MARUI GROUP will function as a social experiment for how we can transcend
the dichotomy between earnings growth and the resolution of social issues.

Hiroshi Aoi
President and Representative Director, Representative Executive Officer, CEO

02

03

/// CEO MESSAGE ///Courage to Advance Toward the Next Stage,
Inspired by Human Capital Management
I see 2023 as the year in which MARUI GROUP embarked
on its advancement toward its next stage. This is also ayear in which we have finally started to see connections
being formed between the various initiatives we haveundertaken thus far, and the vision we imagined has thus
begun to take shape. Moreover, the times have caught up
with our initiatives, and our values are coming to alignwith those of society.
This realization is underscored by the recent trends
pertaining to human capital management. The basic
tenets of human capital management are to position
people as the primary proponents of value creation andto invest in these people and utilize their talents toheighten corporate value. This approach stands in stark
contrast to prior management conventions, which have04

viewed people as a cost to be controlled. Human capitalmanagement has long been a priority in Europe and theUnited States, but only just recently, specifically since2020 or so, has Japan been turning its attention toward
this approach. Discussions regarding human capitalmanagement in Japan have been advanced largely by
the Ministry of Economy, Trade and Industry.
These discussions have led to the decision to makedisclosure of information related to human capital in acompany’s annual securities report mandatory beginningin the fiscal year ended March 31, 2023. This decision
resulted in a sharp rise in the amount of attention
directed toward human capital management, prompting
many to view 2022 as the start of Japan’s full-fledged
promotion of this practice. MARUI GROUP was quick toembrace this trend, providing explanations on its humancapital management activities for shareholders and otherinvestors at a financial results briefing held in May 2022
(see presentation entitled “Human Capital-Focused
Management of MARUI GROUP #1 Corporate Culture
Reforms” for more information). We also included humancapital-related information in the annual securities report
we disclosed in June of the same year.
In these activities, we came to realize that theapproach which has come to be known as “human capital management” is shockingly similar to the approachthat MARUI GROUP has been taking for the more than
15 years since 2007.
Of course, it is not as though the term “human capitalmanagement” existed 15 years ago, and we were thus
not engaged in “human capital management” in the literal
sense. Rather, what I mean to say, is that the measures
we took to become the type of company we envisioned
or to work as we desired as part of exercising MARUIGROUP’s corporate philosophy—“equate the developmentof our people with the development of our company”—
have resulted in an approach that matched that ofhuman capital management.
When we became aware of this pleasant coincidence,
we found it most empowering. This realization cast lighton the fact that the times had caught up with the principles we have cherished thus far, signifying that ourvalues have aligned with those of society. We were presented with proof that both society and MARUI GROUP
value the same principles and that our values matched
the times. This feeling of empowerment brought us joy/// CEO MESSAGE ///and gave us the courage to start our advancement
toward the next stage.
Human Capital-Focused Management of MARUI GROUP #1
Corporate Culture Reforms
www.0101maruigroup.co.jp/en/ir/pdf/others/h_report.pdf

Introduction of New Article, “Exercise of Corporate
Philosophy,” into Articles of Incorporation toFurther Cement Vision
I would now like to continue our discussion of the topic
of human capital management by talking about the steps
we have taken thus far and the path we will take going
forward (see presentation entitled “Human CapitalFocused Management of MARUI GROUP #2 Evolution toCompany Resolving Social Issues” for more information).
Human Capital-Focused Management of MARUI GROUP #2
Evolution to Company Resolving Social Issues
www.0101maruigroup.co.jp/en/ir/pdf/others/h_report_2.pdf

In 2019, we unveiled MARUI GROUP’s 2050 Vision,
which describes our vision of harnessing the power ofbusiness to build a world that transcends the dichotomies of impact and profit. This move created the current
that would culminate in our definition of impact targets,alongside standard financial targets pertaining to earnings and capital efficiency, in the medium-term management plan that was launched in 2021.
Our impact targets pertain to the social issues MARUIGROUP strives to tackle. The goal in defining these targets was not merely to introduce a new set of targets.
Rather, we sought to reshape our approach toward management so that our financial targets would be met asa result of the accomplishment of our impact targets.
However, even after we had effectively defined the overarching themes for our impact targets, we still needed
to undertake a process of trial and error to determine
how best to incorporate these targets into our actual
business activities.
As we undertook this process, we began to witness
the gradual creation of innovations that enabled us togenerate earnings while still having our desired impact
on society. Examples of such innovations found in
Co-Creation Management Report 2023 include our Kesoubrand of sustainable shoes, renewable energy initiatives,

Newly Established Article 2. Exercise of
Corporate Philosophy
Through the exercise of its corporate philosophy of“continue evolving to better aid our customers” and“equate the development of our people with the development of our company,” MARUI GROUP strives to fulfill its
mission of contributing to the creation of an inclusive
society that offers happiness to all.
By merging finance and retailing, the Company aspires
to provide economic enrichment as well as emotional
enrichment in the form of happiness and to create asociety in which everyone is able to obtain this happiness.
However, this important mission cannot be carried out
by the Company alone. Accordingly, an approach toward
fulfilling this mission has been adopted entailing cocreation with customers, investors, communities andsociety, business partners, and future generations.
By engaging in such co-creation management withstakeholders, MARUI GROUP works to create harmony
between the interests and happiness of all of its stakeholders while generating earnings and contributing to theresolution of social issues through its business.

social bonds, and the HERALBONY Card. These initiatives may still only be in their infancy, but this does notchange the fact that they are helping us produce earnings along with our desired impact.
It is our goal to increase and develop such initiatives inorder to generate larger and more wide-reaching results
so that MARUI GROUP can evolve into a company that
contributes to the resolution of social issues. To further
cement this vision, we revised our articles of incorporation to include the new article of “Exercise of Corporate
Philosophy” following approval at the General Meeting of
Shareholders held in June 2023. Articles of incorporation
stipulate the rules that must be followed in the operationof a company and are therefore sometimes referred toas the “constitution” of that company. I recognize that thearticles of incorporation are important, not just for shareholders but for all stakeholders. For this reason, we havechosen to include the text of the newly introduced article
in its entirety in this report.
Here, I declare MARUI GROUP’s intention to evolve into
a company that contributes to the resolution of social
issues by fulfilling its mission of co-creating an inclusive
society that offers happiness to all together with stakeholders in accordance with its corporate philosophy.
05

/// CEO MESSAGE ////// CEO MESSAGE ///Figure 1: Update to Impact Targets
Impact 1.0 (May 2021)

Creating a future for
future generations
togetherRealization of a carbon-free society

Creation of a circular economy

Help realize a carbon-neutral society
Creating a future for
future generations
togetherCreating happiness forindividuals together
Support for individual preferences

Creating happiness forindividuals together

Support future generations to“create businesses”

Support the personalities ofindividuals
Support the health of individuals
Support individuals in utilizing
their money

Provision of venues for co-creation
Facilitation of workstyles that aretransparent to both internal andexternal stakeholders

Innovate for sustainableconsumption and living

Support individuals in pursuingtheir interests

Assistance for self-actualization

Creating platforms
for co-creation

We thereby aim to achieve earnings growth while contributing to the resolution of social issues.

Impact 2.0 (June 2023)

Creating an ecosystemfor co-creation

Provide venues for co-creation
Innovate workstyles andorganizations

Figure 2: Impact KPIs and Financial KPIs
Themes / Priority Measures

ImpactHelp realize a carbon-neutral society

Creating a future for
future generations
togetherInnovate for sustainableconsumption and living

Support future generations to“create businesses”
Support individuals in pursuingtheir interests

2030 Impact KPIs

Financial Value

Reduction of CO2

Over 1 million
tons

Users participating in “innovation insustainable consumption and living”

Over 1 million
peopleOver ¥680
billion intransactions

Companies offering options for“innovation in sustainable consumption and living”

Over 1,000
companies

Lifetime value(LTV): Over ¥90
billionInvestment in future generation
entrepreneurs

Over 100 cases

Users of cards that support interests, personalities, and healthOver 3 million
peopleCompanies supporting interests,
personalities, and healthOver 200
companies

Domestic and overseas young
people and other users of financial
services

Over 10 million
peopleOver ¥3.5 trillion
in transactions

Supportive investment throughco-creative partners

Over 20 countries worldwide

LTV: Over ¥250
billionSupport the personalities ofindividuals
Creating happiness forindividuals together

Support the health of individuals

Support individuals in utilizing
their money

Creating an ecosystemfor co-creation

Provide venues for co-creation

Innovate workstyles andorganizations

06

Over ¥1.3 trillion
in transactions
LTV: Over ¥200
billion

Link Between Impact KPIs and Financial KPIs
In conjunction with the revision to our articles of incorporation, we updated the impact targets we announced in
2021 to create the new impact targets 2.0 (see Figure 1).
These updated impact targets indicate the path we willtake toward exercising our corporate philosophy andfulfilling our mission.
In addition, we have defined impact key performanceindicators (KPIs) as well as financial KPIs, and targets
have been set for these KPIs to be accomplished by2030 (see Figure 2). KPIs represent important indicatorsof progress toward the accomplishment of an organization’s goals and are thus generally expressed in numerical terms. Meanwhile, a company’s social impact issomething that is difficult to express in numbers. Despite
this reality, we chose to set numerical targets for our
impact KPIs in order to confirm that our initiatives arecontributing to the progress of our goals.
Another characteristic of MARUI GROUP’s KPIs is how
we have chosen to link our impact KPIs to our financial
KPIs. This was done to guide us in generating earnings
while achieving our desired impact. The question thenbecomes: How to go about doing this? Determining theideal approach requires a road map that details how theaccomplishment of our impact targets will lead to theaccomplishment of our financial targets. For this reason,
we employ logic models, representations of the logicalcause–effect relationship between an initiative and its
intended goal.
IMPACT BOOK 2023, which MARUI GROUP published inJune 2023, contains a logic model that illustrates how ourinitiatives for achieving each specific impact target willcontribute to the realization of our desired impact and to
improvements in earnings and capital efficiency. This
document also provides a report on the progress of said
initiatives. I invite anyone who is interested to take a look.

Companies that create opportunities Over 350
for co-creationcompanies
Participants in the ecosystem forco-creation

Over 10,000
peopleInnovation creation personnel

Over 5,000
peopleInternal rateof return: Over10%

Development of an Organization in Which “Flow States”
Can Be Achieved through Work to
Fully Exercise Creativity

IMPACT BOOK 2023 (released in June 2023)
www.0101maruigroup.co.jp/en/ir/pdf/impactbook/2023/impactbook_all.pdf

It cannot be denied that achieving earnings growth while
contributing to the resolution of social issues is something that is easier said than done, an undertaking thatcan be expected to be incredibly challenging. If we are toaccomplish this lofty goal, it will be crucial for all employees to fully exercise their creativity.
When considering how best to help employees fully
exercise their creativity, we turned to the idea of “flow”
defined by psychologist Mihaly Csikszentmihalyi. “Flow”
refers to a state of being so engaged in an activity that
one forgets time and themselves. This occurs when thechallenge at hand matches the skill level of the individual.
Csikszentmihalyi speaks of how, by experiencing a“flow state,” people are able to fully exercise their creativity to overcome greater challenges and grow as a result.
Moreover, this state creates a feeling of joy in relation to
the associated experience. By developing an organizationin which employees can achieve a flow state throughtheir work, we aim to achieve our vision while contributing to the happiness of employees.
This is a goal that we are approaching from the two
perspectives of workstyle and organizational innovationand digital transformation.
Our approach toward workstyle and organizationalinnovation entails the expansion of project team-oriented
workstyles. In addition to traditionally structured organizations, we also look to expand opportunities to engage
in project team-oriented workstyles, which involve coordination across ranks and organizations, and to take partin co-creative teams that work together with external
initiatives and the start-up companies in which MARUIGROUP invests.
At the same time, we look to develop organizations
without direct supervisors. In such organizations, thesection managers have traditionally been responsible foroverseeing that organizations will be reframed as teamsupporters, as opposed to organization supervisors. In
this new role, these individuals will be expected to createa flat organization in which all members act with autonomy in order to exercise creativity as a team.
We are also stepping up early promotions to management positions. Specifically, we have revised human07

/// CEO MESSAGE ///resource systems to support the early promotion ofindividuals anticipated to contribute to improvements incorporate value by reducing the minimum age for management positions from 29 to 26. This allows talented
individuals to quickly climb the ranks in what has been
deemed a form of human capital investment. By providing highly capable young employees with opportunities
to exercise their talents earlier in their careers, we look toaccelerate the creation of innovation.
Meanwhile, we are promoting digital transformation
based on the understanding that digital technologies areimperative for rectifying the disparity between the current
state of the Company and its vision. Digital technologies
can be used to lend greater speed and leverage to our
initiatives. We also recognize the need to employ a rapid
cycle of verifying hypotheses if we are to accomplish ourlofty goal of achieving earnings growth while producing
our desired impact. Unfortunately, though, MARUIGROUP found itself lacking the people necessary toadvance digital transformation. This is why we founded
Muture Corporation, a joint venture with cutting-edge
user experience design company Goodpatch Inc., in April
2022. Through Muture, we have commenced recruitmentof the type of specialists who would not normally beattracted by the MARUI GROUP brand. We have thereby
been able to attract numerous individuals who are at the
pinnacle of their respective industries, and these individuals are helping with the development of apps and web
services for MARUI GROUP.
Muture made it possible for us to harness the skills of
specialists for use in product development. This, however, revealed some new challenges. Specifically, we
became aware of the need to make the entire organization more agile if we are to advance product development through Companywide efforts and to continuously
evolve these efforts.
MARUI GROUP has developed a prowess in relation tocore systems development. However, we are lacking thepeople capable of leading the development of completely
different types of agile organizations. This is why weinvited Naofumi Tsuchiya, representative director and
CEO of Goodpatch, our partner in establishing Muture, toserve as our CDXO (chief digital transformation officer) in
June 2023. Mr. Tsuchiya possesses sophisticated insightin relation to organization development and has theperspective of both a digital technology specialist and08

a manager. The advice he offers based on theseperspectives is anticipated to help us develop moreagile organizations.
Definition of Numbers of New Undertakings andAttempts as Action KPIs to Encourage Employees toWork Toward Their Ambitions
As we move forward with the initiatives I have discussed
thus far, we are also pressing ahead with the transformation of our corporate culture. In the past, we have sought
to develop a distinctive corporate culture through uniqueinitiatives such as encouraging voluntary participation invarious initiatives by employees. Going forward, we willseek to function as a social experiment in order to fostera culture of acceptance toward failure and encouragement of ambition. To this end, action KPIs have been
identified including the numbers of new undertakings
and attempts with the goal of encouraging employees towork toward their ambitions.
Included in the number of new undertakings is thenumber of participants in project teams, initiatives, andco-creative teams as well as in internal app development
and web service development contests. The number ofattempts, meanwhile, looks at the numbers of both/// CEO MESSAGE ///successes and failures in attempts to create innovation
for the improvement of operating processes, the development of new products and services, and the creation of
new businesses.
We have set the targets of 5,000 new undertakingsand 5,000 attempts by the fiscal year ending March 31,
2031. We have also launched new initiatives to support
such undertakings and attempts, including the introduction of the Fail Forward Award into internal award programs, which honors failed attempts to create new
businesses, as well as forums for sharing examples offailures. By tackling various new challenges as a form ofsocial experiment, we are working to overwrite the negative connotation of failure to create a corporate culture inwhich it is deemed only natural for everyone to experience failure and in which people are not afraid to tackle
new challenges.
I think that this type of corporate culture is somethingthat many Japanese companies, not just MARUI GROUP,
are in dire need of. We therefore look to function as asocial experiment and to thereby contribute to society byleading the way in fostering such a culture. Through thisexperiment, MARUI GROUP will strive to become a company that can constantly create innovation.
High Growth Coupled with High Returns Achievedby Evolving into a Company That Contributes to
the Resolution of Social Issues through
Human Capital Investment
In conjunction with such initiatives, we are also ramping
up our investments in people. Our anticipated internalrate of return for human capital investment is 12.7%,
which is higher than the level of 10% that is the standard
used for returns from investments in stores and othertangible assets. Given these high anticipated returns, we
expect to be able to achieve highly efficient management
by investing more than ¥65.0 billion in human capitalover the next five years.

The increase in human capital investment is also
expected to drive improvements in corporate value.
Looking at the portion of corporate value attributable tointangible assets, we will see intangible assets accounting for around 90% of the corporate value of U.S. companies, while the figure for Japanese companies is much
lower at 32%. Focusing just on MARUI GROUP, the ratio
of intangible assets to total assets is currently 44%.
Through our investments in human capital going forward, we look to raise this ratio to the level of 80% seenat U.S. companies by 2030 and to thereby boost corporate value.
In this manner, we plan to adopt a new management
approach that transcends the previously perceived
dichotomy between growth and returns to achieve highgrowth coupled with high returns.
Lastly, I would like to touch on the type of corporate
value that MARUI GROUP should pursue going forward.
By evolving into a company that contributes to the resolution of social issues through human capital investment,
we will aspire to raise return on equity from the current
level of 10% to 25% and to increase the price-to-bookratio from the present 1.7 times to 5.0 times going forward. It is my goal for us to be able to look back at 2023
five or 10 years from now and to recognize that this year
was the year in which MARUI GROUP embarked on its
advancement toward its next stage. I will devote my all,or rather, I will achieve a flow state to work toward thisgoal through co-creation together with our stakeholders.
I hope that we can look forward to the ongoing supportof our customers, investors, business partners, communities and society, and future generations.
December 2023

President and Representative Director
Representative Executive Officer, CEO

The president’s message from Co-Creation Management Report 2021 can be found below.
2021: VISION ENCAPSULATED IN IMPACT TARGETS
www.0101maruigroup.co.jp/en/ir/message/ceo/09