Dialogue 01
As a long-term investor,
I consider customer satisfaction
to be the most important elementof the companies I invest in.
Hideto Fujino

Discussion of Co-Creation between
Long-Term Investor and the President
The Importance of Management’s Timeline
Hideto Fujino, a master at aggressively managing Japanese stocks,
and President Aoi discussed the perception of timelines,
which are important to both management and investors,
and the role of customers as a source of corporate value.

Hideto Fujino
President and Representative Director
Rheos Capital Works Inc.

The intersection between the joy ofcustomers and the joy ofshareholders and otherinvestors is actually quite large.
Hiroshi Aoi

Hiroshi Aoi
President and Representative Director
Representative Executive Officer
MARUI GROUP CO., LTD.

Dialogue 01

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Dialogue 01

Discussion of Co-Creation between Long-Term Investor and the President

Return to the Basics of Listening to Customers     Fujino: Japan has recently been witnessing the peak ofconsumption by the baby boom generation. At the sametime, the spread of smartphones is bringing about substantial change in the consumption patterns of theyounger generations. Moreover, the focus of consumption is shifting from physical goods to more fulfilling
lifestyles. I understand that MARUI GROUP has been
responding to these trends for quite some time now.
Aoi: We became aware of these changes around 2006.
This is when we began having difficulty selling physicalproducts, signifying the ineffectiveness of our previous
business model. Progress in IT has driven forward thematurity of the market and the subsequent diversificationof customer needs, creating a gap between us and ourcustomers that grew quite large before we realized it.
It was this realization that inspired us to return to thebasics: listening to our customers.
Co-Creation of Innovation Together with Customers     Fujino: MARUI GROUP is devoting its efforts to developing stores through a process of co-creation. Specifically,
what initiatives are you undertaking in this regard?
Aoi: We are engaging in exhaustive conversations withour customers. For example, we hold planning meetings
with customers at which we directly introduce our ideas
for store concept, floor layouts, and even service andproduct development, asking for their opinions during
this process. Should we discover that any of our ideas
are flawed, we discuss the matter thoroughly to get usback on the right track. We have been practicing thisapproach for nearly a decade. With the innovations cocreated with customers, we are striving to generate
corporate value.
Fujino: That is a very original approach. What benefits
has this approach created thus far?
Aoi: When we first adopted this approach, there weretimes when our pride as professionals and the successes

Hideto Fujino
President and Representative Director
Rheos Capital Works Inc.

we had achieved up until that point got in the way of ourefforts. Over the past couple of years, however, we havebeen feeling the benefits of this approach. These benefits
are particularly apparent in Hakata Marui, which wasopened in April 2016 as the culmination of more than
600 planning meetings with customers. Truly the product of our co-creation efforts with customers, Hakata
Marui features a completely new design and represents
a departure from the traditional concept of Marui stores.
This refreshing design has proved immensely popular.
By taking the lifestyle needs of people living in the surrounding community into consideration, we succeededin creating a shopping center that can be enjoyed bypeople of all ages.

investors is actually quite large. We therefore believe that
we can improve corporate value by increasing the size of
this intersection.
Fujino: Our fund is estimated to have approximately
150,000 customers. While these customers are shareholders, they are also standard consumers. For thisreason, if MARUI GROUP’s co-creation management
succeeds and the Company is able to bring joy to its
consumers in the regions it serves with its stores andEPOS cards, this success may also contribute to thehappiness of our customers, as they too are such consumers. For this reason, our investment in MARUIGROUP could be seen as a type of co-creation investment.
My support for MARUI GROUP is based on this belief.

Co-Creation Investment Oriented Around Customers     Fujino: Our long-term investment activities are basedaround the management and sale of stocks through theHifumi Investment Trust, an active investment fund forJapanese stocks. When we conduct investments, theaspect of investment candidates we focus on the most is
the candidate’s customers. We use this approach
because it is through transactions with customers thatcompanies generate earnings, and it is these earnings
that fund dividend payments. The Hifumi Investment
Trust is currently managing shares of MARUI GROUP’sstocks, and thus our biggest wish is for the Company’s
customers to become happier. If this happiness canadvance improvements in MARUI GROUP’s corporate
value, the value of our fund will increase, allowing us toreturn profits to our customers.
Aoi: It makes me very glad that MARUI GROUP is being
evaluated from that perspective. As a matter of fact, wehave not only been focusing on exchanges with customers over the past couple of years, we have also been
putting effort into interacting with shareholders andother investors—and we have learned much throughthese interactions. The intersection between the joyof customers and the joy of shareholders and otherImportance of a Long Timeline for Management     Fujino: In increasing the intersection between the values
sought by different types of stakeholders, your timeline
becomes incredibly important. If both management andinvestors adopt long timetables, the intersection of theinterests that they share will grow large. However, if thesetimelines are short, conflicts of interest will appear. The

pursuit of short-term gains will likely result in the interests of one party being sacrificed for the interests of theother. On the other hand, these conflicts can be reconciled through a long-term perspective looking five to 10years into the future.
Aoi: I have experienced this principle in the past. If webecome overly concerned with the short term, we end up
being unable to gain customer support, which results infailure to improve our business performance and live up
to the expectations of our shareholders. It is for thisreason that we are committed to practicing managementfrom a long-term perspective. At the same time, we will
work to make the differing timelines of investors match
up better through active interactions. Furthermore, wewill submit our various opinions to the scrutiny of investors in order to build stronger management.
Fujino: This approach of pursuing co-creation management
through an active dialogue with all stakeholders is truly
an undertaking that is characteristic of MARUI GROUP.
We at Rheos Capital Works look forward to supporting
the Company over the long term, and we have highanticipations for your ongoing growth.

Mr. Fujino established Rheos Capital Works in 2003, after gaining experience in stock positions
at Nomura Investment Advisory Co., Ltd. (currently Nomura Asset Management Co., Ltd.), Jardine
Fleming (currently JP Morgan Fleming Asset Management), and Goldman Sachs Asset ManagementCo., Ltd. Beginning as chief investment officer (CIO), he became a director at Rheos Capital Worksin 2009 before assuming his current position in October 2015. Mr. Fujino has an extensive career
as a fund manager with abundant experience in the management of small-to-mid cap andemerging growth equity investments. He also serves as a teaching fellow at the JPX Academy.

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