Management Strategy

sense even if the inbound market isexcluded. As it is the field in which
the Department Store can verymuch capitalize on its strength, wewill develop a strategy so that we
can capture the top share among
department store chains. Food sales
and stay-at-home consumption arerobust even amid the COVID-19
pandemic. I would like to further
pursue proposals that satisfy
customers both mentally andphysically.
What will recover and what will
not recover. And what will growfurther in the future. I think we are
expected to steadily identify them.

Started to see the signsof“evolution”
Management Strategy▶【Special Report】Interview 01

Digitally Expand
the Power of “People”“What will not recover”
and“what will recover”
During the period of the previous
Medium-term Business Plan, in spiteof awareness of the issues inherent in
the Department Store, we developed
growth strategies beyond them suchas increased inbound sales, openingof Ueno Frontier Tower and GINZA
SIX, and rebuilding and opening of
the main building of the Daimaru
Shinsaibashi store and strengthened
efforts to carry them out.
However,ourpreviousassumptions crumbled at theirfoundations due to the COVID-19
pandemic. What was worst wasthat our customer touch points
depended on stores and temporary
store closures made us completely
helpless for some time.
Sluggish sales of womenʼsclothing as an inherent issue andother various issues including the30

rapidly increased share of inboundsales in cosmetics market came tothe surface all at once.
Womenʼs clothing sales weremost adversely affected anddecreased by almost half. Then, will
damaged sales 100% recover when
COVID-19 comes to an end? Weoften say that the future 10 years
from now has come, and in addition
to a consumer shift to casualclothing, the conventional businessmodel, in which a trend is set, andthen, it is spread among followers,
and leftover products are sold atbargain prices, no longer suits thecurrent markets. It is undeniable
that womenʼs clothing occupies
too much space. So it is importantto further strengthen our initiatives
continuing from the previous
medium-term
planincludingnarrowing down of brands and theselection of distinctive brands whileright-sizing womenʼs clothing area.

SAWADA Taro
Director and Senior Managing Executive Officer
President and Representative Director
Daimaru Matsuzakaya Department Stores Co. Ltd.

I do not expect that sales ofcosmetics, which drove inboundsales, will 100% recover even if
COVID-19 comes to an end andforeign tourists come back. Some
Japanese manufacturers started
to strengthen sales in China.
Meanwhile, I also expect that ourmarket will become bigger if we
expand the category to include
beauty and wellness instead oflimiting to cosmetics.
On the contrary, seeing thesecond half of last year, we could
keep sales of luxury items almost
at its preceding yearʼs level thoughinbound sales disappeared. The
luxury watch market was above its
preceding yearʼs level and sales ofart, mainly modern art, significantly
increased.
Looking into the future market
based on these facts, I think there
is still considerable room for growthin the luxury market in a broad

Recently, more and more people,
particularly a new generation in
their 30s to 50s, visit our website
for the categories such as modernart and luxury watches. The touchpoints to serve these new customers
will be online or digital, not in theway to approach existing affluent
customers. In this situation, we
have a website dedicated togaisho customers “connaissligne,”
which is linked with app. Gaisho
customers who registered the app
can visit connaissligne. Originally,
connaissligne was positioned asa tool for communication withcustomers but now it is also used
as commerce. I feel this commerce
works very well now. For example,
we made a substantial purchaseof premium sake and offered all ofthem on connaissligne instead ofallotting them to each store as we
did in the past. Many customers
showed their desire to buy themin one night and we sold them bylot. As for modern art, after an
exhibition in Shibuya PARCO, weposted around 20 works, which had
been shown there, on the website
and they were sold out immediately.
We will further strengthen suchcollaboration with Parco.
In the past, we mainly approached

the customers who have a purchaserecord. However, by postingproducts on connaissligne, they
will be open to potential customers
we did not approach. It is rapidlygrowing into media that increasecustomer touch points and lead toour “winning strategy.”
We made many trials such as
various live streaming and online
customer service using Zoom in2020. We will equip connaissligne
with a reservation system thatconnects customers directly toshops this fall. Soon it will become
possible to connect physical storeswith customers at home and serve
them digitally, which is more thanmere e-commerce. We will hold talkevents by the creators and producersof the art works and products
posted on connaissligne and tastingin gaisho salons. By doing so, we willconnect the online world with realplaces. Merger of online and offline
using our strength – I would like tobuild such a world as a new businessmodel.

Expand the power of“people”
Digital technologies enable us
to further expand the power of“people.” We plan to launch acosmetics OMO website DEPACO
by the end of this fiscal year. I think
it will greatly change customer
experience. For example, a female
office worker visits DEPACO ataround 8:00 p.m. when she relaxes
herself after returning home. She isconnected to many beauty advisers
and she can learn how to take careof her skin and make up using preordered samples. If she likes, she canbuy it immediately by clicking. Thiswill be realized soon. In the past,when a customer wanted to see
a popular beauty adviser in Kobe,
she had to go to Kobe. But she will
be able to see her wherever sheis. There are some beauty advisors
employed by Daimaru Matsuzakaya
Department Stores who can provide

advice on cosmetics across brands.
Based on services in physical stores,
we would like to provide the same
services online.
We will make open the powerof as many specialized “people” aspossible online so that customers
can select persons from whom theywant to receive advice directly orwith whom they want to consult.
By doing so, I think we will be able
to provide unique experience value,
which catalog-type e-commercecannot provide.
Department
storesstartedwith having large stores in prime
downtown locations and haveprovided value that improves
customersʼ lives through retailing.
Both in the past and present,“people” were and are present at
all touch points. With the powerof “people,” we have gained trustand credibility from customers. Ithink the accumulation of these
efforts has become our strength.
This is a very important thing. How
shall we operate the Department
Store in the future based on theseassumptions? I think we have to
aim to attract more customers
and build deeper relations withcustomers both in physical storesand online by further improving
our production capability, curation
capability and hospitality.
Speaking in a little more detail,I think the retail format is notenough to propose colorful
lifestyles to customers. “Purchasing
products and selling them” is notenough. We need to add on thefunction of “media” that provide
more information to customers,
the function of “gallery” that showshigh value tangible and intangible
goods, and the function ofentertainment to make customersʼ
lives colorful and make proposals
to this end. I would like to remove
the “time and place constraints”
by expanding the power of“people” present at all touch points
digitally or online. I think this is theDepartment Store of the future.

Integrated Report 2021

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