Artist s impression of main building of Daimaru Shinsaibashi store

32

Innovation of Department Store Business

From Store Space to Business Management.
Department Stores Can Change Even Further.

assets. However, the biggest problem is that we fail to make the most

6. 0

use of such core competence in the present circumstances. Reaﬃrming

5. 0

that, we will overwhelmingly reinforce the ability to attract customers

4. 0

and create a strong customer base to maximize the value of physical

3. 0stores.

2. 0

expenditure on clothing of the annual average of monthly consumption1. 0561100220102502002091900. 0

9Ministry of Internal Aﬀairs and Communication, the percentage of4.2

1According to the Family Income and Expenditure Survey by the7. 2

7. 0

0

facilities in good downtown locations and have abundant good customer%

8. 0

5The core competence of department stores is to operate large scale◆ Change of percentage of expenditure on clothing of consumption expenditures(workers households of two-or-more-person households)

9Radical overhaul of sales ﬂoor composition* Family Income and Expenditure Survey by the Ministry of Internal Aﬀairs and Communication

expenditures per household decreased from 7.2% in 1990 to 4.2% in
2016. Behind this trend, we assume that there are great changes inwell as increasing globalization and casualization of fashion. In spite ofthese changes in customers buying behavior, in ﬂagship department
stores, the sales ﬂoor space of women s clothing remains bloated since
the latter half of 1980 s. We will reduce the area by 30% orapproximately 16,000 square meters during the period of the current(1) 30% reduction of women s clothing area

Women sclothing

New categories
New areas of our own curation
Meet experiential
consumption demands(2) Expansion of real estate lease area

RetailMedium-term Plan in an eﬀort to correct this gap.

Realestate
lease

Attractmuch
morecustomers

Createstrongcustomerbase

Maximize value of real storesways of self-expression and values particularly among young people as◆ Innovation of new department store model

Challenge of new retail space of our own curation

particularly sophisticated mature people visit, we provide new lifestyles

In the newly created spaces, based on the strategies developed by

supported by discerning mature people as a selection of accessories

scrutinizing the markets of individual stores, we will expand distinctive

including next luxury items on the ﬂoor that brings together luxury

new spaces of our own curation and new categories demanded inbrands.

individual areas, which include an option of concluding ﬁxed-term lease
contracts. Through this initiative, we will create new markets to enhance
the ability to attract customers and broaden our customer base.
One speciﬁc example of our new challenges is Sixième Ginza,
which opened on the 2nd ﬂoor of Ginza Six. The shop name
Sixième means sixth in French. We put into this name our hope ofcreating a retail space which stimulates customers sixth sense as anext level of the senses of vision, hearing, smell, taste and touch. Asvalues are changing rapidly in recent years, in the Ginza area thatSixième Ginza

Integrated Report 201733

Lib Tokyo, which opened on the 6th ﬂoor of Daimaru Tokyo store, awe investigate existing interior and pick out reusable components andconcept-based zone combining sales of products including books and a

use them in the interior environment of the new building mainly on thecafé in a 130-tsubo open environment, which was produced using

1st ﬂoor based on our concept of store planning. Furthermore, in order

external knowledge. By better meeting the demands for consumption

to improve access to the Shinsaibashisuji shopping arcade, we willbased on time, experiences and services, we will encourage existing

renovate the underground walkway from the ticket gate of the subwaycustomers to make multiple purchases and increase our opportunities tostation and make it barrier free by widening the walkway and installing

approach new customers.

elevators and up and down escalators. We will also create anunderground bicycle parking area, which holds approximately 390
units, and green the roof to help resolve regional issues. At the sametime, we will install facilities that contribute to increasing international
competitiveness such as Inbound Center (tentative name) to revitalize
the area. The new main building is planned to open in fall 2019.
After opening this new main building, we will drastically transformthe business model of the adjacent north wing to the shopping centerwith real estate lease as its main business. After that, by connecting

Lib Tokyo

these two buildings, we would like to create a novel and proﬁtablehybrid commercial complex with a total ﬂoor space of more thanInnovation of new department store model

80,000 square meters. At the same time, the Real Estate Division

In particular, the model most representing these initiatives is the newtakes the initiative in developing mainly our own properties around themain building of the Daimaru Shinsaibashi store, which is understore to make ourselves more dominant in the area.

reconstruction and scheduled to open in fall 2019. In the new main34

building, we would like to realize the innovative new department store

Creation of Future Standard Laboratorymodel showing the future direction of department stores, which has

a new organization that promotes innovation

not seen before in traditional department stores, in all aspects

It is essential to rebrand the stores and develop attractive content

including a range of products, services and environments.

in order to have the overwhelming ability to draw customers andThe main building of the Daimaru Shinsaibashi store will be rebornbuild a strong customer base. The Future Standard Laboratory is

as a full-scale department store which maximizes the possibility andpositioned as their driving engine. Combining the functions ofpotential of the Shinsaibashi area and better caters to global

information transmission through the media, curation and businesscustomers. The new main building is expected to be approximately 60

development, it not just analyzes the current conditions but also

meters high with three basement ﬂoors and 11 ﬂoors above ground andconducts marketing and branding activities to create markets forabout 30% larger sales ﬂoors of 40,000 square meters will be created.

ﬁve years ahead. To this end, we will not stick to using in-house

The exterior wall on the side of the Midosuji street will be preserved

staﬀ but mobilize planning personnel including through theand the newly built upper part will be set back to aestheticallyrecruitment of outside talent and assign the right persons to eachharmonize with the preserved exterior wall. With respect to the interior,project to promote open innovation.

Innovation of Department Store Business

Expansion of customer baseIn order to boost sales to aﬄuent◆ Gain loyalty from customers including the aﬄuent(out-of-store sales) customers,

we will set a key target in each area and a dedicated team will continue
to acquire new customers and enhance sales activities to provide more
personalized services according to buying behavior. At the same time,by providing a smartphone application with payment function, of whichDedicated teamwill continue toacquire newcardholders
The Group scard

Enhance sales
activities according
to buying behavior

Inbound

Other company scard

External
External points companies, etc.

introduction we are currently considering, we will acquire a wider rangeof good customers. Furthermore, in order to attract steadily growing
Gain loyalty from a wider range of good customers

consumption by inbound tourists to Japan from neighboring Asian
countries, particularly, China, Hong Kong and Korea, which we position

Enhance CRM (Customer Relationship Management)as the so-called expansion of trade area, by issuing the Exclusive
Card to foreign tourists who made a large amount of purchases, we will
acquire buying information and encourage repeat buying by providing
promotional information to retain them as our loyal customers.

eﬀorts to improve ROA, which is a component of ROE, that is, asset
eﬃciency. To this end, we started to use store-by-store balance sheets

Introduction of store-by-store B/S to innovate business management

for business management in March this year. By adding a viewpoint ofWe conduct the activities of the Department Store Business having

enhancing asset eﬃciency instead of focusing only on proﬁt and loss

very large store assets. However, it is undeniable that the storesstatements as we did in the past, we will improve ROA at a store level.

lacked thought of seeking return based on recognition of these assets

An example of the breakdown of ROA is illustrated below. ROA is

though our consciousness of and attention to sales and proﬁt werebroken down to appropriate indicators at a store level according to thestrong. We have made a company-wide declaration of enhancing ROE.

store characteristics to enhance asset eﬃciency, and thereby, increase

It is essential for the Department Store Business to make speciﬁc

ROE, which is an important company-wide management indicator.

◆ Enhance business management by introducing store-by-store B/S
MarginProﬁt

Total assets
turnoverNet sales

ROEROA(Store Manager
performance indicator)

ProﬁtOperating proﬁt

Shareholder s equity

Total assets

Total assets
Shareholder s equity

Accounts receivable
collection ratiosales (Rate of accounts receivable is relatively high)⇒Prevention of delays in collection / individual assessment

・Key focus of Tokyo store as model store (Rate of inventories is relatively high)Merchandiseturnover⇒Thorough assessment with turnover / cross ratio⇒Secure salable items / remove unsalable items

・Key focus of Nagoya store as model store (Rate of property and equipment is relatively high)P/Lperspective
Operating margin
Operating proﬁt
Net sales

Sales permonth/tsubo⇒Select/implement renovation investment plan that highly contributes to the store s ROA

Return ofinvestment⇒Judge by investment plan review committee⇒Individual assessment with actual return of investment

Associatedsales
Number of new
identiﬁable customers
Product sales
proﬁtEﬃciency ofoperating expenses

Continuing focus

Existing indicators

Financialleverage

Total assets

・Key focus of stores emphasizing

Focus indicators

Operating proﬁt

B/S
perspective

Integrated Report 201735