MANAGEMENT STRATEGYSpecial Report: Management Interview 01

Use the Market Hypothesis
for Change

Dramatically advanced
gaisho activities

SAWADA Taro
President and Representative Director
Daimaru Matsuzakaya
Department Stores Co. Ltd.

Digitization of touch points
Department stores are pressed tochange. I think one of the important
themes for this purpose is thedigitization of customer touch points
centering on app. Before COVID-19,
we can say we had customer touchpoints almost only in physical stores.
However, by digitizing touch points, wecertainly started to see positive results
during the past one year.
By digitizing touch points, we canobtain data on online customer
behavior such as, for example, how38

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many minutes or seconds customers
view our owned media and whether
they click links.
We did not have such an approachin the past. We did not know whether
customers read our letters. We had
only customer purchase data obtained
when customers visit our stores andbuy products. By digitizing touchpoints, the precision of the data we canobtain will dramatically improve. We
can obtain pre-purchase data andpredict potential customer needs suchas what tangible/intangible goods acustomer is likely to be interested in.

I think online players are doing thisas a matter of course. However,through the digital shift of our touchpoints, it came in sight at last.
I think this is something
revolutionary. We conducted CRM
using only POS data for 20 and someyears. It may have helped develop
customers but did not help deeply
cultivate markets. It is not only thelevel that it is good to connect withcustomers 24/7. I think we will have to
make more use of them.

The digitization of touch points has
produced an effect in the closed
website for gaisho customers“connaissligne.” Though we havealready known the potential ofconnaissligne, it is far beyond ourimagination. For example, even if wefind very valuable products in a market,
they may be available in only limited
quantities. However, currently, when wefind valuable content, we can post it onconnaissligne promptly. People whowant it can order it. If the number oforders exceeds the limited numberavailable, we will sell it by lot. Suchsales activities, which took several
weeks in an analog way, are completed
in about one whole day and night using
this process.
We aim to grow gaisho sales to thelevel of ¥200.0 billion in the near future.
To this end, we did not begin withdiscussing what organization structure
we will create but we are carefullybuilding based on the market ideas of“to whom,” “what,” and “how” we will
sell. Customer statuses are classified
into eight, and gaisho customers into
two, from customer data. We set a goalfor each category such as luxury andart. Touch points include human ones
including physical stores and gaisho
staff and online ones.
I think our job is “matching
between value and customers,” that is
to say, to offer valuable content toorganized customers. Its platforms orchannels include physical stores,gaisho , and online.

Content first
When online channels are in place andcustomer database has evolved, it iscontent that makes a difference. I feel
we can work well if we have absolutely
outstanding procurement ordevelopment capability in the industry.
Currently I think we are establishingan advantage particularly in the worldof “art.” Its sales level is still around¥10.0 billion. However, as it is obviousthat its market will further expand, wewould like to gain top share while wecan. Contemporary art is sometimes
critically said to be like a bubble.
However, the more mature the country
is, the bigger cultural investment andmarkets become. So I am not so muchconcerned about it.
This year, we launched an OMO
website ARToVILLA. And recently, we
held an industry’s first event D-art, ART
in collaboration with Art Fair Tokyo. We
also sold art works displayed in Parco’s
exhibition to Daimaru andMatsuzakaya’s gaisho customers.
In terms of recruitment, I realize
our unique art initiatives are one of the
motivations for applying for ourcompany. If we do something
remarkably interesting, we can attract
people. If excellent people get together,
we can do something more interesting
and attract more people. Andcustomers get involved. I feel such a
positive cycle is being created.
The Department Store can stillleverage its strength in somecategories. For art, it has an ability todevelop products and it also has new
media ARToVILLA and customers arebeing properly organized. ARToVILLA
was launched by a young employee in
his mid-30s and he says he would liketo pursue scalability. I think aprofessional team is being createdcentering on content.

Embody the market hypothesis
in Nagoyabuy them. Hokkaido fair, basement foodfloors called depachika, and cosmetics
gain strong popularity among them. In
these areas, young customers are also
increasing. The problem is that it was
revealed that the middle-class women
stopped buying clothing in department
stores. All the middle-class customers
do not say there is nothing to buy indepartment stores.
It is obvious that the women’s
clothing market is segmentalized. If ourcompany has some fashion
connoisseurs and we can communicate
our thoughts to suppliers and take thelead in inviting rare brands, I thinkcurrently struggling women’s clothing isquite likely to gain momentum in proper
dimensions. I actually feel a hypothesis
for our desirable shape is created byfacing market changes seriously.
In the Matsuzakaya Nagoya store
project, we will conduct a large-scalerenovation of its multiple floors basedon the hypothesis. Starting with theNagoya store, I think we will be able togive a concrete shape to what we thinkfashion is like. Luxury zones areplanned to open successively, startingin late 2023. And in 2024 and beyond,we will finally begin to do what we did
not do because we did not know theirmarkets to give a concrete shape to ourthought. By making three touch points
including physical stores, gaisho , andonline perform well, we would like tocreate new department stores that leadto a better future.

Currently I feel strongly that we need to
face markets more squarely and createa hypothesis properly. Now is the time
for all stores and the entire company tomore confront markets considering
what will happen to them and also theirregional characteristics.
The “mass market” and the “middleclass” are often discussed as similar
things. However, I think they are a little
different. If we focus on the areas inwhich department stores have anadvantage, the share of premiumcategories such as luxury will increase.
In fact, the middle-class customers also

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