Retailing Business

Structure

Retail Stores Serving
as Points of Contact with
200 Million Customers a Year
When viewed from the perspective of retailing, MARUI GROUP’s
greatest strength is its retail stores, which serve as points ofcontact with approximately 200 million customers a year. The
Company operates 31 large-scale commercial facilities predominately located in major cities with high people traffic
nationwide. The number of customers visiting these facilities
is constantly increasing. We are also expanding our contact
points in other locations, such as through the opening ofprivate brand stores in commercial facilities operated by othercompanies and the creation of EPOS collaboration cards.

Physical Stores in Prime Locations Functioning as
Customer Contact Points

Commercial facilities operated by AIM CREATE CO., LTD.

Marui Stores Located in Major Cities Nationwide
Shopping centers operated by MARUI CO., LTD.
Shibuya Modi

POINT 2

Opening of Specialty Stores Outside of Group Facilities
and Promotion of Omni-Channel Retailing

Yurakucho Marui

Gifu
Miyagi

Hyogo

Modi Stores Based on Regional Characteristics

Although the overall birthrate is declining and the population isaging in Japan, the population of urban areas is actually increasing, creating greater disparities between regions. MARUI GROUP’s
31 stores are located in prominent districts of major cities characterized by high convenience and people traffic. By employing
new floor layouts that invite daily visits, we are creating spaces atwhich customers gather naturally (→P.32).

AomoriFukuoka

Perspective of Inclusion

POINT 1

Hokkaido

Kyoto

Structure

Retailing BusinessSpecialty Stores
Stores opened as tenants in other commercial facilities
that sell private brand products from MARUI CO., LTD.

MARUI GROUP’s specialty stores deal in private brand products,
most notably the Rakuchin Kirei series of shoes (→P.36). These
stores are opened as tenants primarily in commercial facilities
operated by other companies in areas where there are no Maruistores. We similarly set up try-on stores (→P.33) as short-term
events at the facilities of other companies. Looking ahead,
MARUI GROUP aims to expand its range of contact points withcustomers by accelerating its unique omni-channel retailingstrategy, which takes advantage of the strengths of both physicalstores and e-commerce.

Shizuoka
Rakuchin Kirei Shoes Fit Studio, AEONMALL KISOGAWA

Ibaraki

Mito

SaitamaNagasaki

POINT 3

Omiya

Kawagoe

Support for EPOS Collaboration Card Partner Facilities
Utilizing Retailing Expertise

Soka
Shiki

Kagoshima

Oita

Aichi
Ikebukuro

Miyazaki

Osaka
Nakano Shinjuku

Tachikawa Kokubunji

Kashiwa
Kitasenju

Tokyo

Kichijoji
Yurakucho

MachidaShinurayasu

Mizonokuchi
Ebina

KawasakiSpecialty Stores (outside of Marui and Modi stores): 7
EPOS Card Application Centers (outside of Marui andModi stores): 14

30

Hiratsuka

Totsuka

Funabashi
Chiharadai

Kanagawa

Modi Stores: 6

Chiba
Kinshicho

ShibuyaMarui Stores: 25

Ueno

Yokohama

Employees from Epos Card Co., Ltd., with retailing experience
are positioned at the commercial facilities of collaboration­partners on a full-time basis. These individuals are able toexplain the benefits of collaboration cards for customers andfacility tenants directly to tenants, at the same time teachingthem the card promotion techniques employees have honed
based on their experience. In this manner, these employees help
foster understanding regarding EPOS cards while also utilizing
the retailing experience they have gained at Marui stores tocreate fans of partner facilities while expanding the Company’s
own cardholder base.

EPOS Card Application Centers Located inGroup and Other Facilities
Application centers staffed with extensive customer
service experience gained in the Retailing business

EPOS Card Application Center, Hakata Marui

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Retailing Business

Structure

Co-Creation Store Development
and Unique Omni-Channel
Retailing Strategy
Amid the rapid spread of e-commerce, physical stores are faced with the need to provide services thatcannot be replaced by e-commerce or that are complementary to e-commerce. Recognizing this need,
MARUI GROUP invites customers to take part in the process of developing stores and new services in order
to identify unapparent issues and unmet needs so that it may create new value in tune with the times.

Store Development Based on Customers’ Perspectives Rather Than
Industry Conventions
MARUI GROUP’s stores are currently undergoing a transition to a real estate model, which will entail its revenue
source changing to rent revenues. This transition has
enabled us to move away from our previous apparelcentric focus to alter the amount of floor space at ourstores that is devoted to food, services, sundries, andother product categories catering to the long-term shift
from consumption of goods to consumption of experiences. Moreover, planning meetings with customers andtenants are held at individual stores so that these stores
can be developed based on customers’ perspectives

rather than industry conventions. For example, we havepositioned food vendors, which are of high demand
among customers of all ages and genders, in first floor andother entrance areas. These food vendors have effectively
drawn in customers that have gone on to shop on higher
floors. On the upper floors of stores, we have introduced
service providers that are closely linked to people’s everyday lives, including mobile phone providers, clinics, andEnglish schools. This new tenant distribution has caused
customers to gather naturally at upper floors, thereby
increasing earnings of these floors.

We open try-on stores at various commercial facilities
located throughout Japan as short-term events. Try-on
stores seamlessly link physical stores with Internet sales
to create a completely new type of sales floor designed toprovide customers with a smooth and highly satisfying
shopping experience. These stores display samples of all
sizes of certain products that customers can try on as
they please, while purchases are made through theInternet. Moreover, these try-on stores serve as a venue
for increasing EPOS cardholders along with the number ofcustomers registered for our Internet sales sites, thereby
contributing to medium-to-long-term income growth.

Mail-order and Internet sales initiatives
1988

Installed single-item product management system at all stores

2005

Began updating inventory information in real time based on­individual product movements

2006

Our co-creation store development efforts made us aware of a disparity between the conventions of the retailing industry and the actual needs of customers and tenants. At Hakata Marui,
which was opened in April 2016, initiatives to respond to the needs that became apparent
through planning meetings with customers included positioning food vendors on the first floor
and kitchen accessory and Kampo (traditional Japanese) medicine stores on higher floors.
This made for truly varied floor layouts. Finding tenants that catered to customer needs while
also meeting the Company’s requirements for net operating income yield was a struggle, andI was concerned about the low amount of floor space we were devoting to apparel products.
However, Hakata Marui was able to welcome 13.4 million customers in the first year after
opening its doors, a level similar to that of Yurakucho Marui. Now, I feel confident that thisstore development approach was the right one.

32

Established MARUI Internet shopping “marui web channel”
Commenced program referring customer to e-commerce website
sales through coupons attached to receipts

2007

Completed integration of inventories for physical stores and Internet sales
Began using store inventories to fill e-commerce orders

2008
2009

Integrated IDs for EPOS Net and MARUI Internet shopping“marui web channel”

2010

Started displaying stores dealing in specific items and inventories on
MARUI Internet shopping “marui web channel”

Integrated physical store and MARUI Internet shopping “marui web channel” purchase histories
Established official LINE accountExecutive officer
Managing Director, MARUI CO., LTD.
Director, AIM CREATE CO., LTD.

Launched nationwide try-on store initiative for private brand shoes

Opened Marui store on Wowma! Internet sales site operated byKDDI CORPORATION
Introduced AutoStore robotic warehouse system at Company
Internet sales distribution centers

Takayuki Shibao
Masahiro Aono

Commenced in-store pickup service for items ordered via MARUIInternet shopping “marui web channel”

Launched artificial intelligence-powered recommendation services

Employee Comment

Confidence in Highly Varied Floor Layouts

Physical store sales initiatives

Launched Voi mail-order sales catalog

1995

2017
Service providers closely linked to people’s
everyday lives located on upper floors

Purchases can be made through store-use tablets

Omni-Channel Retailing Initiatives

2016

Food floor developed on first floor based on
customer feedback

Perspective of Inclusion

Ideal Shopping Experiences for All

2015

Planning meeting held together with customers
and tenants

Structure

Retailing Business

Try-on Stores
Omni-Channel Retailing Division
MARUI CO., LTD.

Employee Comment

Try-on stores utilize a framework
created because some customers
came to recognize the quality of
Rakuchin Kirei series shoes only
after trying them on. Our initialstart had some bumps, but thisinitiative enabled us to deliver
Rakuchin Kirei series shoes toregions in which there are no
Marui stores. Looking ahead,I hope to further improve to help
provide customers with the best
possible shopping experiences.

Mariko Hagiwara
Rakuchin Kirei Shoes Fit Studio
Kinshicho MaruiMARUI CO., LTD.

At Kinshicho Marui, we opened atry-on store with no inventory on
a trial basis. Since this store was
opened, we have proceeded to
improve the quality of the shoes
we offer so that the store can bringjoy to as many customers as
possible, and the number ofcustomers commenting on thestore’s convenience continues toincrease. These comments are asource of encouragement in mydaily work.

33

Retailing Business

Perspective of Inclusion

Retailing Business

Quest to Bring Joy to People of
All Ages, Genders, and PhysicalCharacteristics
Looking forward to 2020, the year of the upcoming Tokyo 2020 Olympic and Paralympic Games,
MARUI GROUP is implementing various initiatives on its quest to bring joy to all customers, regardless of their age
and including people of all genders, such as members of the LGBT community, and people with disabilities.

Structure

Perspective of Inclusion

Improvement of Customer Service

Enhanced Drive to Inform Customers

Employees undergo Service Care-Fitter training to fostera spirit of hospitality and to learn how to accommodate
various customers. This training is conducted in-house by
11 Group employees that have acquired official instructor
qualifications. In addition, external lecturers are invited to
implement training for the Universal Manner Placement
Examination program and to perform LGBT training.
Employees also receive training on catering to the needsof inbound travelers performed by non-Japanese lecturers. With the skills gained, we aim to improve customer
service in order to foster an environment in which all
customers can enjoy shopping.

MARUI GROUP is engaged in various activities to keep
its customers informed on its efforts, particularly its cocreation store development initiatives for creating storesthat can be enjoyed by individuals of all genders andphysical characteristics. For example, we are proactively
communicating our co-creation initiatives through participation in the events of TOKYO RAINBOW PRIDE, an organization that aims to create a society in which individualsof all sexual orientations and sexual preferences are able
to live optimistically and to be themselves, while remaining
free from discrimination and prejudice.

Customer Diversity and Inclusion
Japan has a population of approximately 126.8 million
diverse individuals. If we adopt a perspective of creating
spaces in which all people can flourish, the issues faced
by Japan could be turned into opportunities.

MARUI GROUP strives to develop a business that creates
innovation for the benefit of everyone, effectively transforming such opportunities into value. This is the goal of
our customer diversity and inclusion initiatives.

MARUI GROUP’s concept of “all customers”
In training for assisting customers using wheelchairs, employees
learn how to operate wheelchairs through actual use.

Our booth at TOKYO RAINBOW PRIDE 2017 displaying
Rakuchin Kirei series shoes available in a wide range of sizes

Employees wear special goggles to show how objects appear
to someone with cataracts in senior citizen simulation training.

Competition sponsored by the Japan Blind Football Association,
which MARUI GROUP provides with the official suits for theJapan national team through a partnership agreement

Previously

Employee Comment

Ratio of Senior Citizens

Ratio of Differently Abled Individuals

Ratio of LGBT Community Members

The population of senior citizens over theage of 65 in Japan is 34.8 million.

In Japan, 8.6 million people havephysical or mental disabilities.

One in 13 people in Japan is part of
the LGBT community, representinga ¥5,940 billion market.

27.5%

Source: Population Estimates, Statistics Bureau,
Ministry of Internal Affairs and Communications

6.8%

Source: Annual Report on Government Measuresfor Persons with Disabilities, Cabinet Office,
Government of Japan, 2017

Groupwide Promotion of LGBT Understanding

7.6%

Source: LGBT Survey 2015, Dentsu Diversity Lab,DENTSU INC., 2015

Hitomi Kanazawa
Marui Future Project Team
Sustainability Department
MARUI GROUP CO., LTD.

34

When we participated in TOKYO RAINBOW PRIDE in May 2016, understanding of the LGBT community
within the Company was rather low. In the year that followed, however, we have seen a massive change in
employee awareness, denoted by the recent rise in divisions voluntarily requesting LGBT manner training.
During the period of TOKYO RAINBOW PRIDE in May 2017, rainbow flags were displayed at 12 Marui andModi stores. Event flyers and special edition paper shopping bags made for the event were also distributed.
Furthermore, a total of 80 employees volunteered to take part in the event’s main draw: the parade. These
employees marched in the parade while wearing original MARUI GROUP T-shirts. I view such developments
as a testament to how the concept of customer diversity and inclusion has become rooted throughout theGroup. I hope to plan other initiatives on this front in the future.

35

Retailing Business

Perspective of Inclusion

Structure

Retailing Business

Co-Creation of Inclusive Productswith Customers

Perspective of Inclusion

Customer Participation in Product Development

MARUI GROUP views product creation as the process of developing products that match the physical characteristics
of customers. We are thus establishing development and sales frameworks for supplying products that benefit all
customers, excluding no one regardless of their physical characteristics. We thereby seek to include and provide joy
to all customers and to forge a business model that creates new demand.

Development of Size Lineup Accommodating All Customers

At the time when development of the Rakuchin Kirei seriesof shoes was first started, a survey of EPOS cardholders
indicated that around 90% of them had felt discomfort
with their shoes. This survey made it clear that customers
were unable to find pumps satisfying all of their needs
with regard to fashion, comfort, and affordability. We thus
vowed to create just such shoes. We began by measuring
customers’ feet and analyzing the results to make original
shoe trees. We then held planning meetings together withcustomers that had expressed dissatisfaction with the
comfort of their shoes. The Rakuchin Kirei series of shoes
only consists of those products able to meet the strict
standards of customers after being refined through an
ongoing cycle of thinking and creating prototypes together
with customers.

Going forward

Previously• Standard industry sizes• Emphasis on design and other aesthetic qualities• Wide range of sizes accommodating all customers’ feet• Balanced focus on design, comfort, and priceShoe Size Range to Cover 100% of Foot Sizes

Sales of Women’s Shoes: Rakuchin Kirei Series¥5.2 billion

Rakuchin Kirei series shoes lineup
100% coverage¥4.7 billion¥4.5 billion

Total Aggregate
Sales of More Than

3.5 million

72% coveragepairsStandard
industry shoe
size range¥3.6 billion¥2.7 billion

Needs Related to Shoe Sizes
The foot sizes of adult women in Japan are said to range
from 20.5 cm to 26.0 cm. However, the standard range ofshoe sizes offered by the Japanese apparel industry isfrom 22.5 cm to 24.5 cm, which covers only 72% of thisStep 1
Planning Meetings with Customers

Step 2
Sample Inspections

80,000 people

Planning meetings held with customers
to uncover unmet needs that they
themselves were unaware of

Ongoing process of confirmation andrevision that continues until qualifyingscores are received from customers

Customer input received throughcustomer-participation community
website (Japanese only)

Step 4
Total Aggregate Sales ofMore Than

3.5 million
pairs

shoeslabo.0101.co.jp¥1.6 billion

27.0cm

FY2010FY2017

Customers’ Shoe-Related Concerns

Shoes that Go Unworn after Purchase

Ratio of customers expressing dissatisfaction withthe comfort of shoes

Ratio of customers responding that they stopped wearing
shoes due to size issues or pain

Based on survey of EPOS cardholders conducted when developmentof Rakuchin Kirei series shoes had just begun

Based on survey of EPOS cardholders conducted when developmentof Rakuchin Kirei series shoes had just begun

90%

36

from approx.

by 1,000 people
per year¥70 million
24.5cmStep 3Customer Input

held 60 times
per year

Employee Comment

22.5cmrange of foot sizes. With the Rakuchin Kirei series of shoes,
we expanded the range of sizes we offer from 7 sizes to
16 sizes, covering foot sizes from 19.5 cm to 27.0 cm,
in order to accommodate customers wanting to buy shoesthat were previously unable to due to their physical characteristic of having small or large feet. This process led to the
Rakuchin Kirei series of shoes covering 100% of foot sizes,
giving all customers the opportunity to enjoy these shoes
and thereby selling more than 3.5 million pairs to date.

Product Creation Efforts for the Benefit of All Customers¥0.7 billion

19.5cmRakuchin Kirei series of shoes (Japanese only)
voi.0101.co.jp/voi/webshop/customer_portal/index.jsp

41%

Ai Saiki
Shoes Business Section
Omni-Channel Retailing Division
MARUI CO., LTD.

Employee Comment

I have been involved with the
Rakuchin Kirei series of shoes as amember of the sales staff since its
launch, and I was well aware ofcustomers’ concerns regarding
shoes. We are currently in theprocess of creating an environment that will encourage as manycustomers as possible to experience the comfort and wide rangeof sizes provided by these shoes.
Specific efforts in this regard
include renovating shoe sales
floors and establishing new ones.
I am driven in these efforts by thecomments of satisfied customers.

Miki Goi
Shoes Business Section
Omni-Channel Retailing Division
MARUI CO., LTD.

We are intensely focused on
developing products that meetcustomer needs based on the
input gathered from customers
during planning meetings. After
expanding our size lineup,­customers expressed their appreciation by stating how they wereable to feel the joy of fashion andfinding shoes that fit. Knowing that
I have been able to enrich the livesof customers is a major source of
motivation. In future productdevelopment activities, I will
maintain my approach of earnestly
incorporating customer input.

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