Business Model＞

Multi Service Retailer“Multi Service Retailer”
beyond the Framework of Retail
We are a business group with the retail business and the real estate business as its core, including department stores Daimaru andMatsuzakaya, commercial complexes Parco and a luxury commercial complex Ginza Six.
The histories of Daimaru and Matsuzakaya began respectively when Shimomura Hikoemon Shokei opened a kimono fabric store “Daimonjiya”
in Fushimi, Kyoto in 1717 and Ito Genzaemon Sukemichi, a son of Ito Ranmaru Sukehiro who served Oda Nobunaga, opened a kimono fabricand fancy goods wholesale store in Honmachi, Nagoya in 1611. Both companies started as kimono dealers but have changed their businessmodels for as long as 300 and 400 years, respectively, by responding appropriately to the changing times and grew as department stores.
After management integration in September 2007, the Company aggressively pursues M&A opportunities to expand its business wings forgrowth. We converted Parco Co., Ltd. into a consolidated subsidiary and StylingLife Holdings Inc. and other companies into equity method
associates to broaden our business as a multi retailer with department stores as our core.
And under the new “FY 2017 to 2021 Medium-term Business Plan,” we strive to change the Group structure toward development as a “MultiService Retailer” beyond the framework of retail to expand our business domain for discontinuous growth based on the new Group Vision“Create and Bring to Life ‘New Happiness.’” With respect to the business portfolio, while growing the core Department Store Business and ParcoBusiness, we will expand into new areas such as the Real Estate Business and Credit and Finance Business to increase their shares.

Multi Service Retailer

Expanded needs to relieve
concerns/frustrations in daily life

Rise of sharing economy

Advent of IoT era

Consumption shift from products
to services/experiences

Increasing urbanization

Expanded demand for
staﬃng services
Diversiﬁed payment methods
Advanced ﬁnancial services

Multiple retail business brands(Multi retailer)

12

Business Model

Source of Value Creation

Structure (Core Businesses)

Strength (Core Competence)Store assets

RetailReal estatein urban areas
CreditFinance
ServiceGood customer

Accumulated

than 6 mnmind

assets of more

hospitality

The Group’s strengths

123Store assets in urban areasnationwide

Good customer assets ofmore than six million people

Accumulated hospitality

The Group has store assets
including department stores, Parcoand Ginza Six in major cities acrossJapan, from Sapporo to Tokyo,Nagoya, Osaka and Hakata. In key
areas, we will promote the“UrbanDominant Strategy” for growing
with local communities by putting
together small- and medium-sized
stores around these flagship storesas their core and attract new crowd
to live in harmony with localcommunities.

Daimaru, Matsuzakaya and Parco
have good customer assets of morethan six million cardholders. Department
stores have an organization ofaffluent gaisho (out-of-store sales)customers whose sales share ismore than 20%. As a new initiative,
we will introduce an app with apayment function, which will further
increase our customer assets under
the concept of “Lifetime ServiceHub.”Our hospitality mind has been
accumulated in our history. Under
the corporate credo of Service
before Profit, the spirit born out ofcustomer services provided bythoroughly putting the customer
first and serving the community isalive in the Group value chain. It
leads to the operation of a staffing
service company Dimples’ andDaimaru Matsuzakaya Sales
Associates, which leverage thisstrength.

As a “Multi Service Retailer” beyond the framework of retail, we will capitalize on our business portfolio
and core competence mentioned above and respond nimbly to changes in the times with the support ofwell-trained diverse human resources and effective governance that improves the transparency ofmanagement in an effort to create values demanded by society.

Integrated Report 201813