of Issues of Forest, Forestry, and the Timber Industry (March 2021)” 3. Current State and Issues of theTimber Industry*3 Source: Standard properties renovated by the company in December 2018

Recycling soil to contribute to society throughbusiness
SHIMACHU considers it important that all employees work at their best and contribute to society throughbusiness. To work toward the harmonization among society, people, and the environment and the realization of asustainable society, as well as to be a company trusted by stakeholders, the company engages in businessactivities that attach importance to sincerity, honesty, and sustainability, not to mention compliance. In addition,
SHIMACHU contributes to resolving ESG issues and achieving SDGs in various ways. For example, SHIMACHU
collects used soil, ﬁres and sterilizes the soil with dedicated machinery at the manufacturer, and turns it into new,recycled soil. This initiative not only contributes to waste reduction and creation of a recycling-oriented society
but also resolves frustrations and inconveniences of customers who wish to grow plants in new soil but do notknow how they should dispose of used soil.
*This service is available only for customers who purchased certain products.

Details: SHIMACHU’s sustainability

42

NITORI Group’s Sustainability

NITORI Group’s
Human
Resources
Development
Transfer-based
education

E SG

Training system

Materiality 6

Creation of a rewarding work environment and promotion of diversity

NITORI Group aims to train true specialists who cancontribute to society, enhances human resources throughtransfer-based education that covers an extensive range offields, and creates an organization with a wealth of elites.

NITORI-style specialists build the foundation forsustainable growth

NITORI Group’s unique business model that integrates manufacturing, distribution, IT, and retailis supported by specialists who can think comprehensively and create new value. In order to train
them, a transfer-based education in which they can experience a variety of occupations every two
to three years is essential. It is an education system that forms the foundation of human resource
development, designed to provide each employee with a wealth of knowledge and extensive
experience. In recent years in which personnel are forced to solve problems that transcend theboundaries of industries and occupations, we require human resources who can apply knowledge
on a broad range of ﬁelds and combine expertise in several subjects to generate innovation.
Through transfer-based education, NITORI Group has increased the number of pillars of expertiseeach employee has and produced a large number of “NITORI-style specialists” who are able tosolve problems from a broad perspective. We continue to aim for sustainable growth by taking
advantage of the potential presented by being an organization with a wealth of elites.

Education system

Toward an organization where employees learn
from and inspire each other’s growth

Seminars in the U.S. is a major training program in NITORI Group, with curriculums prepared foreach training stage, from the introductory course in which second-year employees participate, tothe selective advanced courses. Approximately 1,200 people attend the seminars each year. The
purpose of these long-standing seminars is to experience an “enriched lifestyle” with all ﬁve senses
and to reafﬁrm the Company’s mission. We visit the U.S., where NITORI Group’s mission has its
roots, to tour the chain stores that support the lifestyles of the general public and observe the latest
initiatives, sales floors, and products, and through the seminars, our employees realize and learn a
lot from the experience. In ﬁscal 2020, all of the seminars in the U.S. were cancelled due to the
COVID-19 pandemic. Long-term, ongoing initiatives are essential for human resource development,
and to keep offering education, we immediately replaced the seminars with programs that takeplace in Japan and launched various new training programs.
Leaders’ course of seminars in the U.S. in fiscal
2019

Training programs and initiatives that give employees learning opportunities and back up their growthAdvertising
Businessplanning

Online
sales

IT

Store
operations

Logistics

Tradingcompanies

Education
Manufacturers

Development of autonomous human resourcesthat support the future of NITORI GroupNITORI University, an in-house educational institution, is at the center of NITORI Group’s employee education. Placing the idea of “training ‘innovation
creators’ through ‘deepening of knowledge’ and ‘search for knowledge’” as the core, it offers a variety of learning opportunities for our employees.
In “deepening of knowledge,” we deepen studies of the philosophy, knowledge, and experience that NITORI Group values. In “search for knowledge,”
we have prepared curriculums that reflect the latest technology, values, and knowledge of the modern era in order to accommodate the insatiable
intellectual curiosity of employees.

Job shadowing training

NITORI Color Coordination School (NCCS)

Job shadowing is a form of career education where participants think
about their future workstyles and lifestyles by accompanying employeesof various companies and organizations, as if they were shadows, andexperiencing the work. In ﬁscal 2020, 70 of our fourth-year employees
participated in the program, and 10 departments* accepted theparticipants. Experiencing the tasks at the headquarters made theparticipants realize how rewarding and enjoyable the tasks are. In
addition, being close to the actual employees helped the participants
understand the difﬁculty and signiﬁcance of the tasks, which encourages
our young employees to draw clearer career plans.

NCCS is a one-year in-house program where our employees study
interior coordination to be coordination professionals. All of ouremployees, including part-time employees, are eligible to take theprogram. Based on the belief that coordination is not about tastes but
about rules, participants gain proper knowledge on coordination andapply the knowledge through practical assignments, thereby acquiring
skills to propose coordination in response to our customer needs. The
program consists of four courses, designed for employees at different
skill levels, including the beginner course to gain a basic knowledge andthe adviser course teaching how to propose coordination plans basedon customer needs. The program constitutes an important education
opportunity that helps employees’ career building, since taking theNCCS program often leads to a transfer to the Merchandising Divisionor the Corporate Sales Business Division.

*Merchandizing Division,
Organization Development Office,Product Quality Control &Improvement Office, Internal
Regulation Office, etc.

Three pillars of NITORI University

Realizing the best assignment
for each employee by
introducing Workday

NITORI Group employees submit future
career plans to the company twice a year,
based on social issues they wish to resolve andwhere they see themselves in 30 years. Such
career aspirations of each employee, as well as
all other information on them including learning
history, backgrounds, and skills, are compiledin Workday, a human resource platform. By
taking advantage of technology and centrally
managing a large amount of information, we
realize the best, optimal assignment for each
employee.

Core competence“NITORI Style” thatcannot be imitated byother companies

Technology
Knowledge in applying IT
technology to
revolutionize the future

GlobalAbility to leap from Japanand play an active role in
the global community

Foundation

Credentials…other talent information

Technology

Work aptitude

Core competence

Results and evaluation

GlobalCourse participation
Operational experience

Self-development support

Coordinating
courseparticipation data

Future goals
Career plan

Three pillars

Proper assignment of
human resources

Global Communication Online at Nitori (GCON)
Basic employee information

GLOBIS
One-off payment for
qualifications
Education mileage
In-house competition

Backing up the growth of each
employee for the company’s growthAs our business ﬁelds expand, business skills, suchas management theories and digital knowledge, havebecome increasingly important, in addition toconventional in-house learning centered around thechain store management theory. Since 2019, NITORIGroup provides all employees with a long-term plan of
Globis’ study-all-you-want program. We back up thegrowth of each employee by creating an environment
where they can gain knowledge guided by theirintellectual curiosity. In ﬁscal 2020, a total of
approximately 5,000 hours were spent on learning eachmonth, indicating that our employees are increasingly
taking advantage of Globis’ study-all-you-want program.

GCON is an online business conversation program for theenhancement of employees’ foreign language skills. We aim to enhance
global literacy in the company by equipping employees with the ability tohave business conversations expected in actual work at NITORI Group.
To ensure that the program is practical, all contents and textbooks areprepared by the HR Education Division from scratch. The program
develops human resources who can immediately play an active role ona global stage. Employees with high levels of language proﬁciency serve
as instructors. Twenty-six employees have been instructors so far, andby creating a platform where individuals can take advantage of theirskills, we create a culture where our employees learn from and inspire
each other’s growth.

Introduction of digital signages to our storesTo create a work environment where employees can work with peaceof mind and increase the level of employee engagement, we put in agreat effort in facilitating communication between the company and our
employees. As part of the effort, we installed monitors at each store,
which stream the latest information on the company. To increase theamount of knowledge full-time and part-time employees have and thelevel of their satisfaction, the monitors are installed at locations
convenient for the employees to see. We call for information from eachdepartment at all times, so that the
information that is seen on the screen
is always up-to-date and fresh. We
hear from our employees that
contents such as the new productintroduction videos are very helpful.

Training for part-time employees
Part-time employees, who account for approximately 90% of NITORI Group employees, are the important human resources which support the Group.
We have various training programs for them, so that they can ﬁnd their tasks rewarding and contributing to their growth. For instance, we have enhanced
online training programs for part-time employees working at stores across Japan. This initiative was led by the Store Operations Division, and theintention was to keep offering education opportunities under the COVID-19 pandemic. Dedicated trainers serve as instructors of the training program,which is offered live instead of via recordings. The program lays emphasis on interactive communication, thereby bringing out the participants’ eagerness
to learn. The headquarters take charge of all education programs to eliminate the unevenness of quality and opportunity. We thus help all NITORI Group
employees work at sales floors with peace of mind, as they feel the joy of growth and ﬁnd the tasks rewarding.
Examples of the training programs: Education for new employees, how to operate cash registers, knowledge on sofa products, knowledge on curtain
products, etc.
NITORI Group’s training hours data: p.62

43

44

Internal commendation
systemSystems for fair assessment of results create
reforms

NITORI Group strives to ensure workplace safety and aims
for a comfortable work environment where all our employees
work in good health.

Work
Environment

We have various internal commendation systems and competitions to increase employee motivation and create innovation. Initiatives and results that arelaunched and produced by each individual, group, and department are acknowledged and recognized across the company. These commendation systems
and competitions not only revitalize the company but also play a signiﬁcant role in the development of the organization by uncovering hidden abilities andidentifying talented human resources.

Health management creates the future

NITORI Group’s internal commendation systems and competitions
President’s Award (annual/quarterly)

Coordination contest

The award commends groups that achieved cost reduction, proﬁt
increase, etc. by making improvements to resolve groupwide or eachdepartment’s issues. Depending on the details of the initiatives and thescale of the achievement, the groups are given the Gold Prize, Silver
Prize, Bronze Prize, or Special Prize andmonetary rewards for each prize.
Winners are announced in quarterlycommendation ceremonies. Annual
awards are given at the ceremony held in
the management policy brieﬁng, and theresults are shared in the company.

All employees of NITORI Group participate in the contest, where theytake pictures of their proud home and compete for the best coordination.
NITORI Group aims to convey coordinated, enriched ways of living tocustomers. We launched this annual contest in 2019, to ﬁrst have our
employees express and enjoy
coordination in their home. There were
470 entries in 2020, and award winners
made presentations at the commendation
ceremony and received NITORI gift
certiﬁcates as incentives.
FY2020 first prize for total
coordination

FY2020 annual awards: A total of 70 entries/30 awards

Nitori World Circle (NWC)

Customer service contest

NWC activities are long-standing initiatives where like-minded
employees form a team, identify issues from day-to-day tasks, andpromote improvements. This year marked the 15th year since the launch.
The activities take place at NITORI Group sites across the world and play
an important role as a platform to directly
deliver the voice of frontline employees
to the management. The team that wins
the ﬁrst prize gets to participate in aseven-day seminar in Vietnam, so many
young employees aspiring to grow takepart in the activities.

The contest started in 2017 as a platform to improve the levels of ouremployees’ skills and motivation. It is held every year since then, as we
aim to be a company where employees support and inspire each other’s
growths. The key purpose of the contest is to have our employees feelthe importance of hospitality, as well as gain and polish customer service
skills to express gratitude to our customers. Both full-time and part-time
employees across Japan compete their customer service andcommunication skills on a level playing
ﬁeld, through which the winner isdecided. All employees, regardless of
position or circumstances, are given
equal opportunities and are able to grow,which makes NITORI Group strong.

*Seminars in Vietnam for 2020 were cancelled due to the COVID-19
pandemic.

NWC in 2019: 341 entries
NWC in 2020: 415 entries
New graduate
recruitment

Participants in 2020: A totalof approx.18,000

Related topics: p.37, 38

Being close to students and helping them take a
step toward their dreams

New graduate recruitment

The recruitment philosophy of NITORI Group is, “Your dream shapes who you are.” To support students to thinkcarefully about their purpose for working and their future goals before deciding to join NITORI Group, our third- tosixth-year employees, who work as the recruitment staff, take care of each student and offer support until they
make the decision to join the company. In ﬁscal 2020, we carried out online recruitment activities even under the
COVID-19 pandemic. More than 19,000 students attended our brieﬁngs in total, and we were able to speak to alarge number of students and end the recruitment season without reducing the number of new recruits.
Ranked 5th (humanities and social science students) and 13th (natural science students) in themost popular companies among 2022 university graduates, complied by Mynavi and The Nikkei

President Shirai attending an online
briefing

Recruitment from overseas

For NITORI Group’s global business development, global-minded human resources are essential. In search of human resources who can play an activerole on the global stage, we also put in an effort in recruitment from overseas. We used to send our own employees to overseas job fairs to ﬁnd talent, butsuch events were cancelled in 2020 due to the COVID-19 pandemic. In the face of the cancellations, we participated in online job fairs and continued with
our recruitment activities by directly negotiating with overseas universities and student organizations. In addition, we actively participate in events atuniversities specializing in foreign languages to recruit global-minded human resources in Japan.

At NITORI Group, we believe that the physical and mental health of each and every employee is essential to the growthof our company, and we are actively working to maintain and improve the health of employees and their families. In 2013,
we instated the Company’s exclusive NITORI health insurance society, and in 2016, established the Health Management
Declaration. We work with our labor union and health insurance society to achieve our Group mission and vision andensure that all employees fulﬁll their potential. Our efforts resulted in the accreditation in the Certiﬁed Health andProductivity Management Organization Recognition Program (White 500) for the ﬁfth time in 2021.

NITORI Group’s key initiatives
Measures to prevent harassment

Wellness promotion●Establishment of rules to prevent harassment●Introduction of various helplines, developmentof a self-reporting system●Creation of content for personnel
management●Practical communication training for
managers●Health education program in in-house training●Education to prevent mental illnesses,
creation and distribution of books for selfcare●Created our own women’s health booklets incollaboration with six companies in different
industries and the health insurance society.
Distributed them to approximately 7,100
female employees.

Health improvement events

Personnel management●Health checkup challenge●Walking campaign in which teams compete against each other●Personnel management seminars by external lecturers (four times a
year)●Distribution of video learning content concerning personnel
management

NITORI Group respects human rights of each and every
employee and harmonizes all workplace communication tomaintain diversity.

Diversity
Creation of a culture that respects
diversity and an environment
where each person can shine

NITORI Group promotes diversity and inclusion. We consider
that fostering a corporate culture where employees in different
circumstances and with different backgrounds, in terms ofmarriage, childbirth, childcare, nursing care, nationality, sexual
orientation, etc., acknowledge and respect each other creates
an empowered work environment and leads to the company’s
growth. In particular, we are focusing on supporting women’s
active roles. For example, we have been holding career support
seminars since 2014 to encourage women to fully demonstrate
their individual ability in carrying out their tasks. Female
employees of all ages and positions participate in each of theseseminars, where they discuss work-life balance and careerplans, as well as exchange opinions on their workstyles. Issues
raised in these seminars often lead to suggestions to thecompany and shape future policies. We aim to pay attention toemployees’ voice and be a company where each female
employee enjoy their work.

Internship

NITORI Group’s internship program aims for “zero stranded job-hunting students.” The purpose of the program is to help students face job hunting in apositive mindset, by letting them think about their purpose of working, as well as learn how to self-analyze themselves and analyze different companies. In
ﬁscal 2020, 29,000 students participated in NITORI Group’s internship program. We hope to offer a program useful as a ﬁrst step of students’ job hunting.
Ranked 1st in companies that offer best internship programs for 2022 graduates, compiled by Rakuten Minshu

45

Balancing work and private life is the
key to improved productivity
We have been enhancing systems that give employees diverse workstyle options,in accordance with their personal circumstances including marriage, childbirth,childcare, nursing care, and illness. To create a culture that facilitates the use of thesystems, we distribute guidebooks to all employees to provide an overview ofsystems that support work-life balance and how to use them, and hold seminars for
managers.
We believe that enhancing the lives of employees can improve work performance,
and aim to be a family-friendly company for both employees and their families. A
half-day paid leave system was introduced in 2016, and a work interval system in2017. To reduce overtime hours, we take a ﬁrm stance against unpaid overtime.
Employees whose overtime hours constantly exceed 30 hours per month, as wellas their managers, are notiﬁed by the Human Resources & Labor Division. If themonthly overtime hours exceed 45 hours, an improvement plan needs to besubmitted to the management. We thus promote the reduction of overtime hours
across the company.
To accompany the change in workstyles, we also introduced a work-at-homesystem geared toward employees who work shorter hours
to improve work productivity from 2016, and the teleworksystem from 2018. These ongoing initiatives have beenrecognized, and we won the ﬁrst prize inthe 5th White Company Award.

Career support seminars

46

NITORI Group’s Sustainability

NITORI Group’s
Local
Contribution
Activities

E SG

Materiality 5

Contribution to local communities

Aiming to become a company that people will feel in need of,
we implement a wide variety of local contribution activities,
with particular focus on “personal development,” “measuresagainst disasters” and “environmental support,” to give backto all of the countries, local communities, and society
members that nurture and support NITORI Group.

Development of “Future
IT Human Resources”
NITORI Holdings concluded
a partnership agreement with
Sapporo City and Hokkaido
University in July 2019 for thedevelopment of “Future IT
Human Resources”, who canleverage the power of digitaltechnology and data to resolve local issues and create a society of the
future. Hokkaido joined the partnership in March 2021 to expand andstrengthen the initiative throughout the prefecture. The four dedicatedparties are working together to roll out human resource development foreach level of education, including elementary, junior high school, highschool, university and graduate school students. “NITORI Future
Society Design Course,” established in Hokkaido University, invites
public applications for research using data and assignments provided by
NITORI, as well as conducts cutting-edge research that make use of
actual stores. Research outcomes are published in journals andpresented in academic conferences, constituting practical humanresource development initiatives. We are promoting initiatives so that
Hokkaido, the place where NITORI was founded, will generate many
talented people who will forge the future, and so that those people will
generate vitality throughout the entire community by playing an activerole in the region, and moreover become a bridge to the world.

NITORI International
Scholarship Foundation

47

NITORI Group’s Sustainability

E SG

NITORI Group’s

Past disaster assistance: NITORI Holdings website

NITORI Culture
Foundation

NITORI’s founder, Akio Nitori, donated his private funds to establish
the NITORI International Scholarship Foundation in March 2005, hoping
to give something back to people in the Asian countries, who have lent atremendous support to the achievement of NITORI Group’s mission. To
expand friendship and support human resource development around theworld, the foundation offers beneﬁt-type scholarships and has supported
a total of 7,040 students from 43 countries and regions. In addition,social events and study group sessions are held to provide opportunities
for scholarship students from different countries and of different ages tointeract with each other. These are precious opportunities where eachscholarship student grows
by ﬁnding inspiration fromguests’ and other alumni’s
advice and peers’ speeches.
We will continue to expand
the circle of support invarious ways, both in Japanand overseas.

The NITORI Culture Foundation was founded in April 2011, to support
the development and succession of culture, arts, and tradition and to bea bridge for the formation of a new culture. Taking up joint projects withNITORI, the foundation has supported activities that are for the public
beneﬁt and expected to contribute to local communities, as well as tree
planting activities (supported the planting of a cumulative total of over 5
million trees). In October 2020, the foundation took over OTARU ART
BASE, a collection of museums in Otaru City, Hokkaido that had been
managed by NITORI, and started its management as a non-proﬁt
activity (the gallery attracted over 250 thousand visitors in ﬁscal 2019).
Working with the foundation,
we will promote and expand
activities to contribute totourism development, as
well as to protect and use
cultural resources such as
historic structures andwonderful works of art.

Details: Official website of NITORI International ScholarshipFoundation*In May 2021, a plan to promote cultural tourism in the Otaru Canal
district, the center of which is OTARU ART BASE, was authorized asa project subsidized by the Agency for Cultural Affairs.

Effective corporate governance

NITORI Holdings Co., Ltd. (“the Company”) places top priority on
sustainable growth and the medium- to long- term improvement ofcorporate value in its management. The Company believes thatenhancing its corporate governance system is necessary forachieving these goals. To enhance corporate governance, theCompany aims to build an organizational structure to respondpromptly to any changes in the business environment, practice fair
and transparent management as a listed company, and disclose
accurate information to all stakeholders in a timely manner.
Meanwhile, the Company will develop an internal system to establish
its corporate social responsibility and corporate ethics.

Corporate
GovernanceDisaster mitigation
project and disasterassistanceDisaster mitigation project focused on
As a social
Flow ofproduct supply after disasters
goods
infrastructure
Transportation
Distributionof stockwarehousecompany that deals
Customer’s
Deliveryvoice
Customerneedswith householdStores inafter disasters
Headquarters
affected
Products in demand
Flow of data
items, NITORI
areaschange over time
Flow ofGroup consider it its
people Support from
Build upacrossexpertise
the country
mission to promptly
deliver necessary
Deliver products in demand
Rebuild lives as soon as possible
products tocustomers in affected areas, when natural disasters occur. Based on
multilateral analyses of issues found at the time of past disasters, we
implement the “Future Disaster Mitigation Project,” which builds
expertise to resume store operations in affected areas in the shortest
possible time and simultaneously creates systems to supply productsthat are in high demand after disasters. The aim is to help customers
restore their daily lives as soon as possible. When actual natural
disasters, such as earthquakes and heavy rainfall, strike in various
locations, the entire Group joins forces to procure and deliver
emergency relief supplies to shelters and temporary housing at therequest of the government and local municipalities. We will continue tooffer assistance as necessary, both in Japan and overseas.

Materiality 7

Board of Directors’ effectiveness evaluation(1) Size and composition
3.25(2) Management4(8) One’s own efforts
status
3.75
3.78
3.52
3.5
3.25
3

(7) Response to
stakeholders
3.44

In analyzing and evaluating the effectiveness of ﬁscal 2020
Board of Directors, we conﬁrmed the status of improvements andprogress of the issues identiﬁed in the effectiveness evaluation
conducted in the previous ﬁscal year. Based on thequestionnaire-style evaluation given by each Director, individualinterviews were conducted. The results were discussed by the
Board of Directors to improve its functions.

Options
4. Appropriate
3. Acceptable
2. Insufficient
1. Needs
improvement(3) Matters discussed
3.6

2.75
2.5

(6) Riskmanagement
3.75

Evaluation categories of the questionnaire(1) Size and composition of theBoard of Directors(2) Management status of theBoard of Directors(3) Matters discussed by the
Board of Directors(4) Support systems for the
Board of Directors(4) Support systems
3.73(5) Materials
3.47

Initiatives in fiscal 2020

FY2019FY2020Priority issues for fiscal 2021 Board of Directors

Ongoing issues

Deepening discussions on
medium- to long-term issues of
NITORI Group

Prior distribution and thoroughexplanation of board material

Promoting delegation of theauthority to make decisions
regarding the execution ofdutiesStandardization andimprovement of the level ofmaterials submitted to theBoard of Directors

Resolved issues(5) Materials for the Board of
Directors meetings(6) Risk management(7) Response to stakeholders(8) One’s own efforts

Ongoing issues

Deepening discussions on
medium- to long-term
issues of NITORI Group[ongoing issue since the previous fiscal

Promoting delegation of theauthority to make decisions
regarding the execution ofduties [ongoing issue since theyear]previous fiscal year]

Expanding discussions on
ESG and SDGs

Continuing discussions toappoint female directors*Appointed female directors at the fiscal
2021 General Meeting of Shareholders

New issues

Based on the results of the effectiveness evaluation, we interviewed our outside
directors about the current state and the future of the Board of Directors.

48

NITORI Group’s Sustainability

NITORI Group’s

E SGMateriality 7

Effective corporate governanceDiscussion with Outside Directors 1

Non-Audit and Supervisory( Committee)
Members

the Company’s Board of Directors is making progress in discussing

Generation 1.0 arrangement was what we might call an extension

major themes such as management strategy and we’re lookingof relationships between friends. Generation 2.0 could be

forward to future discussions.

described as an arrangement whereby outside directors keep

Yoshizawa: This is the ﬁrst time I’ve ever been a member of thecorporate governance and compliance in mind as they monitor

Board of Directors at a listed company. I’ve learned a great deal

management. I think Japan is currently in Generation 2.0. andpersonally from attending the Company’s Board meetings. At other

Generation 3.0 is an arrangement whereby, in addition to the rolecompanies’ Board meetings that I experienced in Japan, there wasoutside directors play in Generation 2.0, they not only advise on

often very little opportunity to discuss business strategy. On the

management strategy, but also become involved in its formulation.

other hand, my impression is that Board meetings at venture

Based on my own experience of running a company, my comments

companies overseas are very strategic and discussions are guided

are intended to enable discussion of management strategy from aby the directors’ skills, drawing on their various perspectives as

Generation 3.0 perspective. As an outside director, I try to probe

specialist professionals. To be honest, before attending the meetings

deeply, primarily as a means of helping to formulate betterof the Company’s Board of Directors, I thought the atmospheremanagement strategy.

might be similar to the ﬁrst group of companies I’d experienced, but

Miyauchi: I think the current executive directors are a great team:once I attended meetings here, I gained the deﬁnite impression thatthey’re extremely passionate about their work, they work quickly,

this Board belongs to the second group. I’m very impressed by how

and they thoroughly understand the relevant issues. It’s important

the Board of Directors discusses strategy properly.

that this continues to be the case. And this is the perspective fromwhich I intend to approach monitoring.

We held a conversation with three outside directors who are non-Audit and Supervisory Committee Members: Mr. Sadayuki Sakakibara, Mr.
Yoshihiko Miyauchi, and Ms. Naoko Yoshizawa (newly appointed). The themes discussed included the distinguishing characteristics of the
NITORI Group’s Board of Directors and the sustainable growth of the NITORI Group. The conversation was led by Kenichiro Aoya, Executive
Ofﬁcer and General Manager of the Legal Ofﬁce.
*To avoid spreading COVID-19, those present wore face masks during the discussion and removed their masks only to have their photographs taken.

At the shareholders’ meeting two female directors were appointed.
Could you tell us what changes you’re expecting with theaddition of a female perspective?

Sakakibara: I regard the addition of two female directors as a major
reform. With women’s participation, the atmosphere at Board
meetings will change completely and both the content and qualityof comments will naturally differ from before, especially as opinionsfrom a new perspective are voiced. And when you consider that, in49

Enhancing the Effectiveness of the Board of Directors

strategy have become the main topics of discussion. I have a real

Could you tell us what you regard as the distinguishing
characteristics of the Company’s Board of Directors, having
attended its meetings?

engage in enthusiastic discussion while emphasizing a strategic

sense that this Board of Directors has evolved into a forum that canapproach, considering practical management strategy from athe case of consumer goods such as the products the Company
handles, the authority for purchasing decisions often lies withwomen, a management strategy focused on women’s perspective
is indispensable. In terms of diversity too, we could perhaps add
another female member. And I also think it would be a good idea toHave there been any occasions when you felt that yourcomments at a Board meeting changed the result of a
discussion, or led to improvements in how duties are executedor how the Board of Directors is run?

Sakakibara: Although the Company’s Board of Directors is stilldeveloping, I think it has evolved signiﬁcantly even in just these last
two years. The opinions of outside directors including myself aretaken seriously; for example, the suggestion that we should allow
more time to discuss medium- to long-term strategy was properly
addressed. I feel that the executive directors are very quick to act.
Miyauchi: When the outside directors offer their opinions, theexecutive directors give those opinions serious thought and come

Sakakibara: It’s been exactly two years since I assumed thelong-term perspective, and incorporating the shareholder

position of outside director. During that time, the outward

perspective.

characteristic that struck me most was that NITORI Group’s Board

Miyauchi: In my case, a year has passed since I became anof Directors is an extremely objective and progressive. The

outside director, so I am now in my second year. To address thepercentage of members who are independent outside directors isquestion from a corporate governance perspective, I believe thatover 40%, and as the skills matrix shows, the mix of outside

the essential purpose of governance is to help a company continue

directors’ skills is extremely well-balanced. In terms of the way

generating value over the medium to long term. The responsibility

meetings are run too, the outside directors lead a lively exchange

for generating value lies with the executive directors, and it’s theof opinions, and for that reason, I feel that it really is a Board ofrole of the Board of Directors to monitor whether they are on the

Directors in the true sense. The board chairperson, Akio Nitori, isright track toward their purpose and goals. That being the case, myan owner-manager, but he always listens to the outside directors’

own focus is on monitoring from an external perspective as aopinions and comments and reflects them in his business

representative of the market. In fact, the Company’s Board ofmanagement faithfully and with a sense of urgency. I feel that thisDirectors is moving in the right direction faster than I imagined it

Sakakibara: As I mentioned

Sakakibara: DX has become a key shared concept, not onlyis a distinguishing characteristic lacking in other companies

would. It may still be developing in some respects, but in light of myearlier, I monitor andthroughout Japan, but throughout the entire world. Yet, it seems to

managed by their founders. As outside directors are in the position

own experiences as an outside director at more than tencomment from theme that many companies in Japan are taking an over-simplisticof monitoring the executive directors, I try to comment from thecompanies, I think the Company’s Board of Directors is on course

perspective of shareholders

approach by directly equating DX to IT. IT and AI are merely tools;

perspective of shareholders and society at large. I can see that the

to be top class, so to speak. I’ve also been extremely impressed byand society at large. There

the real objective lies elsewhere. That’s to reform businesses andexecutive directors take our comments very seriously, and instigate

how the Board’s chairperson, Akio Nitori, who is also theare three generations ofoperations. In addition to reforming the Company’s actual

actions and improvements accordingly. When I ﬁrst assumed thisCompany’s founder, listens with humility to the outside directors’

outside directorbusinesses for the DX era, therefore, we will also need to reform all

position, numerous detailed business execution-related matters

opinions, and in no time at all, carefully considers them andarrangements: Generation

the operations that make up each business, including store

would be selected for discussion by the Board of Directors, but

incorporates them into the business. Mr. Sakakibara and I both

1.0, Generation 2.0, andoperations and the product mix. I think we should treat DX as ourrecently, matters relating to management strategy and businesshave experience of running companies ourselves, and in our view

Generation 3.0. The

actual management strategy and create a specialized internal

have non-Japanese directors in future from a diversity standpoint.
Miyauchi: I think of diversity as meaning variety. But it’s not a caseof a woman speaking on behalf of women or a man speaking on
behalf of men. What will be important as the next step, I think, will
be to avoid categorizing people in terms of separate genders or
nationalities in the name of “diversity,” and instead, to ensure thatpeople with an array of different backgrounds and skills can bringup with plans. Even if the plans don’t come to fruition, the outside
directors have fulﬁlled their duty by expressing their opinions.
When I give my opinions to the Company’s executive directors, I
feel conﬁdent that they will always seriously discuss the issues I
raise. From that point of view, I feel that my role as an outside
director at the Company is meaningful.

variety into debates.

Achieving Sustainable Growth and Enhancing
Corporate Value for the Company

Could you tell us what perspectives you yourselves adopt whencommenting or expressing opinions at Board meetings?

Could you tell us the potential issues to be aware of when
implementing digital transformation (DX) in NITORI Group overthe medium to long term?

Sadayuki Sakakibara
Outside Director, NITORI Group50

Could you tell us how the sustainable growth of NITORI Groupshould be combined and balanced with ESG and SDGs?

operating sites need to be put in place to focus on this strategic

as a whole to move in a single direction globally, this issuearea. There can be no doubt that overseas expansion is

becomes very difﬁcult to deal with. To cite some speciﬁc examples,

only develop the physical

Sakakibara: In the last year or two, ESG and SDGs have come tochallenging. Accordingly, I believe that, rather than trying to control

the Company needs to consider how to implement employee

infrastructure necessary forbe recognized as the top priority in business management

overseas operations from Japan, it’s only once human resources

appraisals and management accounting. It will be important toDX, but should alsoworldwide. However, instead of undertaking related initiatives for

totally committed to a certain country are living and working there

design systems that take local approaches into account.

deliberate on how to create

nebulous reasons, as in the past, we should engage with ESG andthat the ﬁrst signs of success will emerge. The Company has only

Meanwhile, another issue is, of course, human resources. A

a new NITORI Group,

SDGs as key issues for the company, acknowledging that ourjust made it to the start line in terms of global businesscompany can’t just start managing overseas operations overnight if

drawing on the opinions ofbusiness depends on doing so to remain viable. Amid major

development. I think it should develop specialist human resources

experience hasn’t been accumulated well in advance. I’m well

the outside directors.

worldwide trends including efforts to achieve net-zero carbon

who can formulate overseas strategy, and undertake upfront

aware that the Company’s investing effort in developing human

Miyauchi: We should thinkemissions by 2050, and to address human rights issues, NITORI

investment, while holding more discussions including exchanges ofresources, but it’s important to tackle the issue of how to cultivate
individuals capable of management suited to different countries
and regions from a young age.

organization to promote it.
This organization should not

Yoshihiko Miyauchi

Outside Director, NITORI Group

Group cannot survive as an enterprise unless it sets out its policy

opinions with outside directors.

incorporated into, or combined with, the Company’s main businessand priorities. At this very moment we’re at a fork in the road, andMiyauchi: It’s fantastic that the entire company is heading in themodel. Effective use of DX might enable us to change NITORI

as a company it will be crucial to have guiding principles.

same direction, guided by a vision for the next ten years. Looking

Group’s business formats in positive ways. However, doing so will

Miyauchi: I too sense rapid change. With regard to assessments byback at the Company’s business model to date, it hasn’t branchedrequire human resources with the business management skills toorganizations such as ESG assessment bodies, for the time beingout into new products or services, but has instead concentrated ondetermine the changes to be made; I therefore think we should

I think we have no choice but to aim for just a “pass mark,” but inits original furniture and home fashion businesses as a means of

Sakakibara: An important role of the Board of Directors is choosing

develop such human resources.

future we must earn better assessments in a way that is workablebuilding a wide network of stores and achieving success. And now

the next generation of senior managers. In fact, one could even

Yoshizawa: I believe there are three hurdles to overcome infrom a business perspective. This is because corporate activities

that it’s become a leading company in the domestic arena, thesay that taking the lead in the replacement of senior management

about how DX could be

implementing DX. The ﬁrst is the “ideas hurdle,” the second is theare set to come under increasing pressure from outside, bothCompany’s taken on the ambitious task of trying to do two difﬁcult

is another one of our key functions as outside directors. The“investment decision hurdle,” and the third is the “execution hurdle.”

socially and politically. In future, we should aim to be among thethings at the same time: enter the markets for new formats andCompany has set up a discretionary Nominating andI myself often talk to companies about DX, and the most common

top companies that lead the way in terms of ESG and SDGs, asservices, and advance into new geographical areas overseas. Both

Compensation Committee, so the Board of Directors needs to because of failure for DX initiatives is the poor quality of the initialwell as in other areas. I see this as the path we must follow.

of these endeavors require knowledge, but if the Company is to

kept fully informed of the types of discussions that take place at

ideas on which they’re based. The ﬁrst requirement when

Yoshizawa: Given that shareholders provide the capital that funds

make progress on these fronts, what it lacks above all are human

this committee. I also believe that key issues and strategies

implementing DX is usually to conduct a POC (Proof of Concept),sustainable growth, I think it’s essential to focus action on the

resources. The Company needs to engage in serious, probing

shouldn’t be discussed only at meetings of the Board of Directors. I

but POCs generally achieve only a 20% success rate. Or it might

issues that are currently of greatest concern among institutional

discussions to determine how to develop the human resources thatthink it would be a good idea to also have something like abe even less than that. Accordingly, the reality is that, unless a

investors and other shareholders—namely, the environment, andwill be central to its plans. The fact is that it’s trying to do something

separate discussion forum made up entirely of outside directors.

DX-related idea proves to be at least ﬁve times more successful

climate change in particular. As the Company’s Integrated Report

unprecedented that no other retail or services business has everMiyauchi: The Company shouldn’t aim merely to be a corporate

than usual at the POC stage, it won’t be a worthwhile investment.

shows, its initiatives to tackle environmental issues have madedone. Japan boasts numerous outstanding retail and services

governance high-flier by Japanese standards, within the framework

So, the number of high-quality ideas that can be generated at thegreat progress. However, when business expands, distribution

businesses, but few of them have been successful outside thisof the Japanese Companies Act; it should aim to lead the way

beginning is important. The next most common pattern of failure iscenters and stores, for example, increase, and this results in a vast

country. So, I’m really looking forward to seeing the Company

overseas as well. And surely it should also consider the future

an inability to get others involved. Within a company, individual

number of route permutations. It may therefore become impossible

make inroads overseas according to the NITORI Way, and mypossibility of changing its corporate governance structure topeople and departments have their own differing opinions andto improve the efﬁciency of distribution routes from within the

expectations are high. That’s another reason for the Company tobecome a Company with a Nominating Committee, etc. Progress

aims. But, when implementing DX, it’s essential for the entire

existing system. For that reason, NITORI Group always needs tohold repeated discussions as a matter of urgency and put its plans

is being made in delegating business execution-related matters tocompany to proceed based on a shared understanding. DX is a

be taking action focused on the next step ahead, such as

into action.

the executive directors, but I also think it would be great if we could

considering new technologies now.

Yoshizawa: In my own experience, growth in the size of overseas

create a setup whereby even more authority for reporting, such as

operating sites gives rise to the issue of how to ensure effective

monthly reporting, is delegated to executive directors to enable

Could you tell us your thoughts regarding the challenges ofglobalization?

governance over them. It’s important to delegate certain aspects ofmore dynamic discussion of medium- to long-term topics.

of failure, which is employing low-quality solutions to issues. For

Sakakibara: My perception is that the Company’s global businessmarkets, but in cases where it’s necessary for the NITORI Group

example, if one takes a tools-based approach to dealing with adevelopment is still far from adequate. Growth in the Group’s global

certain issue, and decides from the start to solve the issue usingbusiness will be crucial to achieve its mission and vision, but simply

AI, that mindset is in itself misguided. AI is just a means to an end;

persisting with the current way of doing things won’t be enough.

there are many other factors and choices to be considered when

In terms of the organization,

solving an issue. Failing to think about those other elements is afor instance, the Groupmistake. The keys to avoiding failures such as these areshould create an internal

commitment to DX on the part of the management, and a sharedorganization dedicatedunderstanding among employees. And, when coming up with

exclusively to global

ideas, it’s important to ensure diversity by, for instance, introducing

business development.

a variety of opinions from outside the company. This is because

Overseas strategy is apeople inside a company sometimes regard things as normal when

specialist ﬁeld that requires

they’re actually not.

sophisticated skills; anbusiness reform aimed at providing added value to customers. As
it entails creating an organization and corporate culture that can
provide added value continuously, I believe it’s necessary to
involve the entire company. And next we come to the third patternorganization and overseas
51

Could you tell us your thoughts on further strengthening theCompany’s corporate governance?

governance to local operating sites that fully understand their own

Naoko Yoshizawa

Outside Director, NITORI Group(newly appointed)

52

NITORI Group’s Sustainability

NITORI Group’s

E SGMateriality 7

Effective corporate governance(CHINA) HOLDINGS CO., LTD, is in the process of moving on fromdirector, Ms. Naoko Yoshizawa offers the same degree of insightthe current situation, in which it purposely decelerated store openings

and perceptiveness with regard to DX and IT. I therefore expect

and paused for a while. In light of what’s been learned there, wethat these two directors will not only provide a female perspective,

should discuss the Company’s future strategy for other regions as

but will also bring their respective specialist skills into play.

well. The second theme is strengthening existing formats andDiscussion with Outside Directors 2

Audit and Supervisory(Committee
Members )expanding business areas. In this regard, we should discuss how toapproach new business areas such as SHIMACHU CO., LTD.’s home
center business and the apparel business of N Plus Co., Ltd., while

Could you tell us what perspectives you yourselves adopt whencommenting or expressing opinions at Board meetings?

Ando: The ﬁrst perspective I adopt is that of consumers. I’m always

leveraging the Company’s strengths. The third theme requiring

trying to ascertain whether the Company is managing to provide

discussion is digital transformation (DX). Pursuing more seamlessproducts that enable a large number of customers to experienceO2O is essential as the next phase for the Company, so we need toenriched homes. My criterion is whether the Company is continuously

discuss what type of measures should be taken to ensure proper

providing products that offer new forms of appeal, and when I have

CRM (Customer Relationship Management) as a means of enhancing

time, I go to look at competitors’ stores to ﬁnd out what they are doing

customer satisfaction. The fourth theme is ﬁnancial strategy; I thinkwith new formats. My second perspective is whether the Company

that, as the Company undertakes M&A and major investments, it will

can continue growing into the future, so I’m checking that thebe necessary to discuss medium- to long-term cash flow.

Company isn’t relying too much on its past successes and showing
reluctance to reform. The third is crisis management. Obviously, thisAt the shareholders’ meeting two female directors were appointed.
Could you tell us how you think the Board of Directors will changewith the addition of a female perspective?

We held a discussion with three outside directors who are Audit and Supervisory Committee Members: Mr. Takaharu Ando, Mr. Kazuhiro Suzuki,
and Mr. Tsuneyoshi Tatsuoka. The themes discussed included evaluation of the effectiveness of NITORI Group’s Board of Directors and thesustainable growth of the NITORI Group. The conversation was led by Kenichiro Aoya, Executive Ofﬁcer and General Manager of the Legal Ofﬁce.
*To avoid spreading COVID-19, those present wore face masks during the discussion and removed their masks only to have their photographs taken.

Ando: Precisely because women account for a large proportion of
the Company’s customer demographic, I have high expectations
that adding a female perspective to the management of thebusiness and hearing their opinions during Board discussions will
have a positive effect. What’s more, the fact that we now have a

Enhancing the Effectiveness of the Board of Directors
In evaluating the effectiveness of the Company’s Board of Directors,
we have aimed to delegate a greater number of decisions on
business execution-related matters to the executive directors, while
shifting the matters to be discussed by the Board of Directors to
medium- to long-term strategy. Could you tell us if you feel that thishas been successful, and if you think that the themes to be addressed
as agenda items by the Board of Directors are appropriate?

Ando: My impression is that increased delegation to the executive
directors and the shift toward discussion of medium- to long-term
strategy are progressing incrementally; I think things are heading in
the right direction. As one point to be aware of, however, I’d suggestthat minor changes or issues that occur at stores or other frontline
locations sometimes presage larger medium- to long-term issues,
so I feel that, rather than narrowing down the number of themes too
much, I’d like such frontline changes or issues to be addressed asa theme within the discussion of medium- to long-term strategy as
well. And I’d like us to keep that perspective in mind in future.
Suzuki: I feel that increased delegation to the executive directors
has brought about a shift from discussion of detailed matters to
discussion of medium- to long-term themes.
Tatsuoka: I have the impression that we’ve steadily transitioned
from “management-style” discussion of individual store openings
and similar matters to “monitoring-style” discussion of cross-cutting
issues. Looking ahead, as the Company works toward achieving its
targets for 2032, there’s a limit to what can be achieved simply
through organic growth of the furniture and Hfa businesses. I
therefore think it will be necessary to discuss medium- to long-term
strategy, taking into account changes in the operating environment.
53

Could you tell us which themes you think should be addressed asagenda items (or should be extended in scope) going forward?

Ando: Overseas regions such as the U.S. and Eastern Asia are far
ahead of Japan in terms of integrating online and offline services,and even within Japan itself the barriers to entering other businessspheres or industries are lower than they were previously. What’smore, companies trying out a variety of different formats haveappeared, so there is more competition. In such circumstances, I
think that Board of Directors meetings should include descriptionsof the latest trends among progressive retail businesses in Japanand overseas, and discuss the theme of potential risks to theCompany as a result of taking no countermeasures. And, withregard to SHIMACHU CO., LTD., which became a member of
NITORI Group, the theme of how the two companies should merge
and generate synergies over the mid to long term should beincorporated into discussions.

female inside director (Hiromi Abiko), will serve as encouragement
to many female employees.
Suzuki: The appointment of a female employee who started her careerat the Company as an inside director is a very signiﬁcant development.
I think it will raise motivation for the Company’s female employees.
And, as the Company’s products comprise numerous household items
including furniture, I think that opinions from a female perspective
represented in meetings of the Board of Directors certainly will have apositive effect. Not only does Ms. Abiko’s appointment increase
diversity, I also think it’s an appropriate appointment in terms ofcontributing to the Company’s strategy with regard to business formats.
Tatsuoka: In addition to beneﬁtting from the perspective of theCompany’s female customer base, as pointed out by my twocolleagues, I expect the Board of Directors’ discussions to be
enlivened by the addition of the younger generation’s perspective.
Looking ahead to potential changes in the post-coronavirus world,
this younger generation (theSuzuki: We need to discuss the course the Company should takegeneration closest to thein developing its business in order to achieve its mission andCompany’s customer base)vision. I believe that, in addition to discussing the Company’s

will be highly attuned toexisting formats, we need to discuss its entry into the new formats

shifts in consumerof apparel, including the business of N Plus Co., Ltd., andpreferences. Newly

restaurants, in the form of the NITORI Dining business. We also

appointed inside director,

need to talk about business development overseas, and in

Ms. Hiromi Abiko is highly

particular the course to be followed when expanding businesselsewhere in Asia, including the ASEAN nations.
Tatsuoka: I believe there are four themes that should be discussed
within a larger framework. The ﬁrst is overseas strategy. NITORI

insightful and perceptive withTakaharu Ando

Outside Director and Audit andSupervisory Committee Member,
NITORI Group

regard to human resources
development, training, andcoordination, while outside

involves commenting from a crisis-management perspective when ascandal or something similar occurs, but it also involves constantly
thinking about risk across all aspects of corporate management andlooking ahead to the future to offer comments intended to prevent
risks arising from issues that have not yet become apparent.
Suzuki: I believe the Company’s lineup of directors is diverse, and I
have a high opinion of the Board of Directors, which holds lively
discussions and is highly effective. Each individual director
provides objective opinions based on his or her own experienceand perspectives, and I myself intend to express my opinions froma compliance and governance perspective. The Company ismanaged by its founder and chairperson, Akio Nitori, and it’s his
charisma that’s enabled it to continue growing. This could
potentially create an atmosphere that makes it difﬁcult for insidedirectors to express disagreement freely. In such circumstances,it’s crucial that outside directors can speak freely, and I myself am
doing so. In fact, the atmosphere is such that everyone can fully
express their opinions to the chairperson as well, and I therefore
feel that this is a genuinely effective Board of Directors.
Tatsuoka: As my own distinguishing characteristic within the Boardof Directors is my experience of working at an economics-related
governmental ministry, my contributions to discussions are informedby my past involvement with matters including structural changes in
the Japanese economy and industry, corporate governance reform,
issues relating to energy and the environment, and trade policy
including geopolitical issues relating to Eastern Asian countries. At
the same time, I believe that the key to continuously enhancing
corporate value—the most important mission for directors—issustainability. To describe sustainability in my own words, it would
be “the capacity to always continue being regarded as essential by
consumers, even when the external environment is changing
dramatically.” I make a point of constantly keeping this perspectivein mind. During discussions, I strive for a combination ofunderstanding and vigilance. In addition to trying to fullycomprehend the Company’s corporate culture and its unique54

Kazuhiro Suzuki

Outside Director and Audit andSupervisory Committee Member,
NITORI Groupbusiness model integrating

and corporate identity. As long as the Company stays within Asia,

companies. To strengthen corporate governance even more, I’dmanufacturing, distribution,

it may be enough to simply stick with the current way of doing

ensure that those terms have been set properly. I think it’s important tolike the standard of the documents provided to the Board ofIT, and retail, I pay attention

things, but entry into the European and U.S. markets, where values

conduct accurate employee surveys to establish whether part-time

Directors to be further improved. Discussions would be enlivened

when my own common

differ signiﬁcantly, will necessitate discussion. In addition,

employees really do feel empowered, and to follow up by bringing any

by eliminating differences in the standard of documents produced

sense makes me feelstandardization and sharing of products leads to increased

issues to light and resolving them.

by individual departments and concisely summarizing issues foruncomfortable about certain

efﬁciency, but preferences and markets differ from one region to

Tatsuoka: Ultimately, the Company’s greatest asset is its people.

discussion in terms of where they arose, their background, howmatters or developments. I

another, so localization will also be required to some extent.

What’s struck me about the Company’s corporate culture is its ethos

they were handled, and the efﬁcacy of the measures taken. With

approach my role with the

Therefore, it will be necessary to ﬁnd the right balance betweenof striving to achieve targets—even those that appear ambitious—

regard to important topics for discussion, when there are mattersattitude that it’s important tostandardization and localization through trial and error. Meanwhile,by starting with the target itself and backcasting from there toover which opinions are divided at the Internal Board of Directors

maintain a balance between

as everybody’s pointing out, the biggest issue is human resources.

identify the required actions. I’ve realized that this ethos is not just(the body that deliberates on matters for discussion prior todeepening my understanding

In particular, as we learned through the Company’s experience inempty words, but an approach that has permeated through to every

meetings of the Board of Directors), if the points of contentionof the Company and retaining

Eastern Asia, when embarking on a phase of accelerated store

single employee. Meanwhile, the Company, for its part, appears to

could be clearly set out for the Board of Directors, the decision-

openings, a system is required to prevent a mismatch between thevalue its human resources because it invests a considerable amountmaking process up until that point would be easier to understand.

capabilities of the human resources and the store opening plans.

in people, including sending them to seminars in the U.S. On the

Meanwhile, from a risk management perspective, if reports couldAnd, when expanding into new regions, it’s important to have theissue of creating empowered environments, I believe that employees

be made to the Board of Directors not only after incidents havenecessary operating foundation, including standardized

can maintain their motivation and work energetically if theyoccurred, but whenever there are risks, or signs of risk, relating to

infrastructure for IT and operations, so a proper strategy needs toexperience three feelings simultaneously. These are: (1) the feeling

any aspect of the company’s management over the mid to long

be worked out alongside opening stores. When developing supplyof achieving self-fulﬁllment and personal growth, (2) the feeling ofterm, I think such risks could be averted by receiving usefulchains in each region, it’s important to ensure their resilience inbeing connected to the Company’s business performance andopinions and comments from outside directors with abundant

light of the risks in each country and region. The Company must

growth, and (3) the feeling of being connected to social contribution

experience in a wide array of ﬁelds.

make arrangements to monitor supply chains’ sensitivity toby providing enriched lifestyles to people around the world. As the

Suzuki: The documents provided to the Board of Directors havegeopolitical risks and situations systematically and continuously.

underlying infrastructure is already in place, including the corporate

improved, and the volume of documents is now at the right level,

culture and provision for training, I think the Company should seek

but I would like even more to be done in this regard. As Mr. Andoa degree of vigilance with regard to its management.

Achieving Sustainable Growth and Enhancing
Corporate Value for the Company
Could you tell us your thoughts regarding the risks associatedwith globalization and entry into markets overseas?

Ando: In addition to the time it takes for forays into overseas
markets to turn a proﬁt, companies are reluctant to waste theinvestments they’ve already made, so many ﬁnd it difﬁcult towithdraw. To avoid that from happening, I think it would be better todecide in advance the timing for reviews of Company’s policies on
withdrawing or temporarily pausing. The Company should also
make strategic preparations to develop human resources who canwork effectively in the global arena, in line with its future plans forentering new markets. And another important thing is to conduct
exhaustive local marketing in advance.
Suzuki: Although the Company still has scope for growth within
Japan, future expansion overseas is unavoidable, and I believe thatmaking inroads in Eastern Asia and the ASEAN nations isparticularly important. In Eastern Asia, the Company already has
experience of opening stores, so it has accumulated know-how, but
in new regions such as the ASEAN nations and Europe, where it
hasn’t yet opened any stores, it will be important to take full stock of
local circumstances, and work out how to deal with them. Suchcircumstances could include internal affairs, politics and economics,
living conditions, and feelings toward Japan. The Company should
then devise comprehensive plans for entering each market,
including development of distribution networks and IT infrastructure.
For example, the key to accelerating store openings in Eastern Asia
is human resources development targeting middle-ranking
executives, and when opening stores in Europe and the ASEAN
nations, it will be difﬁcult to achieve adequate results without ﬁrst
establishing a system for educating human resources, which should
include identifying the skills required and developing local
employees. When doing business with local suppliers as well, I
think the Company needs to gather information about the conditions
in each country or region, whilst also taking the SDGs into account.
Tatsuoka: When expanding overseas, alongside discussing thepolicy regarding which regions should be targeted, it’s also
necessary to consider how to build the Company’s brand image
55

employees requires it to think about their terms of employment and

Could you tell us your thoughts on creating empowered work environments
and promoting diversity from the ESG and SDG perspectives?

to make further progress in this regard. Moving on to diversity, it

said, it’s probably necessary to share information about theseems to me that the point is not to hold discussions withinprocess of internal decision-making, such as the points ofAndo: To create empowered work environments, the Company

formalized frames of reference deﬁned by gender and nationality.

contention when there’s disagreement at the Internal Board ofneeds to implement tangible measures, such as expanding telework

Instead, surely, what changes the status quo and leads to innovation

Directors. And I’d suggest that topics discussed at Audit andby pursuing DX and creating an environment in which employees canis the process whereby contact between human beings of various

Supervisory Committee meetings should also be reported to theuse satellite ofﬁces, although in essence it’s the intangible aspect—types triggers a chemical reaction. As implied by the saying “twoBoard of Directors, although not necessarily every time.

people—that’s more important. I think that further enhancing theheads are better than one,” it’s important for people with a variety of

Tatsuoka: While it’s a plus that the skills and perspectives offerededucation provided to executives to cultivate respected individuals

attributes and backgrounds to come into contact and react againstby the directors are becoming more diverse, I also see a need towho can raise the morale of their teams will do more to empowereach other. The Company already appears to have the foundations

review how deliberations are conducted in future so that discussions

employees than providing the right physical environment.

of a corporate culture that allows employees to constantly interact

don’t lose focus as a result of the increased number of Board

Suzuki: I feel that ESG and SDGs related initiatives initially had aand produce an effect that was not expected and clash over theirmembers compared with a few years ago. For complicated matters,

strong air of being responses to external pressure from Europe andapproaches, so it just needs to do more to cultivate this culture.

it would be advisable to provide fuller explanations prior to Board
meetings, reducing the time spent explaining agenda items during

the U.S., rather than being something inherently Japanese. Recently,
Could you tell us your thoughts on further strengthening theCompany’s corporate governance?

meetings as much as possible, to ensure more time to engage inhas grown at the Company too: for instance, it established theAndo: I have a high opinion of the Company’s Board of Directors,

diversity, I think we need to avoid running meetings the same way

Sustainable Development Goals Promotion Ofﬁce as a newwhich holds very lively discussions, even in comparison with other

we’ve always done, and instead embrace further reforms.

however, the idea that it’s normal for companies to engage with ESG
and SDGs has become more prevalent. Awareness of ESG and SDGs

actual discussion. In order to maximize the beneﬁts of greater

department to play a role
within the wider society as ameans of contributing as acompany. To produce results,
however, it’s necessary for not
only senior management, but
all employees, to be ESG and
SDGs aware. Moving on to theissue of creating empowered
workplaces, the Company’s
employment of a very large
number of part-time

Tsuneyoshi Tatsuoka
Outside Director and Audit andSupervisory Committee Member,
NITORI Group56

NITORI Group’s Sustainability

NITORI Group’s

E SGMateriality 7

The Aspirations of Newly Appointed Directors

Effective corporate governanceDirectors (As of May 13, 2021)
Directors
Akio Nitori

Toshiyuki Shirai

Fumihiro Sudo

Representative Director &Chairperson (CEO)

Representative Director &President (COO)

Director, Executive Ofﬁcer &Vice President

Fumiaki Matsumoto

Masanori Takeda

Hiromi Abiko

Director, Executive Ofﬁcer &Vice President

Director
General Manager of Global
Merchandising Division
General Manager of Global
Sales Promotion Ofﬁce
In charge of Overseas Sales
Business

Takaaki Okano

Takao Kubo

Director

Director

Director
General Manager of HR
Education Division

Member of Audit &Supervisory Committee(Full-time)

Hiromi Abiko

Takaaki Okano

Naoko Yoshizawa

Director
General Manager of
HR Education
Division

Director

Director

I am very pleased to have recently
assumed the position of director at NITORI
Holdings. For more than 30 years I havebeen involved in the development of
coordinated products, as well as in creating
systems for delivering coordination-related
education and in-house training on chain
store theory. Over the past ﬁve years I havebeen working within the ﬁeld of coordinatedproduct development on product branding,and I served as manager of the PlanningGroup Merchandising Division. This year, I
was appointed as president of NITORI
University and general manager of the HR
Education Division. I intend to apply myknowledge and experience to the humanresources development ﬁeld in order topromote education that enables employees
to become who they want to be, and to put
NITORI’s excellent corporate culture (theNITORI Way) into words as a means to
educate employees. I will dedicate myself asa member of the Board of Directors to enable
the Company to enhance its corporate value
sustainably. I look forward to serving theCompany.

* Independent Outside
Director

I am very pleased to have recently
assumed the position of director at NITORI
Holdings. For the past 18 years I haveworked in furniture and home improvement
retail. During the last seven years I was a
director at SHIMACHU responsible for theadministrative divisions of Human Resourcesand General Affairs and following a stint as
general manager of the Sales Division, I
served as representative director. I intend to
apply my knowledge and experience topromote NITORI Group’s comprehensive
lifestyle suggestions, including those in thehome improvement ﬁeld. I will dedicate
myself as a member of the Board of Directors
to enable the Company to enhance its
corporate value sustainably. I look forward toserving the Company.

I am very pleased to have recently
assumed the position of outside director at
NITORI Holdings. For more than 30 years I
have worked on projects with IT vendors
inside and outside Japan in ﬁelds including
development of databases, cell phones,
smartphones and AI business. During thepast few years in particular, I havechallenged myself to broaden my horizons bystarting up a new IT business overseas andproviding advisory services to venturecompanies in Japan, among otherendeavors. I intend to apply my knowledge
and experience to help make digitaltransformation a reality at NITORI Group. I
will dedicate myself as a member of theBoard of Directors to enable the Company toenhance its corporate value sustainably. I
look forward to serving the Company.

Skills Matrix
Independent Outside Directors
Sadayuki Sakakibara
Director* Independent Outside Director

Of the skills, etc. held by each Director, maximum of seven main skills are marked with ●.
Yoshihiko Miyauchi
Director* Independent Outside Director

Naoko Yoshizawa

Title

Akio Nitori

Representative
Director & Chairperson(CEO)(Chairperson)

●

●

●

Toshiyuki Shirai

Representative
Director & President
(COO)

●

●

●

Fumihiro Sudo

Director
Executive Ofﬁcer &Vice President●●

FumiakiMatsumotoDirector
Executive Ofﬁcer &Vice President●* Independent Outside Director

Masanori Takeda

Director●

Member of Audit &Supervisory Committee

Hiromi Abiko

Director

Takaaki Okano

Director

Sadayuki
Sakakibara

Outside Director●●

Yoshihiko
MiyauchiOutside Director

●

●

Naoko
Yoshizawa

Outside Director●●

Takao Kubo

Full-time Member of Audit &Supervisory Committee

Director* Independent Outside Director

Takaharu Ando

Kazuhiro Suzuki

Tsuneyoshi Tatsuoka

Director* Independent Outside Director

Director* Independent Outside Director

Director

Member of Audit &Supervisory Committee

Member of Audit &Supervisory Committee

Executive Officers
Executive Vice Presidents

Senior Executive Officers

Executive Officers

Fumihiro Sudo / Fumiaki Matsumoto

Naoshi Takei / Manabu Nakamura /Hiroshi Nagai / Kazuyuki Hashimoto /Isao Arai / Tsuyoshi Okamura / Junichi
Yoshima

Akio Igarashi / Hidetoshi Kobayashi / Tadashi Kudo / Soichi Oda / Eri Ablet / Hiroki
Murabayashi / Kunihiko Takahashi / Yoshihisa Sato / Nobuyuki Tomii / Toshinao
Matsushima / Ei Sugiura / Harumi Sawai / Akihiro Kushida / Kenichiro Aoya / Shigeyuki
Kushida / Koichiro Oshima / Tadahiro Hosokawa / Kazuya Orimoto

Managing Executive Officer
Mitsuru Ohki

Independent

Nominating
Corporate
andCompensation Management Product Development Production
Coordination
Quality Control
Committee Management
Strategy

Name

●

●

Kazuhiro Suzuki

Outside Director

Member of Audit & Supervisory
Committee●●

Tsuneyoshi
Tatsuoka

Outside Director●●

Member of Audit & Supervisory
Committee

57

●
●

●
●

●

●

●

●

●

●

Overseas
Business
Strategy●●●

Rejecting Status
Organization &QuoLegal Affairs
HR
Changes &HR Development Risk Management
Challenges

●

●

●

●

●

●

●

●

●
●

●
●
●

Finance &Accounting
TaxationInternal Control
Governance

Sustainability
SDGs

●
●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

Director

Member of Audit & Supervisory
Committee (Chairperson)

DX Promotion Sales Planning Macroeconomic
IT & Information Store-opening & International
Communications
PolicySituation●

Outside Director

Takaharu Ando

Knowledge and experience the Company expects of Directors
Logistics &Trading
Procurement

●
●

●
●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

●

58
Chaiperson

NITORI Group’s Sustainability

NITORI Group’s

Sustainability Data BookE SG

Materiality 7

Materiality 1 Contribution to enriched lifestyles by “offering the unexpected”

Effective corporate governance

NITORI Group places the highest priority on resolving customers’ frustrations and inconveniences, and continues to pursue what is useful,always from the perspective of our customers. Taking advantage of our business model that integrates manufacturing, distribution, IT, andretail, we will not only maintain affordability and appropriate quality but also offer products and services that live up to the concept of “offering
the unexpected,” allowing everyone to enjoy coordination. As we work to be conducive to customers’ convenience and comfortable lives
through those products and services, we hope to further contribute to enriched lives of customers by creating and providing unprecedented,
new value that also leads to solutions to environmental and social issues.

Executive compensation system

Performance-based
compensation
31.8% *

Performance-based stockcompensation(medium- to long-term incentives)

Basic compensation
68.2% *

Performance-based monetarycompensation(short-term incentives)*The ratio is based on a pay structure where
basic compensation accounts for 75% andshort-term incentives 25%, and medium- tolong-term incentives are 10% of a cumulative
total of compensation for the relevant two fiscal
years.25%, and medium- to long-term incentives
are 10% of a cumulative total of compensation
for the relevant two fiscal years.

Calculated based on the achievement of thetargets for the Company’s performance, suchas consolidated net income, for the target
period of every two fiscal years. Variable
between 0% and 200% of the basic amount ofstock granted to each executive director.

Calculated based on the achievement of thetargets for the Company’s performance, suchas consolidated operating income, for eachfiscal year. Variable between 0% and 150% of
the standard amount for each executive
director.
Compensation for non-executive directors, inprinciple, consists of fixed basic compensation. Performance-based compensation as
short-term or medium- to long-term incentive is
not provided for non-executive directors.

Basic compensation

Performance-based stock compensation system
Medium- to long-term target period of two fiscal years+ Continue to hold the stock for three more years

Achieved
Up to 200%

Not achieved
Down to 0%(1) Set numerical targets

Performance Share Unit
To strengthen the link between thecompensation structure and medium- tolong-term increase in corporate value, theCompany has adopted a performance-based
compensation system (Performance Share Unit)
in which compensation is provided in accordancewith the achievement of medium- to long-term
performance targets.

59

NITORI Group always has the customer’s perspective and recognizes its social responsibility to contribute to safe and secure lives ofcustomers, not to mention offering products with stable quality at affordable prices. We work to improve quality and ensure safety at all times,
so that customers can use our products safely and with peace of mind.

Materiality 3 Promotion of environmentally conscious business
To prevent its business expansion from increasing environmental impact not only within the Company but also throughout the entire supply
chain including suppliers, NITORI Group strives to be environmentally conscious at all times by saving resources and energy. In addition, we
aim to promote initiatives that conserve and improve the environment through business and to contribute to the creation of a better
environment.
Response to climate change

Effective use of resources

We recognize a range of risks caused by the impact of climatechange, and by taking advantage of our unique business model, work
to optimize all stages of our supply chain to improve efﬁciency and thelevel of optimization. We thereby reduce CO2 emissions and mitigate
the impact of climate change. Going forward, we will work to disclose
information in accordance with the Task Force on Climate-related
Financial Disclosures (TCFD).

As a company that manufactures and sells a wide range of products fromlarge furniture to fabric products (bedding, curtains, etc.), hard products
using metal and plastic, and accessories (tableware, etc.), we regard it our
corporate responsibility and an important mission to recognize the ﬁnite
nature of resources, especially timber, and address the sustainability ofresources. We strive to reduce the amounts of resource use and waste in the
product life cycle by making full use of resources, without wasting, andpromoting recycling through effective use of recycled materials.

Energy use

Prevention of air and water pollution

We recognize the ﬁnite nature of energy essential for our businessactivities, and by taking advantage of our unique business model,
work to improve efﬁciency of and reduce energy use throughout theentire supply chain. In addition, we contribute to the reduction ofenergy use in customers’ everyday lives by developing and selling
environmentally friendly functional products.

Both our own factories and suppliers not only ensure comprehensive
quality control in the product manufacturing process but also work to protect
the environment by preventing and reducing air and water pollution, as wellas thoroughly controlling chemical substances.

CO2 emissions from NITORI Group’s domestic operations

Greenhouse gas emissions from domestic operations calculated based on the Basic Guidelines on Accounting for Greenhouse Gas Emissions
Throughout the Supply Chain
Domestic operations: Stores (NITORI, Deco Home), Head Ofﬁce (Sapporo Head Ofﬁce (including Nitori Asabu store), Tokyo Headquarters (including
Nitori Akabane store)), and distribution bases (distribution centers, sales ofﬁces)

Strive to achieve the targets
Met targets
100%

Materiality 2 Product safety and security through comprehensive quality control

Encourage further efforts to increase stock price(corporate value)(2) Grant common shares

Restrictions on transfer
after delivery

Clawback provisions

To promote medium- to long-term proﬁt sharing
with shareholders, the Company’s shareholding
guidelines set forth that a three-year restriction
shall be imposed on the transfer of stock granted
as performance-based stock compensation.

The Company’s shareholding guidelines set
forth that the Company may request an eligible
director to return the incentives (clawback) if
misconduct or illegal conduct causes a material
breach regarding ﬁnancial reports.

Unit: (t-CO2e)

CO2 emissions from domestic operations

FY2018FY2019FY2020 *3

Scope 1 (t-CO2e)

Total

50,60550,192

57,567

Direct emissions from the use of gas, kerosene, and diesel oil

Stores49,341

48,80756,294(Amount of energy (gas, kerosene, and gasoline) use) × (CO2emissions unit by type of energy)

Head Ofﬁce, etc.

665

757

676

Distribution bases

599

628

597

Scope 2 (t-CO2e)*1

Total

107,651

101,858

110,336

Indirect emissions from electricity use

Stores93,58187,85495,432(Amount of electricity use (kWh)) × (Emission factors byelectricity supplier)
Total of CO2 emissions associated with energy use*2
CO2 emissions per 100 million yen of net sales in Japan

Head Ofﬁce, etc.

3,232

3,241

3,144

Distribution bases

10,838

10,763

11,760158,256

152,051

167,903

34.5

29.6

29.4

*1 Scope 2 emissions were calculated by multiplying CO2 emissions from electricity purchased from other companies by emission factors byelectricity supplier (emission factors after adjustment), based on the Global Warming Countermeasures Act.
*2 CO2 emissions associated with energy use represents the total of Scopes 1 and 2.
*3 Energy use in summer and winter temporarily increased for FY2020 to maintain a comfortable room temperature while ventilating the stores toprevent COVID-19 infection.

60

Sustainability Data Book
Energy use (gas, kerosene, gasoline, diesel oil, and electricity) in NITORI Group’s domestic operations
Energy use in domestic operations

FY2018

Gas use (m3)

FY2019FY2020 *10,798,550
10,407,555
220,929
170,066

10,425,022
10,083,236
182,575
159,211

14,614,443
14,258,976
203,780
151,687

2,357

2,075

2,120

Distribution bases

612,514493,570
19,276
99,668616,443
491,646
20,952
103,845

571,443436,21232,514
102,717

Use of kerosene, gasoline, and diesel oil per 100 million yen of net sales in Japan (ℓ)

134

120

100

223,576,423
194,765,535
6,505,895
22,304,993

227,178,208
196,247,241
6,912,682
24,018,285

248,878,442
215,045,734
6,807,994
27,024,714

48,80544,29343,510Total
StoresHead Ofﬁce, etc.
Distribution basesGas use per 100 million yen of net sales in Japan (m3)
Use of kerosene, gasoline, and diesel oil (ℓ)

TotalStoresHead Ofﬁce, etc.

Electricity use (kWh)TotalStoresHead Ofﬁce, etc.
Distribution bases

Electricity use per 100 million yen of net sales in Japan (kWh)Past initiatives to reduce CO2 emissions and energy use at domestic sites
FY2013: Introduced LED lighting for new stores. Started replacing lighting of existing stores with LED lighting and reducing electricity use by demand control.
FY2015: Completed the introduction of LED lighting at four distribution centers.
FY2018: Introduced smaller company cars for stores (energy saving by improving safety, fuel efﬁciency, and store operation)*Energy use in summer and winter temporarily increased for FY2020 to maintain a comfortable room temperature while ventilating the stores toprevent COVID-19 infection.

Amount of waste from NITORI Group’s domestic operations
Amount of waste disposed of from domestic operations
Amount of waste (t)Total
Plastic
Polystyrene
Cardboard*
General waste, etc.

Amount of waste per 100 million yen of net sales in Japan (t)FY2018FY2019FY202085,0994,945
605
39,72039,82988,823
5,248
522
40,83542,21890,0285,119
350
42,64841,911

18.6

17.3

15.7

Past initiatives to reduce the amount of waste at domestic sites
FY2013: Reduced the use of packaging materials by downsizing product packaging.
FY2017: Reduced the use of polystyrene by changing product packaging materials.
FY2020: Used stretch ﬁlm, left after transportation, was recycled into garbage bags by a subcontractor and utilized at some of our sites.
*We recycle cardboard into secondary materials in collaboration with subcontractors.

Materiality

NITORI Group aims to train true specialists who can contribute to society, enhances human resources through transfer-based educationthat covers an extensive range of business ﬁelds, and creates an organization with a wealth of elites. In addition, we aim for a comfortableworkplace environment where all Group employees feel empowered and respect each other’s personalities. To this end, we strive to respecthuman rights (prohibit forced labor, child labor, and discrimination, etc.) and maintain an appropriate work environment (prevent overwork,
ensure more leave than statutory requirements, pay statutory minimum wage, ensure workplace safety, create a comfortable workplaceenvironment where employees work in good health, etc.).
Anti-discrimination

NITORI Group respects basic human rights and diversity of all people concerned and neither engages in nor encourages any discriminatory evaluationor human rights violations based on race, ethnicity, skin color, faith, religion, sexual orientation, gender, pregnancy, nationality, social status, age,birthplace, lineage, mental or physical disability, military service record, or other characteristics protected by laws and regulations or rules of each country
and region.

Employees’ freedom of association and right to collective bargaining

In accordance with international standards, NITORI Group respects employees’ basic rights, including freedom of association and right to collective
bargaining.

Personnel Data
Employee data

FY2018FY2019FY2020

Diversity & Inclusion

FY2018FY2019FY2020

Number of full-time employees
Percentage of women (%)

4,688
27.2

4,965
31.8

5,300

Childcare leave, childcare leave forpartners

139

152

152

Number of employees
Percentage of women (%)

31,031
63.1

33,055

Shorter working hours (pregnancy,
childcare, nursing care)

145

144

190

63.4

34,56464.1

4,688
26,343

4,965
28,0905,300
29,264FY2018FY2019FY2020

1,169

1,134

−

Type

Regular employment
Non-regular employment

Global human resources strategy
Number of participants in U.S.
seminars
Gender

29.5

Male

740

728

−

Female

429

406

−

*Cancelled for fiscal 2020 due to the COVID-19 pandemic

Training Hours Data
FY2020Total training hours

8

10

7

Percentage of paid leave taken (%)

Nursing care leave

85.1

87.5

84.3

Average overtime hours(hours per month)

20.4

16.7

16.2

Women in management positions
Percentage (%)
Number

12.8
286

13.4
305

13.7
344

New graduate women hired
Number

42.2
227

47.8
277

45.1
233

Percentage of employment of persons
with disabilities (%)

2.52

2.85

2.7

*Total numerical values of NITORI Holdings, NITORI, Home Logistics,
Nitori Facility, and N+

59,124*Calculated by multiplying training hours per session by the number of times training sessions were held

4

Fair and honest trade and respect for human rights in the supply chain

Affordability, quality, and coordination are considered most important in NITORI Group’s manufacturing. Quality means that thoroughmeasures are taken to ensure, from the customer’s perspective, appropriate functions and product safety, and that products are made throughthe correct manufacturing process (in terms of sincerity, respect for human rights, compliance, occupational safety, environmental protection,etc.). We ask suppliers, who are our partners in achieving the mission, to not only comply with laws and regulations but also establish what we
consider as true partnerships with us. Together, we will achieve sustainable growth throughout the entire supply chain.
True partnership(1) A relationship where both sides learn about the latest topics, including those relevant to corporate management, share the knowledge and work hard together.
(2) A fair, honest, highly transparent, and open relationship where both sides can engage in active exchange of opinions.
(3) A relationship where both sides share not only ideas and management methods for the creation of a culture of product safety but also the importance of fulﬁllingsocial responsibilities, such as being environmentally conscious*1, respecting human rights*2, and maintaining an appropriate work environment*3 and grow together
to achieve the mission. To share such information, we conclude contracts that comply with our “Basic Entrustment Contract for Product Manufacturing” and “Quality
Assurance Manual.”*1 Being environmentally conscious in accordance with NITORI Group’s Environmental Policy*2 Prohibition of forced labor, child labor, and discrimination, etc.
*3 Preventing overwork, ensuring more leave than statutory requirements, paying statutory minimum wage, ensuring workplace safety, maintaining a
comfortable workplace environment where employees work in good health, etc.

Suppliers’ rights to organize

We respect basic rights, including the right to establish a labor union, and strive to resolve issues through consultation and dialogue.

Related link: Business Partner Charter (NITORI Holdings website)

Materiality 5 Contribution to local communities

61

Materiality 6 Creation of a rewarding work environment and promotion of diversity

NITORI Group takes action to be indispensable to local customers by contributing to local communities as a mission of chain stores, suchas ensuring stable supply of affordable products essential in daily life, creating local employment, and being environmentally conscious.

Materiality 7 Effective corporate governanceTo achieve its grand mission and vision, NITORI Group works to respond to requests from all people involved in the Group’s businessactivities, builds trust-based relationships with them, enhances compliance systems, and aims for mutual prosperity.
Trust-based relationship

Shareholders and investor relations: To meet the expectations and trust of our shareholders and investors, we aim for stable growth and increase incorporate value. We will strive to promote understanding about corporate management and business activities through appropriate investor relations
activities. Furthermore, our Board of Outside Directors will actively exercise its monitoring function for sound management. In addition to fulﬁlling statutory
requirements for the disclosure of company information, we will actively publish accurate information in a way easy to understand to familiarize people
with NITORI Group.

Business partners

In rolling out our global sales strategy with the support of customers, we always maintain equal relationships with all business partners and strive forfair trade, thereby building relationships based on mutual trust and working together as trusted partners for the business development on both sides.

Local communities and next generations

We not only comply with local laws in all countries and regions around the world but also respect local customs and cultures to gain trust. As the world
faces a range of social issues, including those concerning health, healthcare, food, the environment and climate change, energy, safety, disasterprevention, and equality between people and genders, we strive for sustainable economic growth and resolution of social issues to achieve SDGs as amember of international society.
We take action to be indispensable to local customers by contributing to local communities as a mission of chain stores, such as creating local employment and being
environmentally conscious.
The environment, as well as local cultures and customs, will be taken into consideration in global business development. We thus contribute to each country and region’s
development.
We will achieve our corporate philosophy of enriching homes around the world, while not only complying with laws of each country and region but also taking into
consideration the environment, local cultures and customs, and the beneﬁt of all people involved in NITORI Group’s business activities.

Related links: Anti-corruption Policy, Global Tax Policy (NITORI Holdings website)
62

Financial & Company Data
Transition of Key Management Indicators*Fisical years ended February 20(Million yen)(Thousand USD)FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2020

¥

¥

¥

¥

¥

¥

¥

¥

¥

¥

716,900$ 6,780,481

Income/Loss
Net sales

331,016

348,789

387,605

417,285

458,140

512,958

572,060

608,131642,273

Gross profit

183,938

192,616

201,656

218,337

243,543

278,274

314,778

331,421354,364

411,791

3,894,743

Selling, general and administrative expenses

125,987

131,066

138,583

152,029

170,503

192,497

221,400

230,642

246,886

274,104

2,592,491

Operating income

57,951

61,55063,073

66,30773,03985,776

93,378100,779

107,478

137,687

1,302,251

Ordinary income

59,151

62,19563,47467,92975,00787,563

94,860103,053

109,522

138,426

1,309,240

Net income attribute to owners of parent

33,54835,811

38,42541,45046,96959,99964,21968,18071,395

92,114

871,225

Cash flow from operating activities

43,90841,98946,15452,92357,34377,93076,84081,664

99,337150,879

1,427,022

Cash flows from investing activities(22,925)(21,937)(32,376)(43,023)(35,899)(42,047)(82,751)(30,424)(44,486)(195,985)(1,853,643)

Cash flows from financing activities(16,099)(22,047)(10,540)(6,654)(9,943)(6,414)655(11,340)(13,862)

30,309286,672

Cash and cash equivalents at the end of the year

18,41016,816

21,17925,71336,794

66,03560,923100,053

140,791

125,487

1,186,865

Depreciation and amortization

8,456

8,227

8,850

8,921

9,398

10,406

11,357

12,311

14,57516,024

151,556

Capital expenditure

22,34825,70830,08345,033

26,60542,82864,172

32,237

26,191

22,323

211,136

Total assets

267,153284,290

321,703404,793414,541

487,814550,507619,286

683,247

927,048

8,768,070

Net assets

174,949

209,764

247,898

310,531

330,968

394,778441,668

500,192

560,861

681,857

6,449,045

Equity174,527

209,125

247,099

309,413329,695

393,693

440,991

499,721560,571642,096

6,072,984

Gross profit to net sales ratio(%)

55.6

55.2

52.0

52.3

53.2

54.2

55.0

54.5

55.2

57.4

57.4

SG&A expenses to net sales ratio(%)

38.1

37.6

35.8

36.4

37.2

37.5

38.7

37.9

38.4

38.2

38.2

Operating income to net sales ratio(%)

17.5

17.6

16.3

15.9

15.9

16.7

16.3

16.6

16.7

19.2

19.2

Rate of return on equity (ROE)(%)

20.9

18.7

16.8

14.9

14.7

16.6

15.4

14.5

13.5

15.3

15.3

Equity ratio(%)

65.3

73.6

76.8

76.4

79.5

80.7

80.1

80.7

82.0

69.3

69.3

Ordinary income to total assets ratio (ROA)(%)

23.0

22.6

20.9

18.7

18.3

19.4

18.3

17.6

16.8

17.2

17.2

Payout ration (consolidated)(%)

13.1

13.8

14.3

14.6

15.3

15.2

16.0

16.0

17.0

15.1

15.1

Price earnings ratio (PER)

11.2

10.6

13.3

20.2

19.4

22.7

30.7

23.1

26.1

25.7

25.7

Net income per share (EPS)(Yen,USD)

305.95325.83350.27376.14425.10540.93574.49608.05635.42817.01

7.73

Net assets ooer share (BPS),(Yen,USD)

1,591.64

1,906.91

2,248.80

2,806.99

2,981.27

3,530.51

3,938.89

4,452.99

4,984.29

5,691.11

53.83

40

45

50

55

65

82

92

97

108

123

1.16

57,221,748

57,221,748

57,221,748

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

114,443,496

6,850

6,890

9,340

7,600

8,260

12,25017,625

14,05016,56020,970198.34

391,968

394,258

534,451

869,771945,3031,401,933

2,017,067

1,607,931

1,895,184

2,399,880

22,698,194

Number of stores in Japan

258

286

312

346

383

428

467

505

545

651

651

Number of stores overseas

10

14

19

27

37

43

56

71

66

71

71

Net increase in number of stores

24

32

31

42

47

51

52

53

31

111

111

1,275,121

1,390,711

1,478,205

1,568,596

1,678,835

1,806,666

1,928,461

2,037,213

2,099,373

2,173,090

2,173,090

14,35815,272

16,88419,092

20,75922,111

24,81627,50629,936

36,66936,669Financial Position

Key management Indicators

Per Share Information

Dividend per share (Yen,USD)

Other Data
Number of shares issued at the end of the year
Stock price at the end of the year (Yen, USD)
Total market value

Total sales floor area ()

Total number of employees(Notes)1.The Company conducted a two-for-one stock split of its common shares effective February 21, 2014. The above per share information is calculated
under the assumption that the stock split was conducted at the beginning of FY2011.
2.Translation into US dollars has been made at the exchange rate of 1 USD to 105.73 yen.
3.The total number of employees includes the average number of temporary employees (calculated on the basis that one day is eight hours).

63

64

Financial & Company Data
NITORI Group’s Financial Strategy

activities came to (195.9) billion yen as a result of undertaking
the large M&A with SHIMACHU. However, we achieved a43.9 billion yen, but the equity ratio was 69.3%, maintaining alevel exceeding our target of 60%. I believe it is important tostable cash position, with cash and cash equivalents at theend of the year at 125.4 billion yen, thereby maintaining the
optimum level of two- to three-times monthly sales, which

continue paying attention to ensuring stable liquidity on handas we build and maintain solid ﬁnancial foundations to enable
us to invest for growth in a flexible manner.

serves as a guideline. Interest-bearing debt increased by

We will realize businessgrowth and maximize
corporate value throughappropriate capital
allocation

Year-on-year change in existing store sales

Store openings in fiscal 2020 and number of stores as ofthe end of fiscal 2020 in Japan and overseas

110.0 (%)

(Stores)

71
108.0

722
651

106.0

2

17

104.0

Masaomi Zenji

General Manager
Accounting & Finance Division

1.Results and financial policies in fiscal 2020

Q

65

What are the factors that enabled you to achieve sales and proﬁt growth for the 34th consecutive year despite
the COVID-19 pandemic?
In addition, you conducted a large-scale merger during ﬁscal 2020; has your ﬁnancial policy remained thesame since the merger?

61
Overseas 69

102.0

Asia
U.S.

2017

2018

2019

2020

2021

(FY)

106 Japan
450

NITORIDeco HomeSHIMACHUN+
EXPRESS

2.Store opening plans for achieving Vision 2022 and Vision 2032

Q

Please tell us about your store opening plans and the role of ﬁnance in achieving a store network of
1,000 stores and net sales of 1 trillion yen by 2022 and 3,000 stores and net sales of 3 trillion yen by 2032.

During ﬁscal 2020, the COVID-19 pandemic (“thepandemic”) raging all over the world had a major impact on
NITORI Group’s business. The declaration of the ﬁrst state ofin the second quarter. I believe that our achievement of sales
and proﬁt growth for the 34th consecutive year is the result of
more widespread customer recognition of our stores as

In ﬁscal 2020, we added 50 more stores in total, comprising

20 NITORI stores, 12 Deco Home stores, 13 N+ stores and 5
stores in Asia. And as a result of adding SHIMACHU to therequired to open these stores, both in Japan and overseas, inﬁscal 2021. Based on ﬁscal 2020 results we haveapproximately 150.0 billion yen of annual operating cash flow;

emergency in Japan resulted in difﬁcult business conditions
that required us to temporarily close or reduce opening hours
at some of our stores. Under such circumstances, we
implemented a variety of anti-infection measures to combat

destination stores, and of the progress NITORI Group has
made toward growth by working as one to achieve our longterm vision.
In terms of proﬁts, our ordinary income margin improved byGroup as a consolidated subsidiary, the number of stores for
NITORI Group as a whole increased by 111 to 722 stores.
With regard to our plans for opening new stores within
Japan, for the past few years we have curbed store openings

we are able to ﬁnance the cash conversion cycle using funds
in hand, as our business model is based on a relatively shortcycle.
As we work toward our target of 3,000 stores in 2032, wethe pandemic and continued operating, highly aware of ourrole as part of the social infrastructure responsible for reliably

2.2 percentage points to 19.3%. In addition to the higher sales,
our continuous efforts to lower costs also contributed to thisin light of rising construction costs, but in ﬁscal 2021 we will
accelerate our store openings again. We are planning a total

supplying daily essentials. As a result, we were able to capture
increased demand for furniture and interior products resulting
from so-called stay-at-home consumption and theestablishment of the “new normal” way of life that involved

increase. Such efforts included standardization of raw
materials and improvement of production processes throughcooperation with overseas suppliers. Meanwhile, most of
NITORI Group’s procurement comprises imports denominatedof 85 new stores, comprising NITORI, Deco Home, and N+
stores. Meanwhile, NITORI (CHINA) HOLDINGS CO.,LTD,
during the past two years of strengthening our foundations, werebuilt our systems, while bolstering our organization andwill continue to consider M&A in the clothing, food, andhome-related domains as an option. When undertaking such
M&A, it may be necessary to procure external funds,

spending more time at home than before, and our sales grewsigniﬁcantly. Sales in our e-commerce business also achievedin U.S. dollars, meaning that fluctuations in the dollar-yen
exchange rate present the risk of variable proﬁts. During ﬁscal

human resources. Currently, the business is performing welland we are planning 14 store openings for ﬁscal 2021. As ofsubstantial growth, increasing to 159.2% of the previous year’s
ﬁgure as a result of our efforts to enhance services, aligningthem more closely with customers’ needs. Existing store sales
for the year as a whole were 110.4% of the previous year’s
ﬁgure, while consolidated net sales for ﬁscal 2020 came to2020, however, our success in conducting adequate currency
hedging using forward exchange contracts was another factor
contributing to proﬁt growth.
The basic policy underlying NITORI Group’s ﬁnancial
strategy is to strive to ensure stable liquidity on hand, while

NITORI TAIWAN CO.,LTD, we are planning seven store
openings, the most ever, and we are also planning to open two
stores in new areas in Southeast Asia. We are planning a totalof 110 new store openings in ﬁscal 2021, including locations in
the U.S., and SHIMACHU outlets. We will continue actively

716.9 billion yen. We therefore managed to exceed even theconsidering the balance between investment for growth andopening stores, targeting 1,400 stores in 2025.

sales forecast that we had revised upward to 702.6 billion yen

shareholder returns. In ﬁscal 2020, cash flows from investing

depending on the scale. We will consider a range offundraising methods that enable us to respond flexibly tochanges in the interest-rate environment. Whilst striking abalance between ensuring stable fund procurement andkeeping procurement costs down, we will also take into
account compatibility with our overall capital structure tobalance long-term funding with short-term funding, and indirectfund procurement with direct fund procurement. I think that,
depending on the situation, it may be necessary to develop a
ﬁnancial strategy involving greater ﬁnancial leverage, while
also taking our capital structure into account.

We also plan to continue using internal funds for the funds

66Financial & Company Data
NITORI Group’s Financial Strategy

3.Investment for growth

Q

Please tell us about the ﬁnancial impact of turning SHIMACHU into a consolidated subsidiary and the postmerger integration that will enable SHIMACHU to contribute to proﬁts.

As a result of this business combination, the Company
incurred approximately 165.0 billion yen in outgoings for ﬁscal

With regard to the management integration withSHIMACHU, we set up the Integration Promotion Committee

2020, but as the Company held more than 140.0 billion yen in
cash at the end of ﬁscal 2019, it has been able to maintainsolid ﬁnancial foundations, having ensured stable liquidity on

to rapidly achieve synergies. We are undertaking numerous
speciﬁc tasks in this regard, including revising ourhand by borrowing only 46.0 billion yen in short-term funds
from a ﬁnancial institution. In ﬁscal 2021 we are planningapproximately 50.0 billion yen in outgoings for the procedures
necessary to make SHIMACHU a wholly owned subsidiary.
However, in a situation where the end of the pandemic deﬁes
prediction, we plan to raise around 100.0 billion yen in funds inorder to strengthen our ﬁnancial foundations further to guard
against sudden changes in the business environment.

organizational structure, introducing NITORI products in
SHIMACHU stores, developing a PB for SHIMACHU products,
unifying operations by integrating the two companies’
distribution functions, creating systems for product supply andstore operations, and opening a combined SHIMACHUNITORI store. We already achieved some of these tasks, andwe will continue working on them with a sense of urgency.
In other investment plans unrelated to store openings, weare also implementing plans such as the following:

Increasing production sites (Vietnam)
In addition to the existing furniture business, we also expanded our factory capacity ahead of the launch of the fabricbusiness. Over ﬁscal 2019 and ﬁscal 2020 we invested approximately 5.0 billion yen, and we expect our ﬁnal total investment
to amount to approximately 6.0 billion yen. Our new factory has already started operating, and we plan to be able to ship
products in ﬁscal 2021. Through investments of this kind we are pursuing vertically integrated merchandising in order toprovide low prices and appropriate quality.
Building an optimal distribution center network (Japan)
As of February 2021, NITORI Group is using 20 distribution centers. However, these are not optimally located, requiring
distribution between centers which leads to increased costs. Therefore, by relocating these distribution facilities to optimal
locations, we will be able to reduce distribution expenses. In addition, we are currently renting most of our distribution centers,
making it impossible to install large materials handling equipment. However, by managing these centers ourselves it will makeit possible for us to install the necessary materials handling equipment, which will lead to reduced distribution expenses anda higher ratio of operating income to net sales as a result of improved operational efﬁciency. We already started making plansin this regard and we expect to bring the plans to fruition by investing approximately 200.0 billion yen in total by 2025. Ourbasic assumption is that we will cover this amount with internal funds.

4.Capital efficiency

Q

67

Could you tell us how you were able to undertake investment for growth and improve capital efﬁciency at thesame time?

NITORI Group is still growing and we are focusing our cash
allocation on investment for growth. I think it is important toactively invest in a growth strategy that will contribute tosustainable enhancement of corporate value as we work

As one of the KPIs used to gauge capital efﬁciency, ROE is
a comprehensive indicator covering proﬁtability, asset
efﬁciency, and ﬁnancial leverage. We analyze ROE as one ofour management indicators, bearing in mind the cost of capital.

toward our targets of 3,000 stores and 3 trillion yen in net
sales in 2032.

NITORI Group has maintained a constant ROE target of 15%
or higher. We have achieved this target, since our ROE

reached 15.3% in ﬁscal 2020, and averaged 15.1% over the
past ﬁve years. One reason why we have managed to keep
ROE at a high level is that we continuously strive to increaselevel, as stable. I believe that keeping our proﬁt volatility low,achieving sales and proﬁt growth for 34 consecutive years,
and maintaining continuous business growth, have all

our gross proﬁt margin. Gross proﬁt is the highest level of
proﬁt, and our continuous improvements and reforms with

contributed to keeping our risk premium down. We willcontinue to undertake continuous improvement and reform toregard to gross proﬁt are a factor helping us to achieve a highlevel of capital efﬁciency on a stable basis. Furthermore, we
regard NITORI Group’s capital cost, which is at the 4%-5%keep capital cost at this level.

5.Shareholder returns

Q

With regard to shareholder returns, does your basic policy of paying a stable dividend, while also balancing thiswith investment for growth, remain unchanged?

Our basic policy for shareholder returns will be to maintainstable dividends while taking into account factors such as the
future growth potential and proﬁtability of our business,ﬁnancial soundness (i.e., cash generated, cash and deposits
held, and the level of our equity ratio), investments undertaken,
and capital efﬁciency. As part of our efforts to return proﬁts toshareholders, we increased the annual dividend per share forﬁscal 2020 to 123 yen, 8 yen higher than the most recent
dividend forecast of 115 yen. This means we increased ourdividend by 15 yen from the previous year, marking 17
consecutive years of increased dividends. For ﬁscal 2021 weare planning to pay an annual dividend of 140 yen per share; if
we achieve this, it will be our 18th consecutive year ofincreased dividends.
I believe it is important for NITORI Group, which is still
growing, to prioritize investment for growth in order to boost its
EPS and sustainably enhance its corporate value as a meansof improving TSR (total shareholder return) from an all-roundperspective.
NITORI Group will continue aiming to be trusted bystakeholders as it combines continuous contribution to societal
development with efforts to enhance its corporate value. We
ask for shareholders’ continued support as we pursue theseendeavors.

Dividend per share and payout ratio
Dividend per share

Payout ratio

(Yen)

(%)

120

17.5

100

17.0

80

16.5

60

16.0

40

15.5

20

2017

2018

2019

2020

2021

15.0

(FY)

6.Dialogue with capital markets

Q

Could you tell us about your approach and initiatives in terms of dialogue with stakeholders?

I believe it is essential to establish two-way communication
with our shareholders and investors, and engage inconstructive dialogue. This entails providing appropriate,

disseminate information to all stakeholders fairly and equitably;
we publish ﬁnancial results and similar information promptly on
our corporate website, including materials in English. We also

timely information about management policies and measures
to enhance corporate value over the medium to long term, asseek to deepen stakeholders’ understanding of NITORIGroup’s mission, vision, and business model by publishing thiswell as continuously offering clear explanations, and reportingor otherwise conveying the opinions of shareholders andinvestors to senior management. Our basic policy is toIntegrated Report and actively disclosing information throughsuch means as holding results brieﬁngs and small meetings.

68Company Stock Information / Company Information

Financial & Company Data
Mission Statement & Vision

Company Information (As of February 20,2021)

Company Stock Information (As of February 20,2021)
Outline of Shares

Major Shareholders

Enriching homesaround the world(As of February 20,2021)

Total number of authorized shares: 288,000,000
Total
number of issued shares: 114,443,496
MissionName

Number of shareholders: 24,877

Statemet
Listedmarkets: First Section of the Tokyo Stock Exchange
and the Sapporo Securtites Exchhange
Securities code: 9843

Fiscal Year: February 21st of every year to February 20th of
the following year

Vision2032
Administrator of shareholder registry: May

Number ofshared owned(thousands)

Bank, Limited

Distribution of Share by Type of Shareholder

VisionTreasury 2022
stock

Financial
institutions
28.28%

1.20%

Securities
companies
1.08%

Other
corporationsin Japan23.40%

Foreign corporates, etc
33.55%

Representative

Akio Nitori, Representative Director & Chariman (Cheif Executive Officer)
Toshiyuki Shirai, Representative Director & President (Cheif Operating Officer)

Address

Sapporo Head Office: 1-2-39 Shinkotoni 7-jo, Kita-ku, Sapporo, Hokkaido 001-0907;
Tel: +08-81-11-330-6200
Tokyo Headquarters: 3-6-20, Kamiya, Kita-ku, Tokyo 115-0043; Tel: +81-3-6741-1235

Establishment

Established December 1967

Ratio to thetotal number
of issued shares (%)

20,79918.40

The Master Trust Bank of Japan, Ltd.
(Trust Account)

7,020

6.21

Japan Trustee Services Bank, Ltd.
(Trust Account)

4,857

4.30

Incorporated

March 1972

NITORI International ScholarshipFoundation

4,000

3.54

¥716,900 million

North Pacific Bank, Ltd.

3,860

3.41

Revenues(Consolidated)

Akio Nitori

3,410

3.02

¥138,426 million

Momoyo Nitori

3,078

2.72

Ordinary Income(Consolidated)

Nippon Life Insurance Company

2,056

1.82

Capital Stock¥13,370 million

National Mutual Insurance Federation ofAgricultural Cooperatives

2,007

1.78

Number of Employees(Consolidated)

36,669(including 18,269 part-time employees)

JP Morgan Chase Bank 385632

1,897

1.68

1,000stores Net Sales ¥1trillion
Individual
shareholers
12.49%

Nitori Holdings Co., Ltd.

NITORI Trading Ltd.

3,000stores Net Sales ¥3trillion
Administraor of shareholder regsitry: Sumitomo Mitsui Trust

Company Name

Notes:
1.The numbers presented in “Number of shares held” above arecalculated based on the list of shareholders.
2.The Company’s 1,378,337 shares of treasury stock are excluded fromthe above list of major shareholders.
3.Calculations of equity positions exclude holdings of treasury stock.
4.The number of shares owned by The Master Trust Bank of Japan, Ltd.
and Custody Bank of Japan, Ltd. are shares held in securities
investment trusts and retirement benefit trusts.

NITORI Group List (As of February 20,2021)
Overseas Manufacturing
Companies
NITORI FURNITURE
VIETNAM EPE
NITORI FURNITURE
Ba Ria-Vung Tau Co., Ltd.

Curtain Manufacturing Factory

Import Agent Companies

HOME DECO CO., LTD

NITORI (China) Co., Ltd.
NITORI (Taicang) Trading & Logistics Co., Ltd
NITORI TRADING VIETNAM COMPANY LIMITEDNITORI TRADING (MALAYSIA)SDN.BHD.
NITORI TRADING THAILAND CO., LTD.
NITORI INDIA PRIVATE LIMITED

Trading, Planning & Development,
and Logistics Functions
Logistics Company

Home Logistics Co., Ltd

StockPrice
Price
and
TurnoverStockandTurnover

Advertising Agency
Nitori Public Co., Ltd.

Stock price(yen)24,000

Facility Management
Insurance Agent Busisness

22,000

Nitori Facility Co., Ltd.

20,000

Manufacturing
Functions

18,000

Nitori Holdings
Co., Ltd.

Advertising andPublicity Functions［Holding Company］

16,00014,000

Facility Management
Functions

12,00010,000Turnover(Thousandshares)

15,000Store Management Companies
Nitori Co., Ltd.
-HOME FURNISHING STORE-HOME FASHION STORE-NITORI MALL
-DECO-HOME-Online Shopping Business-Renovation Business-Corporate Sales Business, etc.
SHIMACHU CO., LTD.
-SHIMACHU-SHIMACHU HOME’S-NITORI HOME’S

Sales Activities

10,000Appareal Sales Company
N Plus Co., Ltd

5,000

2018/301 69

2018/62018/92018/122019/3

2019/6

2019/92019/122020/32020/62020/92020/122021/30

Carpet and Rug Manufacturing Company
SIAM NITORI CO., LTD.

Overseas Sales Companies

NITORI TAIWAN CO., LTD
NITORI (CHINA) HOLDINGS CO., LTD
DECO HOME CHINA CO., LTD
NITORI (SHANGHAI) HOME FURNISHING CO., LTD
NITORI (SHANGHAI) HOME FURNISHING SALES CO., LTD
NITORI USA, INC.

70