U S I N E S S S T R AT E G

BUSINESS STRATEGIESFOR ACHIEVINGPOSITIVE IMPACT

Forward-Looking
Investments
Internal new business investment

Business Merging Retailing, Fintech,

02
BUSINESSS T R AT E G Y

Outward co-creative investment

and Forward-Looking Investments
For MARUI GROUP, corporate value entails creating harmony between the interestsand happiness of all of our stakeholders and growing the intersection of these interests and happiness. We are therefore committed to improving corporate value andresolving social issues through co-creation with stakeholders in order to have apositive impact on society.
Efforts on this front going forward will be advanced under a new business modelthat includes the third pillar of forward-looking investments along with the prior pillarsof retailing and fintech founded on our core value—the co-creation of creditability.
By pursuing synergies through this business model, we aim to generate value that

RetailingFintech

22 physical stores
Reliability of MARUI brand
Annual visits by
200 million customers
Retailing anddistribution staff

More than 7 million
EPOS cardholders
Credit expertise
Stable financial base
IT and system staff

is greater than the sum of its constituents.

PHILOSOPHY
Continue evolving to better aid our customers
Equate the development of our people with the development of our company

VALUES
Creditability should be built together with customers
Pioneer spirit of creating opportunities

11

RETAILING

Rapid Evolution Toward Stores That

02_BUSINESS STRATEGY

Evolution of Department Stores

Do Not Sell and Eventful Stores?

5The transition to shopping centers and fixed-term rental contracts was a priority mea-

4

sure under the previous medium-term management plan. MARUI GROUP targeted a
100% transition rate during the period of this plan, a target we quickly met with aStores that do not sell

3transition rate of 106% in the fiscal year ended March 31, 2019. However, even withthis success, we failed to achieve the targeted income improvements as a result ofExpanded range of food vendors and service providers

2

the sluggish performance of apparel items through e-commerce channels and directly
operated sales floors.

Fixed-term rental contracts

1

In the Retailing segment, an opaque outlook remains with regard to commercial real

Eventful storesestate as a result of the COVID-19 pandemic. MARUI GROUP looks to overcome theadversity by fully accelerating its evolution of the department store business model.
Specifically, we are promoting stores that do not sell and eventful stores. Stores that
do not sell involve forward-looking store development efforts advanced through cocreation with tenants whose businesses have predominately been confined to online

Operating Incomevenues thus far. Eventful stores involve arranging an increasingly broad spectrum ofevents that support people pursuing their interests, such as anime. These stores also¥12.0 billion

serve as avenues for improving the value of our retailing facilities through coordination
with the FinTech segment. Accelerating this evolution will no doubt contribute to the¥10.0 billion¥9.0 billion

growth of tenants as well as to the development of physical stores that capture thehearts of wider swaths of customers. MARUI GROUP aims to achieve ongoing earnings growth through this approach with the goal of posting operating income of ¥12.0
billion in the fiscal year ending March 31, 2026.
¥1.5 billion
FY2020

FY2021¥2.0 billion

FY2022

FY2024(Target)
Medium-term management plan

12FY2026(Target)

02_BUSINESS STRATEGYRETAILING

Transition to Stores That Do Not Sell, Positioning Them

Fun Eventful Stores Offering New Discoveries

as a Platform for Merging Online and Offline Spaces

for Supporting the Pursuit of One’s Interests

In its efforts to create the stores of the future, MARUI GROUP is transitioning to stores that do not sell through means

At eventful stores, we arrange a variety of events related to content, like anime and video games, as well as to newsuch as collaborating with tenants who started their business online and attracting tenants that provide food, services,businesses. These events are meant to draw customers to these stores, which function as outlets for supportingor experiences.

people in pursuing their interests.

Tokyo Revengers Event

Mercari Station

Exhibition events commemorating the release of the Tokyo Revengers movie were
held at Shibuya Modi, Hakata Marui, and Namba Marui. The many visitors drawn
to the events were treated to exhibits related to the live action movie adaptationof this anime series along with the opportunity to purchase merchandise featuring anime artwork that was produced specifically for this event.

Mercari Station is a physical venue associated with the Mercari peer-to-peersales app that has services appealing to first-time and heavy app users
alike. Here, customers can learn how to put their items up for sale as wellas get tips for greater success in sales. There are even photograph boothsthat can be used to take more appealing pictures of items to be sold.

Ken Wakui, Kodansha Ltd., Tokyo Revengers Movie Production Committee, 2020

SHIBUYA BASE

Gluten-Free and Vegan Confections

SHIBUYA BASE is a space at which e-commerce brands that use the BASE
online shop creation service can sell their products in a physical environment
over limited-time periods. This physical venue allows prospective customers
to learn about brands and to actually see and touch their products before
purchasing. Moreover, SHIBUYA BASE offers e-commerce brands seeking toopen physical stores an opportunity to try their hand at store operation without
paying the fees that would normally be necessary to open stores.

An event was held at a MARUI GROUP store at which we sold particularly
popular offerings from among the brands provided by the vee ga boo vegan
confection mail order service. This event featured a lineup of more than 150
products including exclusive items and those not available through mailorder centered on confections that do not contain wheat, milk, or eggs,
tracking a wide variety of customers, with and without allergies.

KOREAJUFABRIC TOKYOKOREAJU is a South Korean cosmetic boutique that primarily sells its
products through online venues. Regular KOREAJU events are held atMARUI GROUP stores. These events have received a lot of positive attention for the testing stations that let visitors try out South Korean cosmetic
products at their leisure as well as for the opportunity to interact withmembers of the staff who share their love for these products. In fact, somecustomers have even gone as far as to state their desire for these cosmetics to become a constant fixture.

FABRIC TOKYO Inc. opens physical outlets for its direct-to-consumer (D2C),
made-to-order suit brand in MARUI GROUP stores. At locations in Shinjuku
Marui Main Building and other facilities, customers are able to experience
the entire custom-ordering process, encompassing such steps as measuring and choosing materials and fabric. Moreover, the data from measurements taken in-store can be used for subsequent purchases either at
physical stores or online.

13FINTECH

02_BUSINESS STRATEGY

Growth Driven by Trend

Credit Card Transactions*

Toward Cashless Payments* Total of card shopping transactions andMore than double
Average annual
growth rate

rent guarantee services

16%

MARUI GROUP’s credit card transactions have shown an average growth rate of 15% overthe five-year period beginning with the fiscal year ended March 31, 2017, surpassing theAverage annual
growth rate

domestic market average during this period. As a result, credit card transactions amounted
to ¥2.6 trillion in the fiscal year ended March 31, 2021, the final year of the previous
medium-term management plan. The COVID-19 pandemic forced people to stay at home

¥5.3 trillion

15%¥3.1 trillion¥2.6 trillion¥1.6 trillion

and stores to close and thus placed downward pressure on transactions related to travel,
entertainment, and large-scale commercial facilities. However, we were able to compensate for these negative impacts thanks to the benefits of our ongoing efforts to encouragecustomers to use their EPOS cards for rent and other recurring payments as well asFY2017

FY2021through strong growth in the use of credit cards for e-commerce purchases. This strategyof maximizing the share of EPOS card payments in relation to household finances with afocus on rent, other recuring payments, and e-commerce has led transaction volumes toFY2022

FY2026(Target)Medium-term management plan

Operating Income

double from the level of the fiscal year ended March 31, 2016. Transactions associatedwith this strategy have thus come to represent 46% of credit card transactions. One component of these transactions is rent guarantee services. The volume of transactions forthese services has been growing by 26% a year on average, generating revenue of ¥10.0¥41.2 billion¥38.2 billion¥46.0 billion¥53.0 billion

billion, due to the progress of joint initiatives with a major partner.
The credit card market is expected to enjoy an average annual growth rate of 8% over

¥20.2 billion

the coming five years, due in part to the favorable environment created by the trend towardcashless payments, and the scale of this market is thus projected to surpass ¥100 trillion
in the fiscal year ending March 31, 2025. In this promising environment, MARUI GROUP
looks to maintain high growth rates that outpace the market by taking advantage of themarket growth while also growing through its own efforts. Accordingly, we have set theFY2020

target of achieving credit card transactions of ¥5.3 trillion, more than double the level of theFY2021

FY2022

FY2024(Target)Medium-term management planfiscal year ended March 31, 2021, and thereby generating operating income of ¥53.0 billion
in the fiscal year ending March 31, 2026.

14FY2026(Target)02_BUSINESS STRATEGYFINTECH

Assistance for Self-Actualization

Credit Cards Offering Support for Pursuing Interests

In April 2021, our EPOS cards were redesigned to incorporate a new non-contact payment feature using Visa Touch.

We have received resoundingly positive response from customers for our anime, video game, and other collaboration cards

We anticipate that this feature will drive growth in small-sum payments at convenience stores and other locations.

that support people in pursuing their interests. For example, while such collaboration cards only accounted for aroundAround the same time, we also launched our lifestyle app that allows users to customize their services and functions

30,000 of our 6.4 million EPOS cardholders in the fiscal year ended March 31, 2017, this number had risen to 450,000 of thebased on their lifestyle. The massive improvement to the user experience provided by this app is expected to contrib-

7.1 million cardholders in the fiscal year ended March 31, 2022. Cards that support people in pursuing their interests are

ute to growth in lifetime value. We also project that the new EPOS card together with the lifestyle app will drive

highly compatible with expression via YouTube, social media, and other online venues, and thereby help attract passionate

increases in transaction volumes.

fans by offering an incentive to sign up that goes beyond the financial benefits. Going forward, MARUI GROUP will bolster its
lineup of in-store and online events while also expanding its range of cards that support people in pursuing their interests
with the goal of having these cards held by more than one million customers by the fiscal year ending March 31, 2026.
Click here to register for lifestyle app(in Japanese only).
www.eposcard.co.jp/appli/index.html

New EPOS cards

Lifestyle app©2022 San-X Co., Ltd. All Rights Reserved.

©2022 San-X Co., Ltd. All Rights Reserved.

©khara, inc.

©naganoEarnings Generated Together with Positive Impact
through Renewable Energy

Entry into Buy Now, Pay Later Market through

MARUI GROUP has teamed up with UPDATER, Inc., to encourage EPOS cardhold-Digital Transformation and Evolved User Experiences

ers to switch to renewable energy with the goal of reducing CO2 emissions, bothA category of fintech services that has been showing substantial growth in recent years is the so-called “buy now,inside and outside of the Company, by more than one million tons by the fiscal

pay later” services. These services, which allow for payments to be made at a later date after a purchase, are growing

year ending March 31, 2026. Moreover, as customers use their EPOS cards to pay

together with e-commerce and digital wallet services, and are therefore expected to transform the payment service

their monthly electricity bills, it will contribute to the advancement of our strategy

market over the next five to 10 years. Moreover, digital transformation has the potential to optimize “buy now, pay later”

of maximizing the share of EPOS card payments in relation to household
finances while also potentially contributing to earnings growth as customers
increasingly use their EPOS card as their main credit card. In this manner, thisservices and thereby grant these services an increased presence in both online and offline payment service markets.

Minna-denryoku EPOS Card, the firstcredit card in Japan to be made ofrecycled plastic

Seeking to capitalize on this opportunity, MARUI GROUP introduced a new pay later function for use with its EPOS
cards. We also partnered with a start-up company founded by Generation Z individuals with the goal of promoting

co-creative initiative for reducing CO2 emissions together with customers will

digital transformation and further evolving user experiences.

generate earnings with a positive impact on society.

15

FORWARD-LOOKING INVESTMENTS

02_BUSINESS STRATEGYPositive Impact and Earnings Generated
through Synergies with Existing Businesses

Forward-Looking Investments

Forward-looking investments are a new element of MARUI GROUP’s business model thatare largely divided into two types: new business investments and co-creative investments.
Central to the model for our new businesses is e-commerce. MARUI GROUP is endeavoring to attract fans of its services through websites, social media, and owned media. At
the same time, we are combining pop-up store events in MARUI GROUP stores and credit
card payment services in a manner that merges the strengths of our existing retailing andfintech businesses in order to create business models with high barriers to entry.
Co-creative investments are aimed at the co-creation of value based on the co-creative
philosophy that MARUI GROUP has embraced since its founding. We have, for example,
identified D2C brands as an investment area warranting particular attention. D2C brands
employ a new business model entailing direct connections between consumers andbrands through directly operated e-commerce websites or social media. In this area, weNew Business
Investments

Co-Creative
Investments

Generation ofinternal innovation

Incorporation ofexternal innovation

have established D2C&Co., through which we are investing in D2C start-up companies.
These co-creative investments differ from traditional M&A activities, which target quick
returns, in that they are more oriented toward contributing to earnings in existing business while producing medium- to long-term financial returns.
Through these two approaches toward investment, MARUI GROUP will strive to produce innovation inside and outside of the organization and thereby generate positiveimpacts on society along with earnings. A total of ¥22.3 billion was invested in thismanner over the period spanning the fiscal years ended March 31, 2017 to 2022, andwe intend to raise the aggregate amount of investments to ¥43.0 billion leading up tothe fiscal year ending March 31, 2026.

Achievement of earnings growth together with desired impact(Sustainability, well-being, and digital transformation)

16

02_BUSINESS STRATEGYFORWARD-LOOKING INVESTMENTS

Improved Competitiveness of Stores That Do Not Sell

Large Earnings Contributions from Synergies

through Co-Creative Investmentswith Co-Creative Investees

MARUI GROUP’s strategy of developing stores that do not sell entails a three-layered approach comprising retailing,

The combined earnings contributions from co-creative investments aimed at stimulating innovation outside of thefintech, and co-creative investments. The revenues from this strategy are generated in the forms of rent revenues,

Company and from the growth of store rent revenues and credit card lifetime value amounted to ¥0.7 billion in thecredit card lifetime value, and financial returns, with the amount of said revenues growing larger in that order. At theRetailing segment and ¥0.3 billion in the FinTech segment in the fiscal year ended March 31, 2022. Future initiatives onlowest level, contained within the Retailing segment, this strategy may be relatively easy to imitate. However, this

this front will be oriented toward generating synergies. In the Retailing segment, these synergies will be pursued bybecomes more difficult as an additional layer is introduced into the strategy through the business model merging

encouraging co-creative investees to become tenants in our stores. In the FinTech segment, we will focus on promot-fintech and retailing that the Company has developed since its founding. A third layer is added to this strategy throughing the use of EPOS cards for purchases from co-creative investees while producing collaboration cards with theseco-creative investments, and this layer brings with it a jump in competitiveness. The resulting three-layered strategy ofpartners. We thereby aim to generate total earnings contributions from the Retailing and FinTech segments of ¥5.5 billion

stores that do not sell makes for a business with an exceptionally high barrier to entry.

in the fiscal year ending March 31, 2026, an increase of more than tenfold from the fiscal year ended March 31, 2021.

Three-Layered Strategy of Stores That Do Not Sell

Earnings Contributions from Co-Creative Investments*1

Business Structure

Earnings Structure*1 Included in the operating income of the Retailing segment and the FinTech segment

Barrier to Entry¥5.5 billion
FinTechCo-CreativeInvestments¥4.0 billion

Financial Returns¥0.5 billion

FintechRetailing

Credit CardLifetime ValueFY2021¥1.0 billion

Retailing¥1.5 billion
FY2022

FY2026 (Target)

Internal Rate of Return*2

RentRevenues

FY202227%

Hurdle Rate

10%Internal rate of return of 27%, exceeding hurdle rate of 10%*2 Rate calculated using recent procurement prices for non-listed stocks and based on amounts if listed stocks were to be sold on March 31,
2022, for applicable securities

Low Medium High17