RYOHIN KEIKAKU CO., LTD.

Information Resources
Financial Information

Non-Financial Information

MUJI REPORT

Information on medium- to long-term value creation
Securities Report (Japanese only)
Consolidated Financial Results
Investor Relations (website)

Sustainability (website)
https://ryohin-keikaku.jp/eng/sustainability/

https://ryohin-keikaku.jp/eng/ir/

Contents
Introduction

Our Philosophy
Our History
Our Products
The Ryohin Keikaku Group in Numbers
Global Network

Enhancing Our Corporate Taking on the Challenge of “Public Interest
and People-Centered Management”
Value

Our Goals and How We Will Achieve Them

13
15
17
23

Medium-term Business Plan

25

The Value We Create
Message from the President

Business Strategy
Product Strategy

A Lineup of Products That Are a Part ofPeople’s Daily Necessities
Ryohin Keikaku’s Unique ProductDevelopment
ApparelHousehold Goods
Food
Procurement and Production
Raw Material Procurement

Store Strategy

Community-Based Business Model
Initiatives to Take Root in Local Society

Global Strategy
Human Resource
Strategy
Business Infrastructure

3
5
7
9
11

27
29
31
33
35
37
39

Initiatives in Our Mainland China Business
Human Capital Strategy

49

Human Resource Development Policy
and Initiatives

51

IT Strategy

53

Four Indices
Ryohin Keikaku and Sustainability

Environmental Management
1. B uild a sustainable
society while achieving Resource Recycling
circularity, andWater Resources
coexisting with nature Biodiversity
Chemical Management
Climate Change

55
57
59
59
62
63
64
65

2. R
 evitalize communities Sustainable Community Design
and resolve their issues
through localization
activities

67

Human Resources and Labor Practices
3. P romote highemployee engagement
and acquisition ofproblem-solving skills

69

Initiatives to Realize Co-owned
4. Achieve “public
Management
interest and peoplecentered management”

Basic Information

41
43
45
47

Overseas Business Expansion

Sustainability Strategy

Directors and Corporate Auditors
Corporate Governance
Messages from Outside Officers
Compliance
Risk Management
Financial and Non-Financial Highlights
ESG Data
11-Year Summary
Consolidated Financial Statements
Stock Information
Corporate Information

71
73
77
81
84
85
89
91
93
95
99
100

Editorial Policy
This report is intended to lead to dialogue with stakeholders by presenting goals for medium- to long-term value creation, management
policies, business conditions, and other information based on the philosophy and mission of Ryohin Keikaku, which is aiming to help
create “a truthful and sustainable life for all.”
Note: In this report, amounts and number of shares that are less than one unit are rounded down, and all ratios and percentages are rounded to thenearest whole number.

Scope of This Report Consolidated subsidiaries and consolidated companies of Ryohin Keikaku Co., Ltd.
Period Covered	Fiscal year ended August 2022 (September 1, 2021 to August 31, 2022)
Note: Information outside this period is reported when it is appropriate to show past events and data or recent examples.

Forward-Looking Statements
This report contains forward-looking statements and projections. These statements and projections are based on the Company’s
judgments at the time the report was produced, and include risks and uncertainties. Changes in various factors could cause actual
results to differ materially from forward-looking statements and projections contained herein.
MUJI REPORT 2022

2

Introduction

Our Philosophy

Our Corporate Purpose
Our corporate purpose is to contribute to the creation of “a truthful andsustainable life for all” through our products, services, stores and businessactivities; believing “human society rich in heart, with balanced relationshipbetween human, nature and artifacts.”

Our Two Missions
Mission 1: To provide daily necessities and services with genuine quality
and ethical value, at appropriate and affordable prices.
Mission 2: To have a positive impact on each region by operating stores thatserve as community centers, sharing concerns and values withlocal residents and collaborating with them to tackle local issues.

Our Core Value
We make efforts to reduce our environmental burden and to respectindividual human rights through our product development, services andactions. Through our core value of “contributing to society and people” ouremployees and associates will proactively respond to issues facing society
and the Earth.

Our Management Policy
We will practice “public interest and people-centered management,”
where each of our employees and associates contribute to the public
interest through our business activities and locally rooted stores, have asense of ownership and take leading roles in the community.

Enhancing Our Corporate Value
Through our activities, we will create a highly profitable business structure,
pay taxes properly and return profits to shareholders appropriately.
Furthermore, we will strive to create long-term value for the Company bymaking a positive impact on society together with stakeholders.

3 MUJI REPORT 2022

MUJI Tsuruya Azumino Hotaka

MUJI REPORT 2022

4

Introduction

Our History
In order to realize “a truthful and sustainable life for all,” we have a “Grand Strategy” of contributing to society and people. Of
course, as a business enterprise, profit is also important for us, but our top priority is this “Grand Strategy.” Ryohin Keikaku
has been working to make a contribution wherever it can help with social issues and people’s concerns. This approach has
led to the Ryohin Keikaku of today.

2001-2015

1980-2000
How things should be

The relationship between daily life and things

We aimed to eliminate waste and create products that are truly
useful to consumers from the perspective of selection of materials,
streamlining of processes and simplification of packaging.

We sought to give customers a feeling of rational satisfaction,
expressed not with “This is what I really want,” but with “This will do.”Our Perspective

Apps
ApparelIDÉE

FurnitureCampsites
Householdgoods and foodHousesBicyclesCafe&Meal MUJI

History of Ryohin Keikaku
1980
Seiyu Co., Ltd., a Japaneseretail company, establishedMujirushi Ryohin (MUJI) as
its private brand

1983
First directly managed store,
MUJI Aoyama, opened in
Japan

1986
Production and procurement
started outside Japan

1989
Ryohin Keikaku Co., Ltd.
established

5 MUJI REPORT 2022

2001
MUJI Yurakucho opened

1991
Began business outside Japan(First store in U.K. and first store
in Hong Kong opened)

2005

2011
Found MUJI Aoyama opened

2012
Muji Retail (Thailand) Co., Ltd. established

MUJI (Shanghai) Company Limited
established

2013

1995

2006

Joined UN Global Compact
Launched MUJI passport smartphone app

MUJI Tsunan Campsite opened

Business transfer from IDÉE Co., Ltd.

2000

2007

Listed on the first section of theTokyo Stock Exchange
MUJI.net Co., Ltd. established(currently MUJI HOUSE Co., Ltd.)First store in U.S. opened

MUJI Sino-Ocean Taikoo Li Chengdu, theglobal flagship store in China, opened

2010

2015

Began MUJI x JICA Project Kyrgyz

Began ReMUJI recycling initiative

2014

2016-2020

2021-

A truthful and sustainable life

“A truthful and sustainable life for all,” and beyond

By providing functional, streamlined products that help simplify
and beautify people’s lives with “conscience and creativity,” wehave contributed to solving social issues with proposals ofideas for peaceful, relaxed living.

We offer affordably priced products that are useful and truly essential, in addition to
being good for the environment, producers and local communities. We will also
evolve our efforts to help solve local issues, and contribute to the harmonious
coexistence and development of daily life, culture and the environment together
with local communities.

From products tolifestyle options
Hotel
From storesto localcommunity
centers“Roadsidestation” outlets
Healthcare

Self-driving
vehicles(preventive careand well-being)

Food and
agriculture

Home renovation
Social capital

Flagship store

Culture andarts

Mobile sales

2016

Fiscal year ended August 31, 2022

Entered the market in India as the firstJapanese retailer there

Operating revenue

2017

JPY

Number of MUJI stores surpassed 400 bothin Japan and overseas

2020

2018

Established production management base in Vietnam
Launched MUJI passport Pay service

Began sales of frozen food2019
MUJI Ginza and
MUJI HOTEL GINZA opened

Operating profit

JPY

2021

496.1 billion
32.7 billion

New start under our “Second Founding”
Started monthly furniture rental service
Opened Healthcare Center
Note: The graph in the background shows operating revenue.
MUJI REPORT 2022

6

Introduction

Our Products
Throughout its history, Ryohin Keikaku has tried to help resolve social issues through its products based on the idea of being
useful. In doing so, three perspectives in our product development have remained unchanged since the launch of the MUJI
brand in 1980: selection of materials, streamlining of processes and simplification of packaging. We develop no-frills, quality
products and select materials that take the global environment and producers into consideration, eliminate waste in allprocesses, and provide customers with what they actually need, in the form they actually want.

Three Perspectives

Apparel—Our basic approach to product development—

Selection of Materials
We review materials by always returning to thebasics of product development that are often
overlooked in creating delicious and healthy food,
comfortable clothes that fit well, and household
goods that put function first. We provide highquality products at affordable prices by utilizing
materials that are rejected despite their quality
because of their appearance, using commercial
materials, accessing raw materials from global
markets, and procuring large quantities ofseasonal goods at low cost.

Household goods

Streamlining of Processes
We work to improve processes right down to the
production of a single product. For example, we
eliminate problems associated with sorting andarranging sizes, and we also make products fromgoods rejected because of nonstandard size or
shape. We eliminate unnecessary work. This
includes work that is not related to the fundamental
quality of the product, such as excluding unevenshapes/colors or polishing. Our approach todeveloping no-frills, quality products eliminatesmaterial waste and reduces costs.

Simplification of Packaging
All MUJI products have always appeared in storesfeaturing only a package or tag simply giving
product details. For products that may need extra
packaging, we bundle them together or use acommon container. We pursue ongoing initiatives
to reduce trash because we do not wantresources to go to waste.

7 MUJI REPORT 2022

Food

1980 to 2021

2022

Simplifying Processes

Recycling and Effectively Using Resources

1983: Pre-washed shirts

2022: Down series made with recycled nylon fabricSince washing clothes changes the texture of thefabric, it was assumed that shirts also had to be
starched and ironed before sale. We overturned
this conventional wisdom with the launch ofpre-washed shirts that make the most of theirnatural texture. While omitting some processes
and reducing costs, we also put effort into
selecting materials. Ever since, product styles,
materials and production areas have evolved
further, undergoing both extensions andsubdivisions, according to the times.

We updated our lightweight down apparel by using
eco-friendly recycled nylon fabric. Waste threads
generated during the production process, which
are normally discarded, are collected, washed andcrushed. They are then broken down again intonylon thread for recycled nylon products. As partof our efforts to use finite resources without waste
and to reduce our environmental impact, we
adopted 100% recycled nylon for the inner filling of
our lightweight down products.

Rethinking Functions

Preparing for Natural Disasters and Practical Use

1991: Mattress with Legs

2022: Cardboard beds

Upon hearing that many Japanese people sleep
on a futon placed on top of a bed frame, we
wondered whether they might also use amattress without a frame. This simple idea led
to the launch of Mattress with Legs, whichbecame a major hit product with total sales
easily exceeding 1 million units. Even after its
launch, we have continued to refine the productby incorporating customer feedback to make
improvements in every aspect, including
comfort, durability and price.

Based on the concept of everyday goods that
can also be useful in emergencies, we havedeveloped products in response to the opinionsof people who have experienced life as
evacuees. In collaboration with the Voluntary
Architects’ Network, a non-profit organizationthat has been working for many years to improveconditions at evacuation centers, we launched
an easy-to-assemble cardboard bed for use inlimited space.

Investigating the Essence

Addressing Food Loss

1980: Koshin Shiitake Mushroom Pieces

2022: Irregular Baumkuchen series

Dried shiitake mushrooms have high nutritional
value and can be rehydrated for use as a soup
stock, but everyone in Japan took it as a giventhat they were expensive. Our Koshin Shiitake
Mushroom Pieces disproved this common belief.
The secret of its low price was that MUJI was
the first company to omit the sorting processused to standardize sizes and reject broken
items. Our ambition to develop a product to“provide customers with the lifestyle essentials
they actually need, in the form they actuallywant,” which was printed on the package at thetime of the launch, found acceptance among
many customers.

Some loss inevitably occurs in the manufacturing
process. Food may taste the same, but it isdiscarded because of its appearance. To
eliminate this wastefulness, our Irregular
Baumkuchen uses the entire cake up to its
edges. Some twenty years have passed since
the launch of Irregular Baumkuchen, a productthat shows our respect for food. With theaddition of variations such as a series withchocolate coating, its concept continues to evolve
as a confectionery that enriches everyday life.

MUJI REPORT 2022

8

Introduction

The Ryohin Keikaku Group in Numbers
In the 42 years since the creation of MUJI, we have continued to design and develop no-frills, quality products by focusing on selectionof materials, streamlining of processes and simplification of packaging. The foundation of our ideology has not changed since MUJI’s
inception, and like a compass pointing north, it continues to orient us toward the essential and universal aspects of daily life.

Financial Data
Operating Revenue

JPY

496.1billion

Operating Profit

Operating
RevenueJPY

32.7 billion

Operating
ProfitAn increase in the number of stores due to new store openings both inJapan and overseas resulted in record-high operating revenue.

Operating profit, ordinary profit and net income attributable to ownersof parent decreased as growth in operating gross profit slowed down
due to tough sales conditions for apparel as well as the impact of the
sharp depreciation of the yen and higher transportation costs.

ROE (Return on Equity)

ROA (Return on Total Assets)

10.8%

ROE

9.4%

ROA

ROE for the fiscal year ended August 31, 2022 was 10.8%. We areworking to improve capital efficiency with the goal of maintaining ROE
at 15% or higher.

ROA for the fiscal year ended August 31, 2022 was 9.4%. We areworking to improve capital efficiency with the goal of maintaining ROA
at 15% or higher.

Dividend Payout Ratio

Operating Revenue by Product Category

42.9%
We are committed to returning profits to our shareholders with anannual payout ratio of 30% of consolidated earnings as a basic policy.
The dividend for the fiscal year ended August 31, 2022 was JPY 40.0
per share.

Other

4.2%

Apparel

Food

12.1%

Household goods

36.8%
46.9%

Environmental Data
Number of Textile Products Using
Recycled Materials

Number of Stores Holding
Food Drives2

69

79

1

The above figure is the number of textile products (including appareland household goods) that use recycled materials sold during the2022/2023 fall/winter season.

9 MUJI REPORT 2022

1

We have begun holding food drives in partnership with local governments aspart of efforts to reduce food loss. In this initiative, surplus items fromhouseholds that are nearing their sell-by date are collected at stores anddonated to local welfare groups and facilities through food bank organizations.

Non-Financial Data
Number of Employees

Percentage of Outside
Directors(Ryohin Keikaku Group)

19,009(9,834)

5 out of 8

We had 19,009 employees worldwide (including 9,834 temporary andother workers) as of August 31, 2022.

The percentage of outside directors was 62.5% as of November 23, 2022.

Number of Cooperation Agreementswith Local Governments

Percentage ofFemale Directors

22

3 out of 8

1

We create new value in cooperation with local governments andresidents by promoting initiatives that benefit people in the area,
including local production for local consumption, creation of jobs andcommunity development. As of August 31, 2022, we had entered into
cooperation agreements with 22 local governments in Japan.

The percentage of female directors was 37.5% as of November 23, 2022.

Number of Active Users of
the MUJI passport App

Percentage of Womenin Managerial Positions

13.09 million

1, 2

20.7%

1

Launched in May 2013, the MUJI passport app is available in 11
countries and regions including Japan as of August 31, 2022. Active
users in Japan during the fiscal year ended August 31, 2022 totaled
13.09 million.

Excluding executives, 36 women hold the rank of section manager orhigher, accounting for 20.7% of all employees in such positions. In
addition, 282 women hold the rank of store manager or higher at
directly managed stores in Japan, accounting for 39.1% of all
employees in such positions.

Number of Stores with Water Refill Stations

Volume of Textile Products Collected357

49.1tons/year

1

To reduce plastic waste, we have set up water refill stations in MUJI
stores. This is a free water dispensing service that uses tap water andis available to anyone who brings their own bottle.

1

With the aim of building a recycling-based society, we have beencollecting textiles since 2010. After collection, products are reprocessed
for sale under the ReMUJI brand. See page 61 for details of this initiative.

Note: Figures as of August 31, 2022.
1. Ryohin Keikaku Co., Ltd. only
2. Includes registered members of external communication apps from the fiscal year ended February 2019.

MUJI REPORT 2022

10

Introduction

Global Network (As of August 31, 2022)
We operate directly managed MUJI stores and a wholesale business in Japan and overseas, with more than 1,100 stores in 32
countries and regions (as of August 31, 2022). Although points of emphasis differ depending on the region, by enhancing ourlineup of locally developed products and services that match lifestyles in each region, we establish a locally rooted businessmodel. We also focus on hiring employees locally. We will continue to expand globally with the aim of being useful to thepeople of each country and region where we operate to help realize “a truthful and sustainable life for all.”East Asia
Europe6,580(1,702)1

670(195)1

442

384

23

Japan

2

10,049(7,443)1

5032

Southeast Asia

29
1

1,237
(213)1

3754
2

Oceania128(64)1
Number of Employees
Number of Stores
CafésHotelsCampsites

11 MUJI REPORT 20225

32
Number of Stores
1,1363
Number of Employees
19,009WorldwideCountries/Regions
Where We Operate(9,834)1
North America

Breakdown of Operating Revenue by Area
Europe/North America

345(217)1

19

Southeast Asia/
Oceania

5.4%

4.4%

Japan

East Asia

62.1%

28.1%

Breakdown of Employees by Area
Europe/North America
Southeast Asia/
Oceania

5.3%

7.2%

Japan
East Asia

52.9%

34.6%

1. Number of temporary employees (full-time equivalent for the year)
2. Including 10 IDÉE stores and 81 licensed stores
3. Including licensed stores, Café&Meal MUJI and IDÉE
4. Including licensed stores

MUJI REPORT 2022

12

Enhancing Our Corporate Value

Taking on the Challenge of “Public Interest andPeople-Centered Management”
Ryohin Keikaku’s Heritage and “Public
Interest and People-Centered Management”
MUJI was created in 1980 as a private brand of Seiyu Co., Ltd.
In reaction to a sense of incongruity with the consumer society
and brand orientation of the time, we launched our “no-brand”
concept to handle items and other goods overlooked amid
growing commercialism and to uncover what “quality products”
means to consumers.
A corporate stance of continuing to oppose what isincongruous and unreasonable in society, encompassing a quest
for a better way of life and the universal desire to “contribute tosociety and people,” is part of our heritage. This desire is thefoundation of our “Grand Strategy,” in keeping with what we
intend to contribute to society, the world and the future.
However, social conditions and other factors have changed
significantly since our founding. MUJI’s essential concepts andideas have not changed, but the nature of its business activities is
becoming broader in line with changes in the external environment.
In September 2021, Ryohin Keikaku adopted a new
management structure, declared its “Second Founding,” andbegan initiatives to create a “better future society in 100 years.”
Another aspect has been advocating “public interest and peoplecentered management” as our management policy. This meansthat we place employees with a sense of ownership in leadingroles in our business activities. The activities of independent,

locally rooted stores and of individual employees and associates
also contribute to the public interest.
We want people to understand why Ryohin Keikaku is taking
on the challenge of “public interest and people-centered
management” and the nature of our activities in order to obtainwidespread sympathy and approval. In doing so, we aim for “atruthful and sustainable life for all” that achieves a balance among
the economy, the environment and culture.

Ryohin Keikaku Aims to MeetSociety’s Expectations
The “truthful and sustainable life for all” that Ryohin Keikaku
envisions is one where people think not “This is what I reallywant,” but “This will do.” The former is what feels incongruent
with contemporary society, which is replete with strong
individuality and preferences. In response, we want Ryohin
Keikaku to be a company that considers the Earth and provides
the satisfaction of “This will do.” This includes providing an
explanation of the reasons behind our “This will do” approach.
Excessive capitalism has given rise to a state of degeneration1
in society. Countries, companies and individuals prioritize
immediate profit, and self-interest is given precedence. Even
though people should be economically comfortable, their intrinsic
human emotions and senses have become paralyzed, leaving
them feeling somehow alienated and dissatisfied. Many people

Masaaki Kanai
Chairman & Representative Director

13 MUJI REPORT 2022

seem to be losing their autonomy as they are immersed in theconvenience and passive pleasures of digital technology. In
addition, amid concerns about shortages of food and water
resources as the global population increases to a projected 10.9
billion by 2100, Japan’s population is forecast to decrease to 60
million, resulting in a shortage of people to support society. For
this reason, I believe that the issues facing contemporary society
are a complex mix of four elements: excessive capitalism, selfdomestication,2 response to the digital society, and demographics.
To resolve these issues, each of us must have a strong desire
to change society and the world, to independently consider the
public interest, and to take action. As one initiative to facilitate
this, Ryohin Keikaku operates a stock ownership association,effectively creating an organization in which each employee candemonstrate ownership and think and act on their own. In
addition, stores do not just sell products, but also work closelywith their communities to help resolve local issues, which in turnhas a positive impact on Ryohin Keikaku’s business operations.
We would like to establish a robust business model in which ourvoluntary actions that emphasize the public interest ultimately
coincide with the logic of capital.

Ryohin Keikaku’s Vision for Happinessindividuals—and to become a social platform that maintains “atruthful and sustainable life for all” to further the co-creation oflifestyles, societies and communities that are truly generous. That
is why we emphasize living up to the trust placed in us andmeeting expectations through dialogue with our stakeholders,
including employees, business partners, customers, local
communities and investors. We are conducting research with
universities and think tanks on how to realize systems andapproaches to governance for co-creating “a truthful andsustainable life for all” as we also make various efforts to increase
opportunities for meetings with individual investors, loyal MUJI
supporters and others.
With a sense of contributing to society and people as well as
by working with colleagues for the co-creation of a mutually
supportive society, we want to be a force that supports the kindof happiness that is irreplaceable.
1. Degeneration: A state in which a few species proliferate abnormally anddrive out a large number of other weaker species, leading to an oligopolyof species.
2. Self-domestication: The idea that if domestic animals can be defined as“animals that have been cut off from the wild and have undergone changes
in their appearance and habits for the convenience of humans,” then humanbeings themselves have also been domesticated by their adaptation to ourcurrent social and economic systems, turning themselves into domestic
animals through the loss of intrinsic human emotions and senses.

Our aim is to make a major shift in perspective—from the logic ofcapital to a humanistic perspective that arises from diverse

Governance System

MUJI stores
Local
Communities

Contribution to local
communities and society

Unique platform
ProfitAdvisory Board
Note: See page 78
for details.

Ryohin Keikaku
OutsideDirectors

Board ofAuditors

Supporters/
Customers

Dividends/
Transactions/
SalaryCustomers

Employee
Shareholders

Management
evaluation

Employees

Society

Shareholders
and Investors

Business
Partners

Governance system for co-creation of “a truthful and sustainable life for all”

MUJI REPORT 2022

14

Enhancing Our Corporate ValueThe Value We Create
Structure of Our Business Activities
Based on our core value of “contributing tosociety and people,” we will work with all of our
stakeholders to resolve social issues. The
participation of our stakeholders enables us toprovide products and services “to be a part ofpeople’s daily necessities” and to promote
activities that enable us “to take root in local
society,” which will lead to creation of new value.

Six Foundations

Human
Capital• Number of employees globally: 19,009•	A corporate culture based on our founding
philosophy of practicing ESG management•	Human resources that enable MUJI’s uniqueform of product development• An advisory board made up of industry experts

SocialCapital•	Downloads of MUJI passport app: 69.78
million•	Number of cooperation agreements withlocal governments: 22• Community Market events in stores• Countries/regions where we operate: 32Intellectual
Capital• MUJI design• Product planning know-how•	Know-how in sourcing of materials andraw materials•	Store design with consideration for theenvironment and community

Financial
Capital• Net assets: JPY 244.8 billion• Capital: JPY 6,766,250,000• Equity ratio: 60%

Manufacturingand Marketing
Capital• Number of stores: 1,136• Distribution bases in Japan: 9• Distribution bases overseas: 27•	Production partners who share MUJI’s
perspective of product development

NaturalCapital• Electricity consumption: 74,939 MWh• CO2 emissions: 1.02 million t-CO2• Water consumption: 150 thousand m3(Ryohin Keikaku Co., Ltd. only)

Social Issues
Escalating
environmental
problems

15 MUJI REPORT 2022

Shrinking labor force

Changes in lifestyles

Rural depopulation

Public Interest and People-Centered Management
The MUJI stores that Ryohin Keikaku operates are venues for activities that benefit the public interest. Our aim is to practice “public interest
and people-centered management” in which the value and profit generated by the participation of stakeholders are shared with thosestakeholders and used to fund further activities. (See pages 13-14 for details.)

Participation

Returns

All stakeholders are encouraged to freely participate
in Ryohin Keikaku’s activities in various ways, suchas by making an investment, cooperating in initiatives
or purchasing products.

Co-Creation

All stakeholders participate directly in MUJI’s activities, and we
also develop new products and services together with them.

All stakeholders receive benefits in some form,
whether it be dividends, profit, or discounts.

Enjoyment

All stakeholders benefit in various ways, including through quality
products and services, community vitality and growth, andimprovement of the environment.

Helping to Realize “a Truthful and Sustainable Life for All”
Economic growth inproduction areas

Circular economy

Enhancement ofquality of life

Community
revitalization

Public Interest and People-Centered Management(See pages 13-14 for details)

Participation

Co-Creation
Customers

Employees

Structure of Our
Business Activities

To be a part ofpeople’s daily
necessities

To take root in
local society(See pages 27-40 for details.)(See pages 41-44 and67-68 for details.)

Local
communities
and society

Business
partners

Shareholders
and investors

Governments

Returns

Enjoyment

MUJI REPORT 2022

16

Enhancing Our Corporate Value

Message from the President

Aiming to be a Platform to Make a Better Society
Nobuo Domae
President & Representative Director

17 MUJI REPORT 2022

The Value Ryohin Keikaku Has Provided
For over 40 years, Ryohin Keikaku has rolled out a variety of initiatives around the world to realize “a truthful andsustainable life for all.”
MUJI, the brand developed by Ryohin Keikaku, was launched in 1980 as a private brand of Seiyu Co., Ltd.
(now Seiyu GK). MUJI started with nine household goods and 31 food items, and it has now grown into a businesswith more than 1,100 stores worldwide, handling thousands of items, including apparel, household goods, and food.
Mujirushi Ryohin, the original Japanese name that has been shortened to “MUJI,” means “unbranded quality products.”
MUJI began as a social movement to make a better society based on the concept of planning, developing andproviding basic products for daily life from the viewpoint of the consumers who use them, without dazzling
customers with a brand name. MUJI remains imbued with this ambition, unchanged even after 40 years. Moreover,the presence of customers and business partners who share our way of thinking is a major source of support andstrength for Ryohin Keikaku.

A Sense of Impending Crisis in a Changing
Social Environment
Society and people’s lives are changing drastically. In addition to worsening environmental and social issues such as
climate change, the COVID-19 pandemic has significantly altered people’s lifestyles and values over the past few
years. The emergence of conflict in Ukraine and other geopolitical risks have also given rise to conditions in which
many people are struggling just to maintain their lifestyles.
On the other hand, reflecting on our business as it faces up to this changing world and consumer values,
I cannot honestly say that we have sufficiently addressed these issues yet. Our business model that was thecornerstone of our founding ambition has begun to grow stale, as shown by our business performance in the fiscal
year ended August 31, 2022, when our consolidated operating revenue increased but operating profit decreased
year on year.
I believe this is because we did not move quickly enough to address the changing world and consumer values.
We were unable to envision the future we wanted for society, nor to boldly overhaul our business structure to meetthese challenges. As a result, I sense an impending crisis as MUJI’s uniqueness and superiority gradually decline,
and it becomes more like other companies.
However, conditions like this make it all the more important for Ryohin Keikaku to not just create and offer
products, but to link them to resolving social issues through its business. That is precisely what we have emphasizedsince our founding.

The Impetus behind Our “Second Founding”
Our corporate purpose is “to contribute to the creation of a truthful and sustainable life for all through our products,
services, stores and business activities; believing human society rich in heart, with balanced relationship between
human, nature and artifacts.” I intend to faithfully fulfill this purpose, especially given the current state of the world.
I believe that now is the time for Ryohin Keikaku to contribute to society through its business with the value that only
MUJI can and must provide.
With the above in mind, Ryohin Keikaku has gone back to its roots and renewed its commitment to creating
new businesses and initiatives that contribute to consumers, society and the global environment. This is our“Second Founding,” and it is already underway.
The “Second Founding” is an initiative to realize our corporate purpose and two missions. The first mission is “toprovide daily necessities and services with genuine quality and ethical value, at appropriate and affordable prices.”
The second mission is “to have a positive impact on each region by operating stores that serve as community
centers, sharing concerns and values with local residents and collaborating with them to tackle local issues.” Goingforward, MUJI will continue providing even more value to society through its products and services to create a better
environment and society.

MUJI REPORT 2022

18

2030 Vision
To be a part of people’s daily
necessities
To realize thisvision, we will

To take root in local society●

Practice independent store management and co-owned management●

Provide comfortable online services●

To be a front runner of ESG management

Progress of the Medium-term Business Plan
Under Ryohin Keikaku’s medium-term business plan, we aim to achieve the following four goals by 2024.
1. Create the finest and unrivaled products that are essential to daily life, and establish the processes of procurement
and production.
2. E
 stablish a community-based business model centered on independently managed stores and open new storesthroughout Japan.
3. D evelop organizational culture in which all associates work proactively, leading to the independent growth of eachstore, region and country.
4. B uild the business infrastructure and headquarters functions to support independent store management and localization.
With the announcement of our medium-term business plan, the start of various new initiatives, and the additionof new colleagues who share our corporate purpose and missions, a new awareness is beginning to growthroughout the Company. More than ever before, I sense a real desire to create something new together.
In this context, I would like to introduce the six core themes that Ryohin Keikaku is currently tackling.

1. Strengthen product competitiveness
Ryohin Keikaku aims to capture the top mindshare for products essential to daily life. We must start by reviewing
mainstay products and work to enhance product development. Product development will be oriented toward highquality standard products that have been perfected by refining them to their essential elements, and products that
embody the concept of “lower priced for a reason”
by assimilating insights from lifestyles around theworld. We will think outside the box to develop
and provide products that help resolve social
issues and improve the global environment themore customers use them in their daily lives.

2. Increase involvement in production
We will increase direct transactions with thefactories of production partners to which MUJI
outsources its products, and exert greater control
over production and procurement processes and

19 MUJI REPORT 2022

Message from the President

personnel. By directly including Ryohin Keikaku
employees in product development throughinvolvement at raw material procurement areasand in production processes, we will establish aframework for stable production at the optimum
cost. For aspects from the shape of a product toits production schedule, we will also consider the
production process and convenience for partner
factories to eliminate waste and thus minimize
costs. In addition, we aim to benefit the countries
and regions where our products are produced. We
will give priority to production partners that reinvest
factory profits locally as part of their efforts to contribute to their communities. To achieve these goals, we will ramp
up hiring and training of human resources who can directly contribute to the production process at factories.

3. Enhance marketing activities for products
We will enhance marketing activities for individual products. In its communications with the public, Ryohin Keikaku
has previously focused on conveying the overall MUJI concept rather than proactively marketing specific products.
As a result, sometimes products that receive strong support from some customers have not even been noticed bymany others. In addition, even good products have become difficult for customers to find among the wide range of
product categories in our large stores. We will therefore open stores focused on specific product categories, such as
our new business format MUJI 500, and ramp up communication activities for individual products, including byspreading product information via social media.

4. Establish a store network and new channels
For MUJI to be useful to communities throughout the country, we are opening 600 tsubo (approx. 2,000 m2) stores,
mainly next to supermarkets, at a rate of 100 stores a year in Japan. We aim to make these stores useful in daily life
by devoting more floor space to daily necessities. We will also expand our store network and sales channels
independent of our own stores through measures including establishing MUJI corners at convenience stores, via
consumers’ cooperative store home delivery services, and inside supermarkets.

5. Enhance operations
Ryohin Keikaku will enhance the operational capabilities of its stores and headquarters to underpin independent andautonomous store management by employees. Efficient standardized operations, a solid business infrastructure androbust store support capabilities will give each store the security to conduct management in line with local conditions
and issues. As we work to change our employees’ way of thinking to facilitate independent store management, we
will concurrently consider new ways of operating stores and enhance development of human resources to improvetheir in-store performance capabilities.

6. Make ESG the core of our business
Since its founding, Ryohin Keikaku has consistently emphasized a perspective based on ESG. We aim to embody
an environmental (E), social (S) and governance (G) perspective in all aspects of our business. This includes
developing products for a better environment (E) and society (S) as well as establishing a governance (G) structurethat goes beyond our existing corporate framework. Furthermore, as a new initiative, we will begin commercializationin areas including healthcare, food and agriculture, and the utilization of unused local resources.

MUJI REPORT 2022

20

Product Development from an ESG Perspective for
Medium-term Growth
Ryohin Keikaku aims to be a company that supports society and people by providing products essential to daily life.
We want MUJI to be a collection of specialty stores where each of our product lines is a market leader because of
our unique perspective. The key to achieving this objective is ESG.

Environment (E)
MUJI aims to help resolve environmental issues by providing products with reduced (or improved) environmental
impact. We will develop products that use environmentally friendly materials and minimize energy consumption
without relying on fossil fuels.

Society (S)MUJI aims to make a better society by providing products that help resolve social issues. We will establish
industries in emerging countries to develop products that enrich local lifestyles and products that carry on
the positive traditions, culture and wisdom of each region.

Governance (G)MUJI aims to promote the direct and open participation of not just Ryohin Keikaku employees, but also
consumers, business partners, external experts and others in its product development. We will focus on
aspects of their lifestyles where there is a sense of incongruity, to develop products that support the lifestylesof all.

By advancing these ESG measures, we will create products that support the lifestyles and society of the future.
The key is to set prices that everyone can easily afford. The greater the energy consumed in the production process,the higher the cost of merchandise. Reconsidering raw materials and simplifying processes to create goods at alower cost enables us to reduce both environmental impact and selling prices, thus making our products easier for
more people to purchase. In other words, I believe that an increase in the number of people who use MUJI products
will lead to a better environment and society, and in turn to our business growth over the medium to long term, thus
creating a virtuous cycle.

Opening Our Path to the Future by Innovating Our
Product Mix and Business Structure
In January and February 2023, Ryohin Keikaku raised the prices of about 20% of its total product lineup, including
large furniture, plastic storage units and bedding covers. Amid hikes in raw material prices and the rapid depreciationof the yen, we reached the limit of what could be achieved by improving efficiency in the production process, anddecided to raise our prices to maintain sound business management.
We would like to take this as a good opportunity to challenge ourselves to “change the product mix,” “change
the products themselves,” and “change the business structure” from the ground up, rather than just responding tosmall price changes.
First, changing the product mix entails revising the lineup. For example, we have raised the prices of somecurrent bed linen products, but we will also develop new products in a lower price range using alternative functional
materials to meet the needs of price-conscious customers. In addition, we will incorporate insights learned fromlifestyles around the world to further extend our selection of affordably priced products.
Next, changing the products themselves means rethinking products from an ESG perspective to achieve asubstantive evolution. Going forward, we will launch a succession of products that help to resolve social and21 MUJI REPORT 2022

Message from the President

environmental issues. In particular, we intend to switch from plastic to alternative and recycled materials, ramp up
the collection of plastic products that are sitting unused in households, and cooperate with other companies tocreate new industries.
Finally, changing the business structure involves altering customers’ purchasing behavior. For example, byintroducing a monthly rental service for our furniture and switching to a business that promotes rental and reuse. By
reducing the initial investment required when purchasing furniture and passing on used items to those who needthem after maintenance and repair, we intend to redefine the common concept of furniture as something that ispurchased and then discarded when no longer wanted. In addition, by leveraging our strengths in the space designbusiness to provide comprehensive services that range from living spaces to lifestyles, we aim to establish a spacebusiness that can contribute to the environment and society while also supporting our customers.

Becoming a Company That Helps Make a Better Society
In these times of major change, society’s expectations for and interest in sustainability and ESG perspectives
continue to increase. This has strengthened Ryohin Keikaku’s resolve to contribute to creating “a truthful andsustainable life for all.” We will continue to move forward with our “Second Founding” to evolve from a company thatmakes and sells good products into a company that helps make a better society. In our initiatives to co-create alongwith many others and to contribute to the creation of a better society, we want to make Ryohin Keikaku an
indispensable part of the public infrastructure by taking the lead in providing a platform for making a better society.
There are many challenges to overcome, but we intend to squarely address and steadily carry out our “Second
Founding” to realize our corporate purpose. You can look forward to great things from Ryohin Keikaku as we move ahead.

MUJI REPORT 2022

22

Enhancing Our Corporate ValueOur Goals and How We Will Achieve Them

“Second Founding”

2022

2023

2024

Financial KPIs

2022/8 results

2023/8 forecast

2024/8 target

Operating revenue

Operating profit

Number of stores

Average area of standard stores

JPY 496.1 billion JPY 585.0 billion JPY 700.0 billion
JPY 32.7 billion

1,136

JPY 34.0 billion

1,202
–

300 tsubo*

10%

–

15%

Actions up to 2030

Store Strategy → Page 41

Global Strategy → Page 45

Human Resource Strategy/
Corporate Culture Reform → Page 49

Business Infrastructure(IT Strategy) → Page 53

ESG Management → Page 57

23 MUJI REPORT 2022

1,300

293 tsubo*

Online sales ratio

Product Strategy → Page 27

JPY 75.0 billion•	Rethink product lineup, quality, price and significance from theperspective of use in daily life•	Contribute to regional development in production areas bystrengthening procurement and production processes•	Prevent inventory shortages and excesses by reinforcing supply
chain management•	Establish sustainable agriculture and food businesses andcontribute to regional development•	Create systems for conducting space design and renovation as acore business•	Launch a series of services, including those related to healthcare
and recycling•	Launch of Regional Business Units to establish a community-based
business model•	Double the pace of store development by opening stores inresidential areas•	Open stores in residential areas and improve cost efficiency•	Create a new service responsible for online sales, payment, logistics
and other functions•	Build a top management team capable of leading our “Second Founding”•	Take new approaches to recruiting and training, and create newyoung leaders•	Promote initiatives to pass down MUJI concepts to more people•	Develop a proactive, independent and teamwork-oriented
corporate culture•	Establish systems to realize co-owned management•	Strengthen human resources and improve the efficiency ofheadquarters administration divisions•	Strengthen the IT team and ERP system•	Structure logistics from the viewpoint of total social cost•	Build platforms to support business activities and the localization
activities of stores•	Establish risk management systems

Creation of the basis for our“Second Founding”

Create the finest and unrivaled productsthat are essential to daily life, andestablish the processes of procurement
and production.

Establish a community-based businessmodel centered on independently
managed stores and open new storesthroughout Japan.

Develop organizational culture inwhich all associates work proactively,
leading to the independent growth ofeach store, region and country.

Build the business infrastructure andheadquarters functions to support
independent store management
and localization.

2030

…

2030 Vision

To be a part of people’s
daily necessities

To take root in local
society

We make efforts to reduce our environmental burden and to respect individual human rights
through our product development, services and actions.

Practiceindependent store
management andco-ownedmanagement

Providecomfortable online
services

To be a front
runner of ESG
management

2030/8 target
Operating revenue

JPY 3.0 trillion

Operating profit

JPY 450.0 billion

Number of stores

2,500

Average area of standard stores

Online sales ratio

550 tsubo*30%* 1 tsubo = 3.306 m2

MUJI REPORT 2022

24

Business Strategy

Medium-term Business Plan
Targets for 2024
Based on our core value of “contributing to society and people,” we have set a vision for 2030 that looks ahead to a better world
100 years from now. We have positioned the three years that began with the fiscal year ended August 31, 2022 as a period ofstrengthening our foundation for this purpose, and set the following four priority areas (as stated in our medium-term business plan).
1. Create the finest and unrivaled products that are essential to daily life, and establish the processesof procurement and production.
2. Establish a community-based business model centered on independently managed stores and open
new stores throughout Japan.
3. D evelop organizational culture in which all associates work proactively, leading to the independent
growth of each store, region and country.
4. B uild the business infrastructure and headquarters functions to support independent store
management and localization.

Operating revenue

Operating profit

Number of stores

JPY 700.0 billion

JPY 75.0 billion

1,300

For details of the medium-term business plan ▶https://www.ryohin-keikaku.jp/eng/ir/ir_archive/mt_business_plan/

Fiscal Year Ended August 31, 2022
In the fiscal year ended August 31, 2022, which was the first year of the medium-term business plan, we worked to build our businessfoundation by ramping up store openings in Japan and overseas, strengthening our organization and developing human resources on thefrontlines at stores. However, issues still remained in the areas of enhancing product competitiveness and profitability.
As we accelerate the pace of store openings going forward, it will be important to stably manufacture and supply products at appropriate
prices while maintaining product quality and keeping environmental issues in mind.
Furthermore, employee independence is the key to carrying out the medium-term business plan. We will achieve sustainable growth byfocusing on shifting from a centralized, administratively controlled organization to an autonomous decentralized organization, and by incorporating
diverse values to revitalize our corporate culture.
Operating revenue

JPY 496,171 million (9.4% increase year on year)

Operating profit

JPY 32,773 million (22.8% decrease year on year)

Ordinary profit

JPY 37,214 million (18.0% decrease year on year)

Net income attributableto owners of parent

JPY 24,558 million (27.6% decrease year on year)

Issues		Products
There has been a delay in revamping, updating and switching to concepts attuned to the times.
●		
Production system and cost structure The operating gross profit margin has declined due to the rapid depreciation of the yen and risingtransportation costs, in addition to tough conditions for apparel sales.
●		The percentage of customers who buy single items is high, and MUJI is not recognized as a total
Weakening recognition
lifestyle support brand. Our appeal to young people is weak.
●		
Due to insufficient product competitiveness, sales per square meter are weak at all stores andStore earnings structure
profits are in a slump.
● Persistent high expenses		High expenses for warehousing, distribution, system operation and other areas require structural reforms.
●		
ESG promotion
In our core operations, we have not been able to thoroughly incorporate ESG in every stage of our
product development to establish a business with an impact. We have yet to achieve a structure inwhich localization activities are reflected in store earnings.
●

25 MUJI REPORT 2022

Six Core Themes for the Fiscal Year Ending August 31, 2023

1.

Strengthen product competitiveness → Page 29

2.

Increase involvement in production → Page 37

3.

Enhance marketing activities for products → Pages 31, 33 and 35

4.

Establish a store network and new channels → Page 41

We will enhance the production and product development teams for both apparel and household goods tostrengthen product competitiveness.
Product development will be oriented toward high-quality standard products that have been perfected byrefining them to their essential elements, and products that embody the concept of “lower priced for a reason”
by assimilating insights from lifestyles around the world
We will think outside the box to develop and provide products that help resolve social issues and improve
the global environment the more customers use them in their daily lives.

We will minimize costs by building an efficient production system centered on the Development & Production
Division, which was established in September 2021. The system is tailored to the convenience of producers,which will include direct transactions with factories, a shift to local development and production, and levelingof production volumes.
We will enhance human resource training with the aim of raising the ratio of direct transactions withfactories from 20%-30% in the fiscal year ended August 31, 2022 to about 80% by August 31, 2024.

We will ramp up advertising for individual products. For existing products that are competitive but whose value
has not yet been conveyed to consumers, we will work to help consumers discover that value through various
initiatives including communication via social media.

We will open 600 tsubo (approx. 2,000 m2) stores, mainly next to supermarkets, at a rate of 100 stores a year
in Japan. We aim to make these stores useful in daily life by devoting more floor space to daily necessities. We
will also expand our store network and sales channels independent of our own stores through measures
including establishing MUJI corners at convenience stores, via consumers’ cooperative store home delivery
services, and inside supermarkets.

5.

Enhance operations → Page 53

6.

Make ESG the core of our business → Page 57

Ryohin Keikaku will enhance development of human resources and the operational capabilities of its stores andheadquarters to underpin employee management of individual stores. Efficient standardized operations, a solid
business infrastructure and robust store support capabilities will enable employee management of individualstores. As we work to raise employee awareness through human resource development, we will concurrently
strengthen our IT infrastructure and consider new ways of operating stores.

We will promote ESG in our core business of product development and retailing. Specifically, we aim todevelop products for a better environment (E) and society (S), and to establish a governance (G) structure that
goes beyond our existing corporate framework. In addition, in cooperation with the government and various
stakeholders, we will conduct businesses in areas including healthcare, agriculture and food using our stores,
and the utilization of unused local resources.

MUJI REPORT 2022

26

Product Strategy

A Lineup of Products That Are a Part ofPeople’s Daily Necessities

Apparel⇒See page 31 for details.

Operating Revenue

Composition

JPY

182.7 billion

36.8%

Household Goods
Operating Revenue

Operating
Revenue by
Product
Category
Fiscal Year Ended
August 31, 2022

Composition

Food

232.7 billion

46.9%⇒See page 35 for details.

Operating Revenue

Composition

Other
Operating Revenue

Composition

27 MUJI REPORT 2022

JPY

⇒See page 33 for details.

JPY

59.9 billion

12.1%

20.7 billion
4.2%
JPY

Business Strategy

Main Products

Operating Revenue· Womenswear(Million JPY)

187,572

200,000· Menswear

169,062

161,594· Shoes, bags and accessories

150,000· Children’s clothing

100,000· Innerwear and loungewear

182,784

63,52650,000· Socks, stockings and leggings· MUJI Labo0

· MUJI WALKER

2019/2 2020/2 2020/8 2021/8 2022/8· Clothes based on tradition and insight

Main Products·C osmetics and beauty care products· Aromas and room fragrance· Stationery items· Albums, office storage and cases· Kitchen utensils·F urniture· Tableware and cutlery· Home appliances and lighting· Bicycles and tricycles· Pet supplies

Operating Revenue·S torage items and storage cases
 ed linen·B owels, bath and toilet supplies·T·C leaning andlaundry supplies
 otted plants and·Pgardening items·F ound MUJI

(Million JPY)

250,000
200,000

92,226

100,000
50,0000

2019/2 2020/2 2020/8 2021/8 2022/8

Operating Revenue· Retort pouches, canned(Million JPY)

· Frozen food· Confectionery andconfectionery ingredients

232,703150,000

Main Products
foods and seasonings

211,832

207,691 206,759

60,00054,58740,00027,10520,00059,97730,62917,606· Tea leaves and beverages
0

2019/2 2020/2 2020/8 2021/8 2022/8

Note: Due to the change in fiscal year, 2020/8 covers the six-month period from March 1 to August 31, 2020.

Main Businesses· MUJI HOTEL· Café&Meal MUJI ampsites·C· Space design business· I DÉE

MUJI REPORT 2022

28

Product Strategy

Ryohin Keikaku’s Unique Product Development

Product Planning

Raw Material Procurement• Development of apparel, household goods and food,and services essential to daily life
• All items are original products that eliminate waste byincorporating the three perspectives of selection ofmaterials, streamlining of processes and simplificationof packaging• Identity marketing strategy from the consumer’s
perspective• Product development that makes the most of theessential qualities of natural materials• System for reflecting customer feedback in products(IDEA PARK) https://idea.muji.net (Japanese only)• Production area development that leads to resolving
local social issues• Selection of raw materials harvested and cultivated inways that do not harm the Earth, living things or producers• Proactive use of recycled materials• Use of primary raw materials traceable to the source
as much as possible• Visits to check on raw material production areas

Feedback from Communities,
Society and Customers

Recovery of Resources• Using various unwanted products
collected from customers atstores as resources• Recycling of resources as raw
materials for new products

Main products collected
for reuse as raw materials• Polypropylene products(file boxes, etc.)• Polyethylene products(soft cases, etc.)

Products That Make the World Better the More Customers Use Them: The Concept behind Ryohin
Keikaku’s Product Development Going Forward
We want to develop and offer MUJI products and services that are useful in daily life and available worldwide, and that reduce environmental
impact and help to resolve social issues as more people use them. However, this kind of product development cannot be done by Ryohin
Keikaku alone. All of our stakeholders, including suppliers, customers, local communities, governments and employees, who empathizewith MUJI’s approach and product development philosophy, are free to participate in this process and share their opinions and ideas. This
co-creation leads to products with new value. MUJI intends to be a forum for this kind of open innovation. In addition, when our customers

29 MUJI REPORT 2022

Business Strategy

Production• Ensuring production quality based on our own“Ryohin Standards”• Cooperation with production partners who share
our philosophy• Cooperative system with factories to appropriately
manage a wide variety of products

Distribution• More efficient distribution by establishing centers inmain production countries with functions that enableconsolidated transport of products purchased frommultiple countries and multiple factories• Highly efficient distribution warehouse operations by
establishing distribution centers in Japan andoverseas according to product characteristics• Expanded warehouses as bases for product recycling
and upcycling of items collected• Contribution to reducing environmental impact andsocial costs through joint delivery with partner companies

Sales/Services• Global environmental issues
such as resource depletion andclimate change• Regional issues• Response to earthquakes andother disasters• Addressing issues such as
Japan’s declining birthrate,
aging population and unevenpopulation distribution• Collaboration with national andlocal governments• Lifestyle Organizing School
programhttps://www.ryohin-keikaku.jp/
eng/sustainability/co-worker/
education/• Stores are community centers that have apositive local impact• Approximately 1,100 stores in Japan and overseas
linked with our online store for in-store pickupof orders• Assortment of basic items essential for daily life
including apparel, household goods, and food,as well as comprehensive lifestyle proposals• Sale by weight, water refill service, collection ofclothes, etc.
• Renovation and other space design services• MUJI SUPPORT (consultation counter forlifestyle management)•6
 9.78 million downloads of the MUJI passport app• Sales of specialty products/rollout of quality
products from various countries

return used MUJI products to the store rather than throwing them away, they are recycled as raw materials for new products. Items thatwere previously incinerated as garbage become resources when brought back to MUJI. We want to work with our stakeholders to build
communities that enable society as a whole to lower its burden on the global environment, reduce consumption of natural resources,
recycle resources, and generate innovation. We will conduct planning and development that thoroughly incorporate this approach in MUJI’s
wide-ranging product lineup of items essential to daily life in the areas of apparel, household goods and food.

MUJI REPORT 2022

30

Product Strategy

ApparelBasic Policy and Strategy
Ryohin Keikaku will fundamentally reform its apparel business by going back to the basics.
We will return to the fundamentals of product development—selection of materials, streamlining of processes and simplification of
packaging—to renew our commitment to developing no-frills, quality products. This will include selecting materials that take the environment
and producers into consideration, eliminating waste in all processes, and providing customers with what they need, in the form they want.

Recognition of Issues• Slump in planning and development capabilities resulting from adherence to a stereotyped concept of MUJI
• Weak appeal and low level of recognition of apparel• Unrealistic goal setting• Expansion of sales price reductions due to lower stock liquidation rate

Key Initiatives• Redefine MUJI apparel
Apparel sales in recent years have been weak due to a continued inward-looking approach to product development that has resulted fromadherence to a stereotyped concept of MUJI. We will therefore go back to the basics to develop products that people of all ages can wear
routinely and that are “essential to daily life.” Specifically, we will review sizes and patterns (fit and shape), streamline our range of similar
items, and improve the performance of individual items to expand our lineup of authentic standard products that many people will use
regularly for years to come.
• Innovate the product development system
We have revamped our product planning team for apparel by bringing in experienced talent with a track record from outside the Company
as designers and directors, as well as by appointing numerous former salespeople in their 20s and 30s from inside the Company. We areutilizing the opinions of young employees with firsthand experience of customer requests and complaints at stores to build a system forcommercializing apparel without stereotyped preconceptions about what MUJI should be.
• Strengthen and enhance appeal
Our range of apparel, household goods and food is extensive and the number of single-item displays is large, and this may have hampered
our ability to convey the value of our apparel products. We will therefore significantly change our product displays and switch to a methodthat offers coordinated styling proposals using full-body mannequins to provide an image of the products when worn. We will also work toincrease recognition by stressing the value of MUJI apparel in our pamphlets and digital communication.
• Strengthen the production system for timely and sufficient product supply
Clearance of unsuccessful apparel items entails significant price reductions, which has worsened profitability. We will revamp our productdevelopment system and work to understand customer opinions and needs to enhance our lineup of authentic standard products withvalue. To do so, we will establish a system that allows us to control all stages from product development to production and procurement
in-house. This will enable us to produce or procure the optimum amount from the best factory at the right time, and supply it to stores.

Improving Products by Going Back to the Basics
Warm Cotton Innerwear Series
The first offering in our upgraded apparel lineup is the Warm Cotton series of innerwear, which waslaunched in October 2022. Generally, thermal underwear is mainly made from synthetic fibers. However,
we rejected the preconceived notion that synthetic fibers offer better performance than natural fibers
and focused on cotton, which MUJI has been using as a material in its apparel for many years.
Use of a special technology that increases the number of molecules that bind to sweat and moisture
beyond that of ordinary cotton further enhances cotton’s inherent ability to absorb moisture and keep inheat. Our products allow a greater number of people—from people whose skin reacts negatively tosynthetic fabrics to those who just prefer natural fabrics—to enjoy these benefits without worry.

31 MUJI REPORT 2022

Business Strategy

FeatureMessage from the Executive in Charge
We will fundamentally rethink product developmentfrom an ESG perspective to refine our standard
products and create sales floors that appeal to awider range of customers.
Switching to a Product Mix
Aimed at a Wider Range ofCustomers, Beyond Our
Core Fans

To dispel the “outdated” and “unfashionable”
image of our standard products, we will
focus on developing products that can beeasily coordinated to suit any occasion,and creating sales floors that convey thatmessage to customers. We are alreadyredesigning sales floors—for example, byswitching from merchandise displays with asingle item to displays that show coordinatedoutfits with full-body mannequins. We are also
considering opening apparel specialty stores.
Perfecting our line of standard
products will also allow us to improve the
manufacturing process. Until now, we haveplaced manufacturing orders on a spot
basis at Ryohin Keikaku’s convenience, butstandardizing production and sharing
ordering schedules with factories will
enable lower prices and streamlining ofproduction. Since we will insource someproduction work that was previously
outsourced to trading companies andfactories, we are now recruiting designers,
pattern makers and production management
staff to bolster our organization.

The clothing industry in Japan iscurrently facing very difficult conditions
brought on by high raw material prices,
rising energy costs, and the impact of
the weak yen. Taking a longer view,companies that lack a competitive
advantage will continue to be weeded
out, and only small and medium-sizedniche companies and global companies
will survive. In that context, ESG
initiatives will play an important role inachieving differentiation from competitors.
In developing products that reduce
environmental impact, use materials
that help the environment and resolve
social issues such as poverty, we will
Satoshi Okazaki
continue to delve deeper into the basics
Senior Executive Officerof product development by focusing
In charge of Apparel Merchandising Division, Resource &Development Division, and Production Divisionon selection of materials, streamliningof processes and simplification of
packaging. In addition, we will control
costs so that we can offer products at affordable prices.
Building a Supply Chain Unique to Ryohin Keikaku
Over the last few years, we have leaned on niche product
Our focus on regional development includes a commitment tolines aimed at people who are deeply interested in fashion andfabric development, which we believe will help to resolve social
core fans of the MUJI brand—for example, by selling four types ofissues in production areas. One such initiative we are focusing on
t-shirts that are hard to tell apart at first glance. Going forward, weis the development of kapok,* a natural material with little
will make improvements to our product mix and create sales
environmental impact. Kapok had been considered difficult tofloors that appeal to a wider range of customers, focusing oncommercialize, but we will begin industrial production of it, starting
products essential to daily life. This will include minimallyin Indonesia. (See pages 39-40 for details on procurement.)
processed denim, the Warm Innerwear series that is made from
In addition, MUJI has built its brand image around using
natural fibers and features superior warmth retention, a lineup of
naturalmaterials, but in some cases, it may make more sense tomerino wool sweaters available in different thicknesses to suituse
synthetic
fibers, depending on regional characteristics or thevarious situations, and down made from recycled nylon fabric that
intendeduse,such as eliminating the need for ironing. Therefore,
is thick yet light enough for wearing as an extra layer.
we are returning to our three principles of product development,
and will work to develop new materials and production areas.
Development of High-Quality, ESG-FriendlyStandard Products Helps Improve the
Manufacturing Process* See page 40 for more details.

As a medium- to long-term initiative, we are making plans tocreate high-quality standard products designed for the times.

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32

Product Strategy

Household Goods
Basic Policy and Strategy
In the household goods business, we will review all existing products and redefine what MUJI should be in the coming era. Our aim is toenrich the lives of our customers through our products. We will determine whether our products are truly useful and necessary in daily life
by looking at our ideology and philosophy.

Recognition of Issues• Strengthen product competitiveness by refining mainstay products• Develop products from the perspective of addressing contemporary lifestyles and social issues• Establish a new business structure to increase profitability

Key Initiatives• Do away with fixed ideas and rebuild our lineup of daily products for the current era
Our way of thinking about what MUJI should be has become fixed, and our product planning and development have gotten out of sync withthe consumer’s point of view. MUJI has a wide selection of apparel, household goods and food products. However, many items still do notmeet our goal of “creating the finest and unrivaled products that are essential to daily life.” We will once again review our product mix fromthe consumer’s viewpoint to create a complete lineup of essential items.
• Create an organization that can rebuild product development capabilities
MUJI’s product development begins with a keen sense of social issues and incongruities. As our own most demanding customer and critic,
we will not hold back in coming up with ideas and identifying the kind of products that can help resolve the issues we identify. First, we will
strengthen training of mid-level employees, who are passing down MUJI’s heritage, and young employees, who have gained a sense of theissues we face through interactions with customers at stores. In addition, we will ramp up hiring for positions without specified duties. We
aim to create an organization in which external human resources with knowledge and experience and experienced store managers cooperate
and bring out the best in each other in conducting product planning and development.
• Cross-merchandising and raising recognition
Many customers come to MUJI to purchase a specific item—whether it be curry, cosmetics, socks or another product—and are often
unaware of our selection of other items. We therefore intend to increase awareness of our product rollouts and ramp up cross-merchandising.
Our initiatives include opening MUJI 500 stores that specialize in daily necessities and other lifestyle essentials, and stores specializing inpersonal care centered on skin care, as well as rolling out products tailored to the seasons or specific everyday situations.
• Create unique spaces that leverage our strengths
Ryohin Keikaku’s strengths are its philosophy of contributing to society through its products and services, and its creation of products fromthe consumer’s point of view to realize that philosophy. Going forward, we aim to establish a unique position where MUJI can leverage thesestrengths. We will assemble a lineup of highly specialized products that incorporate insights from around the world, local cultures and otherfeatures to co-create unique spaces that serve as community centers together with people from local stores, farms and other companies.

Product Development Committed to Essential Qualities and Value
Light Toning Water
Light Toning Water, which was launched in 1997, sought to offer the very essence ofskin care. Its simple image and reasonable price made it the antithesis of the cosmetics
industry of the time, when sales focused on the high-price range.
Because water is the indispensable core ingredient of skin lotions, we werecommitted to water quality in creating skin care products. This approach led us tonatural spring water from a cave in a former mine in Kamaishi, Iwate Prefecture,
which has few impurities and is also used as drinking water. We paid special attention
to the intrinsic functions and ingredients of skin lotion so the product could be usedby as many people as possible. Recently, the simple and unadorned bottle design
has gained support from men as well as women, and the lineup is expanding. We are also working to reduce the amount ofplastic used with eco-friendly refills and lighter, thinner containers.
Today, Light Toning Water has become a quintessential MUJI product, but it was a minor item when it was first launched.
Our development team insisted on breaking through fixed ideas to create a product committed to essential qualities and value.
We will recall this spirit for use in developing household goods going forward.

33 MUJI REPORT 2022

Feature

Business Strategy

Message from the Executive in Charge
While staying true to Ryohin Keikaku’s philosophy, we
will go beyond existing frameworks to deliver new value
based on the changing perspectives of consumers.

Polarization of the Value of
Buying Things Is Accelerating,and People Are Becoming
More Cautious about How
They Spend Money

down to items that are needed in everyday
life, while offering a highly specializedassortment for each product. In the stores,
sales floors will be designed so that fastmoving products used every day are easy
to find, enabling quick and stress-free
In recent years, rising prices and othershopping. As for the scenes of dining,changes in the economic environment,
sleeping and housework, we will create
as well as increasing awareness ofsales spaces that bring together uniqueenvironmental and social issues, haveproducts based on the wisdom and local
led to changes in people’s values andcultures of the world.
decision-making criteria in consumption.
We believe MUJI can provide the best
Increasingly, we are seeing polarizationof both models: stores that are useful inbetween people who only care about
everyday life while also offering an exciting
low prices and those who want to
combination of specialized products. To
buy good products and use them forachieve that, we intend to reinvent MUJI’s
a long time. I feel that people are
identity with a product lineup that meets
becoming more cautious overall
those expectations—environmentally
about how they spend money. In thatfriendly products sold at reasonable prices
context, Ryohin Keikaku’s concept ofthat are even more satisfying whena consumer-oriented perspective andAsako Shimazaki
customers use them. We will complete ourenvironmentally friendly design meets
Senior Executive Officer
lineup of everyday products by the end of
the needs of people who want to use
In charge of Household Merchandising Division
August 2023. We are also reviewing
items for a long time.
current products as another key initiative.
On the other hand, other companies share a similar consumerBesides lowering prices, we listen to customer feedback every
oriented perspective, and are strengthening their productweek on whether the product is sufficiently easy to use, and whatdevelopment to manage costs. To embody the Ryohin Keikaku
their needs for the product are. This enables us to makephilosophy and continue to be chosen by customers, we must
improvements to basic products and raise their value. By
conduct product development that goes beyond what our
implementing the above two initiatives, we will broaden our
existing products offer. In addition to offering functional andproduct lineup.
affordable products that are also well-designed, as a company
that sells merchandise, we are committed to developing products
Creating Value Unique to MUJI
that are long-lasting, won’t be thrown away, and have low
One of our advantages is the relationships of trust we have built
environmental impact. We will work to communicate thatwith customers through our products. For example, the market
commitment more effectively.
for skin-care products, towels, bedding and other items thatcome into contact with the skin have high barriers to entry. But
Evolving into a Collection of Specialty Shops
because we have many fans who relate to Ryohin Keikaku’s
with a Product Lineup Narrowed Down to Items
philosophy and approach to product development, we have beenThat Are Necessary and Sufficientable to offer products in all categories of food, apparel andFrom a medium- to long-term perspective, we need to build ahousehold goods. This includes many products that people put
position that is unique to Ryohin Keikaku. That role will be filled byon or in their bodies. Based on that trust, we will refine ourstores that offer just the right quantity of products essential toproduct development with a focus on the essentials to makedaily life, and also provide a highly specialized assortment of
MUJI an integral part of everyday life.
merchandise. These stores will ultimately narrow their selection

MUJI REPORT 2022

34

Product Strategy

Food
Basic Policy and Strategy
Food accounted for approximately 12% of Ryohin Keikaku’s operating revenue in the fiscal year ended August 31, 2022, and we aim toincrease this ratio to 30% by 2030. To do so, becoming the first choice in the field of food is key. Rather than simply increasing productvariety, we will increase the number of typical MUJI products in each category for a lineup that will make people automatically associate
MUJI with certain products when deciding their meals each day.
In addition, since agriculture is often the core industry in rural areas, food also plays a major role in Ryohin Keikaku’s vision “to take rootin local society.” We will also spearhead localization efforts through initiatives including opening stores that handle fresh food direct from thefarm and sales of unsorted apples.

Recognition of Issues• The stories behind our products are not being sufficiently communicated, and repeat purchases of basic items have decreased.
• There have been no changes in store presentation, and new and seasonal products go unnoticed.
• Our production system cannot maintain appropriate supply, and cannot keep up with short-term spikes in demand for some products.
• There have been delays in developing new products that can take a place alongside mainstay products such as curry and baumkuchen.

Key Initiatives• Create incentives to visit stores
One of MUJI’s strengths is as a forum capable of communicating the message behind its products. This message can include the story of
the product itself or the lifestyle the product offers. By enhancing in-store promotions highlighting products that use seasonal ingredientsand new menu proposals for individual food products, we hope to encourage customers to visit our stores. Once in the store we can thenfocus on conveying the messages behind our products. For our regular assortment of products, we will devise strategies such as creating
seasonal variations, avoid making random increases in the number of products, and delight customers visiting our stores.
• Added value of Ryohin Keikaku quality
One of the three perspectives underlying MUJI’S product development is selection of materials. This involves consideration for both theglobal environment and the producers of our products, and the elimination of waste in all processes. To this approach we will add “learningfrom the food cultures of the world” to provide customers with what they actually need, in the form they actually want. Rather than following
trends, we conduct product development that consistently takes our customers’ viewpoint into account in providing them with what they
truly need. We also emphasize balancing value and price. Customers do not simply want low prices from MUJI, so we are particular about
the materials we use to maintain MUJI quality. In the fiscal year ending August 31, 2023, we are emphasizing the changing seasons indeveloping new products that follow on from our current mainstay products, with a focus on foods in new categories, such as chilled
confectioneries and drinks that use seasonal fruits.
• Work to take root in local society
We believe that food and agriculture will be a major theme for the development of the food business. We will expand sales channels todeliver little-known regional specialties and fresh foods that are not widely available to customers throughout Japan. We will also promote
home delivery through consumer cooperative stores and the establishment of MUJI corners in convenience stores and supermarkets, andcooperate with local governments to develop a farm-linked manufacturing and retail business.

Product Development That Opened a New Market
Takikomi Gohan no moto (seasoning for mixed rice)
To make Ryohin Keikaku a part of people’s daily necessities, developing foodproducts that people eat every day is important. One such product, for which
Ryohin Keikaku’s market share is increasing, is Takikomi Gohan no moto.
Although the market scale for Takikomi Gohan no moto is not large, demand issteady because it is easy to prepare and enjoy. Ryohin Keikaku developed thisproduct with the objective of offering easy and delicious everyday meals, andlaunched three variations in 2002: paella, curry pilaf and chicken pilaf. The development
concept was to make the most of the flavor of the ingredients so that anyone could
prepare a delicious meal. In 2010, a series of improvements led to the product’s
current configuration, in which the soup stock is packaged separately from theother ingredients. As of August 31, 2022, the line has been extended to 14 items,
and the market share has grown to 13%.
During 2023, we launched Maze Gohan no moto, which can be prepared bysimply mixing it with cooked rice, and Takikomi Okowa no moto, which is a combination of glutinous okowa rice and otheringredients. We will continue to develop products that offer convenience and deliciousness in daily dining.

35 MUJI REPORT 2022

Business Strategy

FeatureMessage from the Executive in Charge
We are aiming for the top mindshare in specificcategories to provide “truthful and sustainable food.”

Focus on Familiar Foods
Rather than Trends

To increase the number of categories
we are strong in, we still need to improve
our products. To do that, we will create
good products by not only strengthening
our in-house capabilities, but also by taking
advantage of external resources. Our role
is to put together teams of excellent

At Ryohin Keikaku, we believe it isimportant to focus on tastes that arefamiliar to people in the region where
we sell, rather than keeping up withthe latest trends in the food market. In
manufacturers to create products based
fact, a survey of tens of thousands ofon new ideas.
people showed that the foods thatAs a concrete measure, we will firstare eaten most often are not trendy
createan annual development plan, andfoods, but familiar foods. In Japan, forthoroughly execute basic initiatives such as
example, our approach to developing
process management. In addition, we willproducts for daily life is to provide
release products for each season, such as
foods such as deep-fried chicken,
a tea that uses cherry blossoms in spring,ramen and udon noodles with a highto achieve the number-one mindshare inlevel of quality. Blindly following trends
the seasonal products category. Once we
is not what Ryohin Keikaku is about.
establish what needs to be done in each
We need to imagine what is“season,” it will naturally become clear
necessary for customers in terms ofHirotaka Takahashi
what we should do at any given time. This
supporting their daily life, and keep
Senior Executive Officer
will help us to work more efficiently.
an eye on what is happening in the
In charge of Food Merchandising Divisionmarket. Rather than just expanding
Offering New Dietary Value by Telling theour product lineup, we believe that improving flavor andProduct’s Story Rather than Just Selling
convenience and telling MUJI’s unique story will lead to a better
Delicious Items at Low Prices
response from customers.
I have been involved in various food retail businesses, including
supermarkets and convenience stores, but I believe that a key
Exploring Possibilities Thoroughly and Creating
point that differentiates Ryohin Keikaku is that MUJI products
Products Based on New Ideas
have a concept and story behind them, and our stores serve as
In the medium to long term, we will focus on pursuing excellencea place to convey that story. In that sense, it is meaningless forin specific categories rather than building a position in every food
Ryohin Keikaku to handle food products if we are only sellingcategory. Our goal is to achieve the top mindshare in specificdelicious items at low prices.
categories, so that when a customer decides they want pasta,
We are also particular about respecting traditional wisdom
MUJI is the first store they think of. For example, the Takikomi
andtheorigin of ingredients, and will combine food andGohan no Moto (seasoning for mixed rice) series is now one of ouragriculture,
local production for local consumption, refrigeration
most popular products, but in the beginning the market for it wastechnology
andother elements to achieve quality that is not
small and it was not easy to discern. However, we saw the potential
mass-produced. By conducting promotional activities thatin that category, forged ahead with product development andencompass telling the story of our products and proposing new
explored the possibilities thoroughly. That is a particular strength ofstyles of eating, we will offer new dietary value in a way that only
Ryohin Keikaku. Retort-pouch curry and baumkuchen are similar
MUJI can, and contribute to “truthful and sustainable food.”
success stories that are now among MUJI’s leading products.

MUJI REPORT 2022

36

Product Strategy

Procurement and Production
Basic Approach: Be Useful
In keeping with Ryohin Keikaku’s core value of “contributing to society and people,” we are seeking to be a part of people’s daily necessities.
To accomplish this goal, we are also reviewing our procurement and production processes, focusing on natural materials that are good forpeople and the environment, and that are part of a highly ethical and transparent supply chain.

Procurement Policy
We work to select raw materials that are collected and cultivated in a way that does not impose an excessive burden on the Earth, animals
and plants, and producers.
Furthermore, for primary raw materials, we use materials that can be traced back to the production area as much as possible, andabove all, we actually visit the production areas to check with our own eyes the conditions of collection/cultivation sites of major raw
materials and the lives of producers.

Recognition of Issues
Because we currently request production whenever we need a specific item, production scale in the busy season and off-season differs
sharply, resulting in lower cost efficiency. We therefore strive to improve cost efficiency by creating medium- to long-term sales plans andcommunicating with producers.

Production Process
Leveling and Reinforcing Production throughout the Year
Ryohin Keikaku is increasing direct transactions with the factories of its production partners and exerting greater control over production
and procurement functions and personnel. We create production plans based on a medium- to long-term sales plan, then work to levelproduction and make it more efficient through direct communication and collaboration with production partners.
This will reduce the unnecessary costs we previously incurred.

Ordering without knowing
production status
Response each time
Reduced order accuracy

Goal
Loss of sales opportunities
and excess inventory

Poor on-site information✓ Insufficient coordination of information

Ryohin Keikaku

Ryohin Keikaku

Current✓ Unplanned response✓ Plan for leveling out production

Sudden requests
and changes

Reduced productivity
and earnings✓ Visualize and shorten lead time for each process

Factory

Factory✓P repare and streamline through coordination ofPresentation of monthly
plans

Better preparation based on
information sharing* QCD: Quality, cost and delivery

37 MUJI REPORT 2022

Disclosure of on-site
information

information✓ Insufficient information on production sites

Unplanned responseeach time

Accurate information/
Improved QCD*

Limit loss of sales
opportunities andexcess inventory✓ Set monthly capacity standards✓ Significant changes from plan

Poor monthly planning

Make requests withknowledge ofthe actual situation

Planned orders andrequests

Improve productivity
and earnings

Business Strategy

Establishing Global Procurement and Production Processes
Until now, Ryohin Keikaku has planned and developed almost all of its products at its headquarters in Japan, and sold the same products
at MUJI stores worldwide. In addition to this shared global product lineup, we will establish a system in which operating and sourcing
companies outside Japan conduct product planning, development and procurement that reflect local consumer needs and specifications.
This will enable us to be a part of people’s daily necessities and address needs that differ by country and region around the world.

Contributing to Economic Development of Production Areas through Procurement and Production Processes
Ryohin Keikaku aims to contribute to the economic and industrial development of areas where our products are produced through theestablishment of global procurement and production processes. We regard our expenditures for manufacturing products as not just abusiness expense but also an investment in local economic development. Factories that properly generate profits, create employment, andreinvest funds can expand in scale and improve efficiency, thus contributing to the development of the local economy. We therefore intend
to increase direct transactions with factories operated by local managers.

Rethinking Product Development from the Manufacturing (Factory) Perspective
In developing products, we consider the production process in depth. By rethinking product planning and other processes from theperspective of the factory that will manufacture the product, we are able to increase efficiency and reduce costs. By devising different sizes
and designs and utilizing the raw materials and equipment on hand, we can create the best products without wasting resources or energy.
Coming up with ways to accomplish this is a great source of creativity. Going forward, we will take the manufacturer’s perspective into
consideration and creatively rethink what we do.

Developing Products in Each Country
Until now, we have mainly supplied products developed in Japan to overseas operating companies, but we are also accelerating productdevelopment in mainland China and Vietnam, and ramping up and expanding supply in each country.

Europe(Local productdevelopment functions)

Mainland China(Area productdevelopment functions)

CanadaSouth Korea
U.S.A.

TaiwanJapan(Local productdevelopment functions)(Global product development
headquarters)

India

Hong Kong
Vietnam(Area product development
and procurement functions)

Australia
Operating company() Product development functions
Global: Worldwide supply
Area: Supply to some countries/regions
Local: Supply only within own country/region

MUJI REPORT 2022

38

Product Strategy

Raw Material Procurement
Selection of Materials
MUJI selects eco-friendly materials that have ethical significance in consideration of the global environment, animal welfare
and society. By increasing the procurement of such materials, we will contribute to the creation of a resource-recycling,ecological and sustainable society.
Since its establishment in 1980, MUJI has continued to create products with a focus on three perspectives that take the global environmentand society into consideration: selection of materials, streamlining of processes and simplification of packaging.
Because we use various materials from all over the world, we consider reducing our impact on the natural environment and its living
beings to be a critical issue, and we aim for sustainable material procurement. Moreover, we are aware of the impact our business activities
have on ecosystems* and collaborate with producers, local authorities, and communities to minimize such effects and protect theenvironment. We will continue to procure materials responsibly by considering the people who use them, the people who make them andhow they interact with nature.
* See page 63 for details.
Basic Approach to Biodiversity ▶ https://www.ryohin-keikaku.jp/eng/sustainability/environment/biodiversity/

Natural Materials
Plant Fibers• Cotton
At MUJI, organic cotton, certified cotton, and recycled cotton are considered eco-friendly materials.
Cotton can only be called organic if it has been grown from seeds without genetic modifications
that could affect the ecosystem. The seeds must also have been planted in healthy soil where
chemical pesticides and chemical fertilizers have not been used for at least three years. In 2021, we
began making donations of organic cotton seeds to increase production on a trial basis.
Recycled cotton is made by sorting scraps left over from cutting cotton fabric for clothing rather
than disposing of them, then breaking them down into cotton fibers and mixing them with virgin cotton.
• LinenLinen is made from flax, a plant with a low environmental impact that can be cultivated with small
amounts of pesticides, fertilizers and water. In addition to its fibers, the entire flax plant can be usedeffectively without waste, from its seeds in linseed oil to its stems and roots in building and agricultural
materials. Other benefits of flax include its rapid growth and efficient absorption of CO2.
MUJI uses organically grown linen for some of its products. MUJI’s organic linen is made fromflax grown on farms watered by melting snow and that have few pests.
• Hemp
Hemp is said to be the world’s oldest cultivated crop, and its fibers have been used in Japan sinceancient times. Hemp seeds are used in foods, oils for cosmetics and other applications. Hemp hurds
have a variety of uses including in construction materials and automobile interior parts.
In addition, hemp is a plant that can be cultivated using very little fertilizer or water and has a low
environmental impact because it grows very quickly, absorbs CO2 efficiently, and requires almost no
pesticides due to its resistance to pests and diseases. As a fabric, it has excellent breathability,
absorbs and releases moisture well, and is durable and dries quickly. It is also highly regarded for its
natural antibacterial properties and UV blocking effect.
• JuteJute has long been used for grain sacks, rugs and other items that make use of its characteristichigh durability.
Cultivated mainly in hot, humid wetlands in the tropics and subtropics that are unsuited to agriculture,
jute grows very quickly and, like hemp, absorbs CO2 efficiently. It can be cultivated using very little
fertilizer or water and has a low environmental impact because it requires almost no pesticides due to
its resistance to pests and diseases.

39 MUJI REPORT 2022

Business Strategy• Kapok
Kapok is a plant fiber made from the seed pods of the kapok tree. Main production areas are Indonesia,
Thailand and India. Kapok trees require almost no pesticides, fertilizers or watering, and absorb a large
volume of CO2 as they grow to great heights. Because it is not necessary to cut down the tree to harvest
the seed pods, kapok is attracting attention as a material with very low environmental impact.
The hollow center of the kapok fiber is a characteristic that makes kapok the world’s lightest
natural fiber. Kapok fabric keeps the wearer comfortable by absorbing moisture for warmth when theweather is cold, and releasing moisture when the weather is hot.

Animal Fibers• DownFor our down, we only use feathers that have been rigorously screened and certified by a third-party
organization to ensure that the Five Freedoms of Animal Welfare* are respected in the breeding
environment, and that the birds have not been force-fed or live-plucked. In selecting materials, weconsider not just their performance, but also the people who use them, the people who make them
* See page 91 for details.
and how they interact with nature.
• Wool
We use only wool from non-mulesed* sheep that have been raised humanely and naturally. Recycledwool, which is important in terms of eliminating resource waste (a stance we have adopted since ourfounding), is made by shredding wool products that have been disposed of or collected for thispurpose and then spinning the fabric back into yarn. Benefits of recycled wool include a deep hue
from its mixture of multiple colors and a rustic texture. With the intention of building a better relationshipwith nature, we are doing what we can to recycle the Earth’s resources and reduce waste.
* See page 63 for details.

Regenerated Cellulose Fibers
At MUJI, lyocell and other types of rayon made with manufacturing methods that have been designatedas sustainable are considered eco-friendly materials.
Lyocell is a fiber made primarily from the wood of the fast-growing eucalyptus, and more than
99% of the water and solvents used in its manufacturing process are recovered and reused. Rayon
made from specified manufacturing methods mainly uses beech trees, and the process utilizes
bioenergy to reduce CO2 emissions and environmental impact.

Petroleum-derived Materials
Synthetic Fibers
At MUJI, recycled polyester, recycled nylon and recycled polycarbonate that have been certified tocontain at least 20% plant-derived materials are considered eco-friendly materials.
Using recycled raw materials helps to reduce CO2 emissions. Recycled polyester is mainly made frommaterials derived from PET bottles, recycled nylon from pre-consumer recycled materials (discarded fibers
from the yarn production process), and recycled polycarbonate from materials derived from water dispensers.
We are also expanding use of plant-derived raw materials and developing biodegradable materials.

OthersLeftover Yarn and Cloth
MUJI’s longstanding approach of eliminating wastefulness informs its selection of materials. In 2000,
we started sales of socks made from excess yarn that had been leftover at the factory and discarded.
By using leftover yarn and cloth, we constantly work to reduce waste, which is a major issue in theapparel supply chain.

MUJI REPORT 2022

40

Store Strategy

Community-Based Business Model
Basic Policy and Strategy
We will build a system for realizing a net increase of 100 stores annually in Japan and 50 stores per year in mainland China by 2024.
To do that, we will focus on expanding the average store floor space for products essential to daily life as well as the e-commerce sales
ratio of such products, and on creating a community-based business model centered on independent store management. We will also
make system reforms and review store operations to empower the employees who manage individual stores to make full use of their abilities.

Recognition of Issues
New store openings in Japan and overseas are progressing basically as planned. We are accelerating the pace of store openings, particularly
stores next to supermarkets, and will continue to do so in the next fiscal year and beyond. In addition, to expand sales channels, we will
promote system linkage in supplying products to Lawson convenience stores, Okinawa-based supermarket SAN-A, and other supermarkets.

Key Initiatives
• Develop new stores suited to each area and resolve local issues, led by regional business managers•E stablish the human resources and organizational systems necessary for opening stores in residential areas other than major cities andcarry out regional development and town revitalization activities•S trengthen personnel and education systems to realize independent store management as well as increase productivity and improve
efficiency of store operations• Create and offer original digital services to enable community-based independent store management

Store Openings
Store Opening Policy
Our policy for opening stores is to consider profitability and carefully select areas where we can create a long-term growth story with thecommunity in cooperation with local residents.

Store Opening Plan
In our plan leading up to 2024, we will carry out store openings with stores of 600 tsubo (approx. 2,000 m2) next to supermarkets as thestandard, aiming for one store per 100,000 people. In addition, we will open stores in front of train stations, inside of convenience stores,
and offer new home delivery services. Our goal is total sales of JPY 9.0 billion.
In the fiscal year ended August 31, 2022, we expanded store openings in residential areas, particularly stores next to supermarkets. In
the fiscal year ending August 31, 2023, we are continuing to expand store openings in residential areas, as well as opening large stores thatwill serve as local community centers.
Store Expansion Concept
Number of stores

2022

2024

2030

1,136

1,300

2,500

MUJI Itoku Oga Shopping Center (opened April 2022)

41 MUJI REPORT 2022

Business Strategy

Special Feature

Start of Collaboration with Coop Sapporo
As a result of our collaboration with Coop Sapporo, users of the Todock home delivery
system that Coop Sapporo offers to co-op members in Hokkaido can now purchase
MUJI products through Todock and have them delivered practically anywhere in
Hokkaido. The purpose of this collaboration is to further contribute to the lives ofpeople in Hokkaido by strengthening the infrastructure of everyday life in the prefecture.
Both organizations will work together to achieve this goal. Through the distribution
network of Todock, we will be able to offer products to people in areas of Hokkaido
where we have not yet opened stores. Collaborating with Coop Sapporo, which is
supported by the people of Hokkaido, will enable our products to be delivered
throughout Hokkaido. We have also opened MUJI Coop Sapporo Yamahana, our first
store next to a supermarket in the prefecture, inside Coop Sapporo Yamahana. We opened our second store, MUJI Coop
Sapporo Soen, in 2022. We will continue to accelerate store openings with the aim of being a store that is useful in customers’
lives. We are expanding our cooperation with consumers’ cooperative stores to other regions as well. In February 2023, we also
started collaboration with Coop CS Net, which operates in the Chugoku and Shikoku regions of western Japan.

Special Feature

Commencement of Sales of MUJI Products at Lawson Convenience Stores
One initiative we recently began with the objective of making products and services
essential to daily life available at affordable prices throughout Japan is the sale of
MUJI products at Lawson convenience stores. As of March 31, 2023, about 200
items, ranging from socks and skin lotion to retort pouch curry, stationery items andconfectioneries, are being sold at approximately 10,000 Lawson stores.
We are aiming to extend sales to all Lawson stores nationwide during 2023. In
addition, we are discussing expansion of the product lineup to fit store locations andthe wishes of customers, and will jointly develop products and services and expand
initiatives to contribute to community revitalization.

Special Feature

In-store Pickup Service
Our in-store pickup service allows customers to pick up items theyorder online at their nearest MUJI store. They can also use thisservice to back-order products that are not in the store, or reserve
popular products. In addition, there is no delivery charge on items
picked up at the store, and customers have the option of paying
in-store or online.
The in-store pickup service has been available for certain
products since it was launched in 2011, but it was expanded tomore products in 2022, and now covers all items except for foodand super-heavy products. We also improved the ease of purchasing
through the online store, and enhanced information activities andnotices in stores. As a result, the usage rate (based on number oforders) has greatly expanded. The 17% usage rate (number of orders)in January 2022 doubled to 34% in December; on a sales (amount)basis, the usage rate expanded from 5% in January 2022 to 17% in
December 2022. We aim to expand use of the in-store pickup service
as it increases overall delivery efficiency and reduces delivery costs.

Usage Rate of In-store Pickup Service of Products
Ordered Online(%)

Usage rate (Amount)

Usage rate (Number of orders)

40
34
29

29

30
23

25

27

27

30
26

20
17

4
5

7

17

15

17

10

8

10
0

13

10

8
9

15
11

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
2022

MUJI REPORT 2022

42

Store Strategy

Initiatives to Take Root in Local Society

Ryohin Keikaku will leverage the strengths of its MUJI stores tobe a close and commonplace presence that is trusted by local
residents. We will work seriously on localization in Hiroshima.
Seeking to Establish Roots in the Place WhereMy Heart Is

Connecting with the Community at MUJI
Hiroshima Alpark

My first encounter with Ryohin Keikaku was in 2000 when I
started working part-time at MUJI Hiroshima Alpark (before
the reopening) while I was a student. I enjoyed the sales work,so after I graduated I joined the company as an SE employee.*
In 2005, I became the store manager of MUJI youme Town
Kure. Based on that experience, I became a full-time
employee, and have since worked at stores all over Japan inpositions including store opening manager, block manager
and area manager.
I gained confidence in my career choice after working inseveral positions in various regions, and around that time
Ryohin Keikaku was preparing to undertake its “Second
Founding.” Ryohin Keikaku was about to change, and I also
felt ready to try something new, rather than just building on
my previous accomplishments. I thought deeply about how
the Company was likely to change, where it was headed,
what it was trying to accomplish, and what I myself wanted todo. It was at that point that “localization” (making the store aplatform for local residents to interact and connect) became akey consideration in my mind. At the time, I was working as
the Tokyo area manager, but I thought that to effectively
implement localization, rather than staying in Tokyo, I needed
to work in the region where my heart was. So I returned to mybirthplace of Hiroshima Prefecture as the general manager ofthe Hiroshima Business Division.

MUJI Hiroshima Alpark, one of the world’s largest MUJI storeswith a total sales floor area of 1,870 tsubo (approximately
6,180 m2), had its grand reopening in April 2022. The store
also boasts one of the largest product ranges of any MUJI
store in Japan. During the seven-month reopening preparation
period (after I became general manager of the Hiroshima
Business Division), I engaged with many people inside andoutside the Company. Through that interaction, I learned more
about the characteristics of Hiroshima, what the people in theregion think and what kind of activities they are engaged in,what their hopes are, and how they are trying to change.
From that process, we came up with the store concept of“Creating healthy places and lifestyles with the community.”This expresses our wish to use the store as a platform to build
a better community together with the people of Hiroshima.
Hiroshima Prefecture is home to approximately 2.75
million people, and Hiroshima is the largest city in the
Chugoku region. The prefecture has major companies as well
as local industry, and is blessed with abundant nature,including the sea, mountains and rivers. However, thepotential of the region has not been fully realized. For example,
many kinds of crops are grown in the prefecture, but theirproduction volume is small, and rows of items from outside
the prefecture are seen in the aisles of supermarkets ofHiroshima. If enough good products were made in Hiroshima
Prefecture, they would also be consumed more in theprefecture, and I thought Ryohin Keikaku could help makethat happen.

* Sales expert employee (position now discontinued)

43 MUJI REPORT 2022

Business Strategy

Our Strength Is That We Can Make Our Stores
Places for Communication, Not Just Retail Outlets
Ryohin Keikaku’s strength is its stores—in other words, its
ability to create “places.” Local industry cannot grow without
an outlet for its products or a place to convey information, andI believe MUJI stores can help improve this situation by serving
as outlets where people can sell local products and asopportunities for communication. I want our stores to be morethan just places to sell products; I want them to bring together
people who want to do various things, and to create outlets
for programs and businesses that are beneficial to the local
community. We do not necessarily have to be at the center of
all that activity.
For example, community-based events are held at OpenMUJI, a community space in the MUJI Hiroshima Alpark store,
and an area for selling fresh produce grown in Hiroshima has
been set up in the food section. And in keeping with ourconcept of “healthy lifestyles,” we have established a
Healthcare Center that gives local residents the opportunity toaddress their own health concerns, and even receive healthconsultations from physical therapists and public healthnurses. What we hope to achieve is for residents to see the
MUJI store as a natural part of their community, and for it to
be a place where they can purchase daily necessities while
also finding out about what is happening in the area.

Aiming to Be a Close and Commonplace
Presence That Is Trusted by Local Residents
When MUJI Hiroshima Alpark opened, I was surprised at theextent of the reactions, with people remarking, “Wow, MUJI
does that, too?” But at the same time, I can feel the trust thatpeople have in MUJI from my interactions with the community.
Cooperation is, of course, essential in resolving local issues,
and when I told people who are active in the community what
we wanted MUJI to do, many of them were supportive of ourideas. I plan to use those connections and work together withpeople in each community to make each MUJI store an
indispensable part of that community. In addition, by opening
MUJI stores in various places, not just in urban areas, we willtake root in Hiroshima more broadly so that instead of goingto other prefectures for shopping, people will realize theappeal of Hiroshima during their day-to-day lives.

Staff and local farmers discuss the use of local vegetables

We only have nine stores in Hiroshima Prefecture, a small
number in comparison to Tokyo. The current challenge is to
overcome the problem of people sometimes having to drive
up to one hour to get to a MUJI store, depending on where
they live. So our stores are still not seen as close andcommonplace. To become a place that people regard as
close and commonplace, we will consider opening stores in
the mountainous parts of the prefecture in the future. But toensure that we can stay permanently in areas with small
populations, win the trust of local residents, and become
indispensable, we will have to think about our vision for eachstore, and then realize that vision while clearing various hurdles.
To do that, we will cultivate human resources who are prepared
to work together with communities and have an image of thedirection we are going, andto create a system for being
useful to the community in asustainable way.
To contribute further tolocal economies, Ryohin
Keikaku will gather ideas
from the employees andstaff who work in our stores,
and from local residents,
and continue to take on thechallenge of making MUJI
stores indispensable to thepeople in their communities.
Ayako Takahiro
General Manager of the Hiroshima
Business Division
Store Management Group

Information
MUJI Hiroshima Alpark
Address: Alpark Western Annex 1-2 F, 1-16-1 Iguchi Myojin, Nishi-ku, Hiroshima City, Hiroshima
Prefecture, Japan
Concept: Creating healthy places and lifestyles with the community
Size: 1,870 tsubo (one of the largest MUJI stores in the world)
Features: A large-scale store that provides a range of basic products and services, sale ofvegetables grown in Hiroshima Prefecture, Open MUJI, Community Market, Healthcare
Center, etc.

MUJI REPORT 2022

44

Global Strategy

Overseas Business Expansion
Basic Policy and Strategy
We will be selective and concentrate resources in global businesses aligned with the operating environment of the countries and regions
we serve.
We will focus resources in mainland China until 2024. In addition, we are targeting growth in Taiwan, Thailand, Hong Kong, and South
Korea by replacing older stores and ensuring market-appropriate prices. In Europe, we will redefine MUJI for a super-mature society, while
in North America we will streamline management and prepare for future growth.

Overseas Business Targets for 2024
2022/82024/8JPY 188.0 billion

JPY 250.0 billion

Operating revenue

Operating revenue

Recognition of Issues
We recognize the need to create strategies for each area: mainland China, key regions, growth regions and reorganizing regions. A challenge
globally is the lack of products that take advantage of regional characteristics.
In addition, it is imperative that we review our operating and store structures to match each situation and quickly shift to a highly
profitable business model.
To respond to external factors (high raw material costs, exchange rates, ocean freight costs, etc.), we need to manage logistical andother costs, strengthen our product competitiveness and store management capabilities throughout the supply chain, and make a new startfrom a stable foundation.

Challenges and Plans in Each Area
Mainland China• Although the number of stores has increased by 26, their sales are not growing, so average monthly store sales are declining.
•E xpansion of the customer base is necessary, and the integration of online and offline is critically important.
•W e have secured a certain level of sales and gross profit margin by introducing products developed for mainland China, where the cost of
sales ratio is good, so we will carry out further product development. This will lead to sales expansion.

Key Regions (Taiwan, Hong Kong, South Korea)• Taiwan: Sales and profit increased, and with a foundation for growth in place, we will open new stores in the fiscal years ending August
31, 2023 and 2024.
•H ong Kong: Sales and profit increased, and we will open new stores in the fiscal year ending August 31, 2023.
•S outh Korea: Although sales are recovering, the operating gross profit margin has deteriorated due to inventory reductions. We will closeand replace unprofitable stores.

Growth Regions (Thailand, Vietnam, Philippines, Malaysia, Singapore)• Thailand: Sales and profit increased, so we will continue to make structural improvements and accelerate new store openings.
•V ietnam: Operations have gone smoothly since we entered the market in 2019, and we will proceed with new store openings.
•P hilippines and Malaysia: Sales and profit increased, and we will rebuild stores to expand floor area.
•S ingapore: Sales and profits increased, and we will further strengthen our foundation.

Reorganizing Regions (Europe, North America, India, Australia)• Europe: Achieving profitability is the issue. We will implement measures including closure of unprofitable stores, and invest resources in
key regions.
•N orth America: We will further solidify our management structure and strengthen store management capabilities.
• India and Australia: We will make improvements to our management structure, including store management capabilities.

45 MUJI REPORT 2022

Business Strategy

Regional Highlights
Special Feature

Development of Pet Supplies (Mainland China)
In mainland China, we began sales of pet supplies in September 2022. Many pet
supplies in mainland China are elaborately decorated, and pet food with many
additives is common. Therefore, we developed products that are the antithesis ofexisting pet supplies, including pet toys and dishes that are distinguished by the
texture of their materials, and pet food with very few additives.
The pet supplies that we initially sold at just one store were popular, and we
expanded sales to 32 stores in January 2023. They are also sold on our online site.
We will turn our attention to all aspects of life and develop new products and newmarkets to support daily life.

Special Feature

Largest Store in Taiwan Opens in New Location with Expanded Floor Area (Taiwan)
In January 2022, MUJI Miramar moved to a new location with expanded floor area,
and reopened as the largest MUJI store in Taiwan. It carries products essential todaily life, has an Open MUJI, MUJIBOOKS and an embroidery studio, and offers
services by home interior advisers, styling advisers, and experience advisers. It also
has many store-specific features.
In particular, “Found Market”—an initiative in which we find products that havebeen loved for a long time in Taiwan and sell them at MUJI to convey their benefits—has
been highly acclaimed. Products carried in this section include honey, tea, noodles,
soy products, and fresh fruits and vegetables sourced directly from the farm, as wellas processed foods that use them as ingredients.

Special Feature

Local Products from Around the World Are Popular (Southeast Asia)
In Southeast Asia, our proprietary products developed to fit the local culture, climate
and other conditions have been well received. The various products we have developed
include items made of nylon to protect against squalls, and hats that Muslim people
can wear.
In Vietnam, where more than 80% of people sleep with bolster pillows, we developed
a bolster pillow for sale at MUJI AEON MALL Long Bien, which opened in April 2022.
In consideration of the environment, pillows made from leftover fabric at the supplier’s
factory were made available for purchase in limited quantities. Six months after thestore opened, the pillow was showcased on a local website that has 970,000 followers.
It was such a hit that customers waited in front of the store before it opened for theday. We are also considering sales of the pillow in other ASEAN countries.

MUJI REPORT 2022

46

Global Strategy

Initiatives in Our Mainland China Business
Mainland China
Recognition of Issues and Strategies
Our business in mainland China has grown steadily since it began in 2005, but the pace of expansion has slowed in recent years. We see
this as largely due to the increasing competitiveness of rival products and the unique evolution of marketing capabilities, in addition to strict
COVID-19 countermeasures. In mainland China, the market changes rapidly, so we need to be responsive to change. However, there is still
plenty of room for growth. We will pursue the following measures, with a focus on key stores and our e-commerce business, and work toachieve business expansion.
1) Increase the ratio of products developed in mainland China
2) Establish headquarters functions for IT systems, accounting, logistics and other areas that support sales activities
3) Speed up and localize management by training locally hired staff in mainland China
In particular, by developing products in mainland China, we can increase product variety as well as the number of stores selling our
products, which will differentiate MUJI from its competitors.

Stores and Businesses in Mainland China

Space Design and Hotels(As of August 31, 2022)
MUJI

MUJI store

MUJI

e

MUJI store

Flagship MUJI store

1-10 storesHotel

11-30 stores

1-10 stores

Space designbusiness
11-30
storessign business

Beijing

MUJI HOTEL SHENZHEN
31-50 stores

31-50 stores

BeijingChengduChengduShanghai

Shanghai

Kunming
ShenzhenKunming
ShenzhenShenzhen Bao’an International
Airport Terminal 3

Key Initiatives• Product development
By March 2024, we will complete modification or elimination of products that lack variety and products that do not fit local lifestyles.
Specifically, we will work to provide not only items such as skin lotion and writing tools, but a wide range of products that can satisfy theneeds of daily life, including household goods, home appliances, and food. We will also create new categories for products that havebecome a part of daily life, such as pet supplies and outdoor goods.
• Marketing strategy
We will expand customer contact points through measures including electronic payment, stores in shopping malls, and tie-ups with familiar
brands. Our efforts will focus on expanding our brand recognition by collaborating with businesses in other industries, as well as throughproduct development and marketing innovations. By enhancing communication to MUJI members and highlighting MUJI’s uniqueness, we
aim to create an original community.
• Store opening plan
For future store openings, the basic floor space will be about 550 tsubo (approx. 1,800 m2). In addition to major cities, we will also extend
store openings to smaller cities. By improving our delivery service and category-specific platform stores, we will expand customer contact
points, length of customer engagement, and the customer base to enhance the omnichannel effect together with in-store shopping.
• Organizational enhancement
We are carrying out organizational restructuring to enhance governance. This involves building future-oriented customer relationshipmanagement (CRM) and supply chain management (SCM) systems and introducing business intelligence tools that enable decision-making
and problem-solving based on operating data. We are also working on transfer of authority, recruiting, and intensive training of executive
candidates to become an organization capable of independent development.
• Expansion of business scope
We are expanding our housing and hotel businesses in mainland China. We will also work on the launch of new concept stores andpromote the SPA (Specialty Store Retailer of Private Label Apparel) concept in agriculture.

47 MUJI REPORT 2022

Business Strategy

FeatureMessage from the Executive in Charge
We are improving our unique product development
capabilities and overhauling our supply chain for a
speedy response to market changes.

Market Conditions in
Mainland China

chain and improve logistics efficiency. In
cooperation with factories, we are working
to improve efficiency by visualizing all aspects
of operations from logistics costs, which havebeen rising in recent years, to shipping,inventory storage and merchandise transfer.
For our channel strategy, we will
incorporate the online-to-offline (O2O1)
concept into our existing framework ofbrick-and-mortar stores and e-commerce.
We are conducting reforms tailored tocustomer purchasing behavior, which haschanged in recent years. Our initiatives
include collaboration with online platforms
for ordering and prompt delivery throughdirect sales,2 centralized use of inventory
and handling of multiple channels by store
sales staff.

Ryohin Keikaku’s operating environment
in mainland China is becoming
increasingly severe, partly due to theongoing impact of COVID-19. The
growth rate there for lifestyle andconsumer goods has been slowing,
but the market is not shrinking. One
likely reason for that is the diversificationof people’s tastes as their lives havefundamentally improved. The qualityof local companies’ products has also
improved, with enhanced productlineups and marketing capabilities.
Consumers’ perception of quality andprice has also matured.
Under these conditions, thetop-priority management issue for theThree Management Issues
mainland China business in 2022 was
We currently face three management issues.
making our products more competitive.
The first issue is to increase the ratio
Areas of focus included expanding theof products developed in mainland China,
product lineup through local planning,
Satoshi Shimizu
while also making mainland China thereducing costs by improving the supply
center for a global mix of products
Executive
Vice
President&
Directorchain, and further strengthening quality
developed outside Japan. Mainland China
Head of Mainland China Business Unit
control. Among our locally plannedis the Company’s largest market outside of
products, pet supplies were popular,
Japan, and the approach to the standards
with a strong response at stores as
and
costs
of
products
developed there can be applied on a broad
soon as sales began.
scale globally. Moreover, it is currently difficult to achieve
Another characteristic of the market in mainland China is the
economies of scale in countries other than Japan and mainland
speed of its growth due to economic expansion. MUJI has gained
China, meaning we incur large losses manufacturing in otherrecognition there as an ethical and universal brand that handles
places. Mainland China will therefore continue to play a central
standard products. However, unless we constantly change androle in proposing optimal solutions for overseas merchandising.
innovate, we will not be able to remain an option for consumers
The second issue is establishing headquarters functions to
on par with local companies, which are not afraid to fail. We must
supporta continually changing sales force. To ensure reliable andalso think outside the box in looking for room for further development
accurate operations in sales activities that continue to change at athough measures such as concurrently working on an omnichannel
dizzying pace, with new products, new channels and new services,
strategy. We take a heuristic approach in all aspects of management,
wewill restructure the headquarters functions, including IT systems,
and maximize investment of management resources wheneveraccounting and logistics. In addition, enhancing the functions of
we find an opportunity. We also consider it important to continue
our auditing office is an urgent task for ensuring thorough compliance.
communicating these efforts to our customers.
The third issue is developing talent. Management and operation
by local employees is essential in mainland China, where theUrgent Need to Reform the Supply Chain andmanagement environment is becoming more complex. Currently,
Channel Strategy
local employees have been appointed as division managers. At
A channel strategy that encompasses our supply chain and online
this stage, we are receiving support and information from thechannels is currently a priority issue.
headquarters in Japan for our operations, but we will further
For the supply chain, rather than the conventional approachaccelerate localization of management by establishing a systemof concentrating planning and development functions in Japan,that will allow us to transfer full authority in the near future.
we are taking advantage of the close proximity of planning andproduction areas to conduct these operations in mainland China,
1. Marketing measures to bring potential customers from online channels to makeadopting an approach of development together with reliablepurchases in physical stores
2. Visiting customers to sell goods, services or other products
factories, regardless of their size. We are also working tosystematize and standardize operations throughout the supply
MUJI REPORT 2022

48

Human Resource Strategy

Human Capital Strategy
A Human Resource Strategy to Achieve “Public Interest and People-Centered Management”
Based on its core value of every employee “contributing to society and people," Ryohin Keikaku places employees with a sense of ownershipin leading roles in its business activities, where they take the initiative to pursue “a truthful and sustainable life for all” in which the activities ofindividual employees and stakeholders benefit the public interest. We define this management approach as “public interest and peoplecentered management.”
For Ryohin Keikaku, the greatest form of management capital is its employees who practice “public interest and people-centered
management.” Development of human resources and creation of organizations is the cornerstone of our management strategy.

The Kind of Employees Ryohin Keikaku Seeks
Ryohin Keikaku looks for employees who want to contribute to society and people, and who will continue to work together with the people
in their communities to help create the desired lifestyle and society of the future; who will help make sure that products and services areenjoyed, trusted and appreciated by many people; and who will experience personal growth and find happiness in the process of creating
those products and services, which then becomes a motivator for their next business activities. Our goal is to gradually push society andcommunities in the right direction as activities by people who share these aspirations spread throughout the world.

The Type of Person Ryohin Keikaku Is Looking For
Strong Ambition

Ability to Make Things Happen

1. P assion and ambition to contributeto society and people

4. Inquiring mind and intellectual
curiosity

2. Empathy and sense of ownership

5. Creativity and conceptual ability

3. Professional mindset

6. T eamwork and collaboration skills

Ability to Carry Things through to the End

7. Vitality and thoroughness
8. C hallenging spirit and positive
attitudeSpecial Feature

Start of Leadership Talent Development Session to Develop New Talent
Ryohin Keikaku aims to realize its management principles through various talentdevelopment programs. In 2022, we began the Leadership Talent Development
Session, in which executives, general managers and managers from Japan andoverseas come together to discuss issues. This also includes dialogue with thepresident. The event is a discussion-type session in which participants talk about
the mindset and behavior necessary to produce results in day-to-day business,
deepen their mutual understanding, and then link their actions to improvement indaily operations. Through this session, we will develop the leadership talentnecessary to maximize our performance as an organization.

49 MUJI REPORT 2022

Business Strategy

FeatureMessage from the Executive in Charge
Developing independent store managers who
contribute to the community will lead to a stronger
Ryohin Keikaku going forward.

Urgent Need to Develop
Independent Store Managers
and Establish the Necessary
Organization and Systems

play an active role and to be rewarded fortheir work. To encourage independent,
voluntary activities by each employee, we
consider it essential to establish systems
for correctly evaluating their activities andrewarding their contributions.

We have set two major themes forour human resource strategy in orderto realize Ryohin Keikaku’s corporate
An Organization with a Truly
purpose as well as “public interest
High Level of Engagement
and people-centered management.”
The second theme is corporate culture
The first theme is to develop
reform. To realize Ryohin Keikaku’s
human resources and establish an
philosophy, each employee will play aorganization capable of opening
leading role in reforming the corporate
approximately 100 stores annually inculture based on the concept of “coJapan up to 2030. To do so, eachownership.” To achieve this goal, we want
year we must develop 100 capable
all employees to consider themselves as
store managers and about 20 block
joint managers of the Company, tomanagers in charge of regional
proactively give their opinions on local
support. We aim to develop
issues, and to act independently. Our
independent store managers who caninitiatives include investment in humanresolve local issues and contribute to
Yoshimasa Tsuji
capital, implementation of a recruiting
the community, rather than people
Executive Officer
strategy and the introduction of a
who can simply operate stores.
General Manager, Human Resources Division
Japanese-style employee stock option plan
We have therefore set the(see page 71 for details).
following three short-term initiatives.
In
2022,
we
conducted
a Group-wide engagement survey of(1) Establish new training and education programs
employees
in
Japan
and
overseaswith the aim of quantifying how(2) Recruit employees for headquarters to strengthen the organization
close
we
are
to
achievingthecorporate
culture we want so we(3) Introduce new personnel and evaluation systems
canmakeimprovements.
Employees
areengaging in discussions
For (1), we will develop a management training program to
based
on
the
resultsinorder
tocreateabettercorporate culture.
develop new store managers and realize independent store
We
have
also
startedleadershipdevelopment
sessions,
wheremanagement, and a skill development program to promote theexecutives,
generalmanagers
andmanagers
from
Japan
and
resolution of local issues. Specifically, we are promoting training
overseas
gatherfor
discussionswiththepresident,aswework toprograms and career development to enable new university
shareacommonunderstandingof
ourapproachasaproduct
graduate employees to serve as store managers in their third year
developer and retailer.
of employment, with the expectation that young people with
By steadily implementing this human resource strategy, we
experience will take on the responsibilities of the next generation
hopethat our human resources who have a passion for andof Ryohin Keikaku. For (2), we are recruiting headquarters
ambition
to contribute to society and people will grow and findemployees to accelerate the development of our basic productfulfillment
in their respective workplaces. We believe that maximizing
lineup and establish robust work processes. Recently, middle
theresultsof our organization by having each employee play an
manager-class employees and professionals from various fields
activerole
willlead to MUJI’s stores, products and services being
have joined the Company from other industries, and we arelovedbypeoplearound the world. Now is the time to lay thestrengthening our organizational structure to raise the level of our
foundationfor
our
future, and we will therefore work steadily toentire value chain, including IT, e-commerce, logistics, productbecomeanorganization
with a truly high level of engagement.
development and store development. For (3), we are introducing
systems and frameworks that enable diverse human resources to

MUJI REPORT 2022

50

Human Resource Strategy

Human Resource Development Policy and Initiatives
The Six Pillars of Our Human Resource Development
Our human resource development policy for achieving "public interest and people-centered management,” and examples of initiatives for it
are as follows.
1. Recruit and develop employees who have the ambition to embody Ryohin Keikaku’s philosophy and values
2. Foster a healthy corporate culture in which diverse employees can show their individuality, think independently and act on theirown initiative
3. Create a working environment where employees can be themselves, realize physical and mental well-being and continue to workwith peace of mind
4. Train and assign leaders capable of bringing out the individuality and potential of diverse employees and maximizingorganizational performance
5. Develop and establish education and training systems to support the needs of employees who want to learn and grow throughtheir careers
6. Establish and operate a personnel system to support employees’ sense of participation and willingness to take on challenges

Human Resource Development Policy and Main Initiatives
1. Recruit and develop employees who have the ambition to embody Ryohin Keikaku’s philosophy
and values
We recruit employees who share Ryohin Keikaku’s philosophy
Recruiting Results
and have the passion and ambition to embody it, and provide
2020/8them with training on our ideology, philosophy and values.
Number of new university graduate hires
200
Through that training, we foster empathy and a sense of
Numberof
mid-careerhires
52
ownership toward the issues of communities and society, andRatio of mid-career hires to total new hires
21%
develop employees who are motivated to help resolve social
issues and make a positive impact.
Main Initiatives• In conjunction with our “Second Founding,” redefine and conduct training on our ideology, philosophy and values• Promote internal understanding of our philosophy, create ongoing opportunities for dialogue and motivate employees

2021/82022/8

32

103

43

105

57%

50%

2. Foster a healthy corporate culture in which diverse employees can show their individuality, think
independently and act on their own initiative
We create the conditions for fostering a healthy corporate culture, where employees with diverse personalities respect each other and haveopen discussions in an environment of psychological safety; where every employee can think independently and show initiative; and where
people enjoy working positively toward achievement of goals.
Main Initiatives• Visualize the corporate culture through a Company-wide engagement survey, and continue to implement improvement activities•P romote internal understanding of our philosophy, and conduct related Company-wide training and ongoing dialogue
Company-wide Engagement Survey
Starting in 2022, we drastically revised the organizational vitality survey we had conducted in Japan, and conducted an engagement
survey of approximately 30,000 employees working in Japan and overseas. This survey quantitatively verifies whether the necessary
actions are being taken to realize our corporate purpose and vision, and whether the requisite conditions for that are in place. Our
goal is to be a company with high engagement where all employees share our philosophy and take action. We will conduct thesurvey annually and make improvements based on the results.

3. Create a working environment where employees can be themselves, realize physical and mental
well-being and continue to work with peace of mind
We provide and promote working environments where employees can be themselves, realize physical and mental well-being and continue
to work with peace of mind, regardless of their nationality, birthplace, age, gender, disability, or the environment or life stage they are in.
Main Initiatives•C onsider and introduce expanded systems to accommodate diverse work styles (examples: balanced four-day workweek system,*return-to-work system, internal job posting, childcare leave and nursing care leave system, benefit programs)•E stablish systems and support for maintaining and improving the mental and physical health of employees* See page 70 for details.

51 MUJI REPORT 2022

Business Strategy

4. Train and assign leaders capable of bringing out the individuality and potential of diverse employees
and maximizing organizational performance
We continually develop leaders who can bring out the individuality and potential of our diverse employees, direct them toward achievementof the Company’s goals, and maximize the organization’s performance. We also manage human resources by assigning such leaders to theright jobs.
Main Initiatives• Improve education to strengthen management skills for leader development•P rovide opportunities for development through on- and off-the-job training for store managers and community managers, who leadindependent store management and community activities

5. Develop and establish education and training systems to
support the needs of employees who want to learn and growthrough their careers
We have established education and training systems and a self-development support
program to enable employees to learn the basic hard and soft skills necessary as abusinessperson as well as the practical skills required for various positions and levels. With
these programs, we maintain an environment in which motivated employees can continue
to learn according to their needs throughout their career.
Main Initiatives•M aintain and create training programs to fit the needs of different positions and levels in
store and headquarters operations• Improve problem-solving skills and foster independence through Quality Control/Industrial
Engineering education and project promotion

Lifestyle Organizing School final presentation
https://www.ryohin-keikaku.jp/eng/topics/035040.html

6. Establish and operate a personnel system to support employees’ sense of participation andwillingness to take on challenges
We have introduced a personnel system in which employees who act independently and spontaneously to achieve goals, and employees
who take risks and set difficult targets and achieve results are praised and rewarded. We create and maintain an environment in which
employees experience growth through their work, and feel rewarded and happy.
Main Initiatives• Introduce a grade system and evaluation system to assess each employee’s ability, willingness to take on new challenges, andcontribution to their organization, the Company and society•D evelop an internal recruiting system that encourages employees to take on new challenges and build their careers, and systems for
personnel exchanges and dual employment to promote community activities and contribution

Special Feature

Store Manager Cultivation Project
Ryohin Keikaku believes store managers are a key growth engine in carrying out its“Second Founding.” With that in mind, we started the Store Manager Cultivation Projectin 2019 to prepare people to become store managers after two years of employment.
New employees participate in this Store Manager Cultivation Project whether
they are hired as new university graduates or in mid-career. Working backwards fromthe goal of becoming a store manager after two years, this program offers employees
on- and off-the-job training to give them the necessary skills. As of September 2022,
more than 130 store managers have emerged from this project. We are also widening
the scope of their work, including promotion to block manager (a position thatmanages multiple stores) after they gain business and store management experience.

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52

Business Infrastructure

IT Strategy
Basic Policy and Strategy
We aim to become a leading company in product development by utilizing information technology (IT) for more efficient operations throughout
the Company.
To support the reliable product development unique to Ryohin Keikaku and the management of its stores as community centers, we will
maximize insourcing of IT for the following purposes: (1) cost structure improvement, (2) system stabilization, and (3) contribution to business.

Status and Recognition of Issues
Ryohin Keikaku has previously relied on vendors for its systems and related matters, and did not sufficiently consider non-functional
requirements* such as scalability and support for operation and maintenance. As a result, we are aware that our systems have become
extremely complex. This has slowed development speed, reduced cost efficiency, and made it difficult to respond to failures. We will rebuild
our IT infrastructure by preparing development standards in-house and insourcing system development.

Key Initiatives• Company-wide project
The operating system (OS) that has supported Ryohin Keikaku to date will not be enough on its own to achieve our goal of locally rooted
stores with independent management. We are therefore conducing a project to rebuild our OS. For this purpose, we are working to visualize
current business processes in order to identify system issues and update existing systems. We are conducting this Company-wide businessreform project to support independent store management, decentralization and autonomy.
• Net increase of 100 stores per year and improved productivity per hour worked
In carrying out our plan to open 100 stores annually, we will increase self-service checkout lanes, redesign bagging areas and install andoperate registers for a rollout to 1,200 lanes in 230 stores by February 28, 2023. During the second half of the fiscal year ending August 31,
2023, we plan to complete the switchover of software at stores that already have self-service checkout lanes.
• IT investment plan
To promote system insourcing, we will proactively invest in IT for e-commerce, stores, infrastructure and other applications with the aim of
reducing information processing and outsourcing costs by JPY 1 billion compared with the fiscal year ended August 31, 2022.
• Establishment of a new business development organization
We have established an in-house app development team to handle new initiatives and services, including new businesses. Service designand operation flow can be completed by a single team, which we also expect to be responsible for core operations and system hubs
as necessary.
• Increased hiring of IT talent
To promote system insourcing, we will ramp up external hiring to fill approximately 70 positions, including project managers and engineers.
• Creating an organization that lets engineers growTo create an organization where engineers can grow, we are compiling a checklist of their skills and conducting individual evaluations. Other
measures to raise the level of engineer quality will include holding internal technology sharing meetings, hiring technical advisors andformulating development guidelines.
* Non-functional requirements: Requirements that are not directly related to system functions, such as availability, performance, scalability, operability, maintainability,
portability and security.

53 MUJI REPORT 2022

Business Strategy

FeatureMessage from the Executive in Charge
We will improve the environment and infrastructure
for effectively using IT, with the aim of being a leading
company in product development.

Improving Our IT Environment
as a Technology-driven
Company Is Imperative

Launch of Company-wide
Business Process
Reengineering Project

In its 2030 Vision, Ryohin Keikaku has
set out two objectives: “to be a partof people’s daily necessities” and “totake root in local society.” Achieving
the goals of the medium-termbusiness plan will require us toaccelerate improvement of our IT
environment to make Ryohin Keikaku
a technology-driven company.
In the IT industry, the retail sector
is generally considered to be lagging
in IT uptake. Among companies that
handle apparel, which has a highenvironmental burden, only those that
manufacture products with integrity
will survive as upstream traceability
becomes more and more important.
Tatsuya Kubota
Ryohin Keikaku still often handles
Executive Officer
supply chain management andIn charge of IT Services Division
traceability with an analog approach,so there is a lot we can do with IT inthese areas. That underscores theurgent need to improve the IT environment.
One issue to address is that work flows are not visualized.
Since Ryohin Keikaku has long conducted product developmentwith integrity, I am confident that it can become a leading company
in product development by visualizing and standardizing workflows through the use of IT.
Another challenge is dependence on vendors. Communicating
only functional requirements without defining non-functional
requirements, and having different definitions and technical staff
for each vendor results in extra time, effort and cost for operationand failure recovery.
At this point, our environment and systems, development
standards, and IT-BCP* are also inadequate for a technologydriven company, so creating the IT infrastructure that addresses
these issues is imperative.

During the fiscal year ending August 31,
2023, we will move forward on schedulewith a project that began in July 2022 torebuild our IT infrastructure. More than justan IT systems project, this is a Companywide business process reengineering (BPR)
project that involves every employee.
Through this project, we will resolve
remaining issues in global supply chain
management (GSCM), implement businessprocess reforms to support individual store
management and autonomous
decentralization, and make innovations to
our MD (merchandising) system.
To support a net increase of 100
stores annually in Japan, we are also
reconstructing our POS system platform
and store network, and expanding therollout of self-service checkout registers(1,200 registers in 230 stores in the firsthalf of 2023). In addition, we will expand
online sales, carry out new businessdevelopment and create a security
governance framework.

* Business continuity planning (BCP) measures for IT systems

Creating a Vibrant Work Environment
I will never be an engineer, but I want to be the top supporter ofengineers. Without someone who understands them, even very
talented engineers will not be able to make the most of their abilities.
That’s why I want to be their supporter, and to foster a vibrant work
environment and culture where they can work with enthusiasm.
Ideally, business units and engineers will cooperate with eachother. On the business side, we will also be able to utilize technology
as a problem-solving tool. The IT Services Division has a goodunderstanding of the whole value chain, so we also serve as abridge between organizations.
Currently, we are bringing in talented personnel. They arehighly motivated, have respect for existing employees, and arepeople who like MUJI. Together with them, we will work towardachieving our goals.

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54

55 MUJI REPORT 2022

Ryohin Keikaku
and Sustainability
MUJI aims to solve social issues on a global levelby incorporating simplicity and beauty into daily life
through its products and services. We would like to bea group focused on attentiveness that sees and thinks
from a broad perspective, from the smallest details to
the future of the whole planet. MUJI embodies Ryohin
Keikaku’s contribution to society.
We have determined four indices for contributing
to society, and will implement policies and initiatives
aligned with our goals.

Four Indices1. Build a sustainable society while achieving circularity,and coexisting with nature• Reduce combustion of fossil fuels and use of their derivatives• Guarantee ethical production processes• Encourage participation in sustainability activities** See page 57 for details.

2. Revitalize communities and resolve their issues
through localization activities• Resolve issues arising from an aging society and declining population• Open stores and revitalize industry and the economy in local communities• Preserve local communities, the environment and traditional culture

3. Promote high employee engagement and acquisition ofproblem-solving skills• Maintain a corporate culture of acting proactively and independently• Be highly sensitive to social issues and finding solutions• Demonstrate commitment to diversity• Create workplaces where anyone can fit in and succeed

4. Achieve “public interest and people-centered management”• Encourage co-owned management• Earn strong shareholder support• Earn strong support from residents, customers, local communities
and business partners

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56

Sustainability Strategy

Ryohin Keikaku and Sustainability
A Consistent Commitment to ESG since Day One
Ryohin Keikaku’s MUJI brand has consistently served society as a whole since day one. Our core value is“to contribute to society and people.” This is a value that is rooted in all of our business activities.
Our commitment to the three perspectives of selection of materials, streamlining of processes, andsimplification of packaging has made us a pioneer in what the world now calls sustainability. Based onthese three perspectives, we continue to develop products that take society and the environment into
consideration. This policy, which we have maintained as a constant focus, has become even more
important given the “Second Founding” we initiated in 2021 to create a better world 100 years from now andto “be a front runner of ESG management.” We aim to build a sustainable society while achieving circularity,and coexisting with nature, reduce our environmental impact and respect individual human rights
throughout the entire lifecycle of our products and services as well as through our actions.
We will achieve our ESG management ideals by implementing innovative ESG approaches for products,
business activities and communities to create new value and contribute to society.
• ESG in products	We will encourage participation in sustainability activities* worldwide by adopting circular design for
all products and offering them at affordable prices.
• ESG in business activities	We will collaborate with stakeholders to reduce social costs and environmental burden. At thesame time, we will contribute directly to solving social issues through our business activities.
• ESG through activities in regions	We will make a positive impact on society by leading the revitalization of local areas throughactivities with local communities.

ESG Strategy through 2030
Process for Identifying Material Issues

Ryohin Keikaku’s Material Issues

Ryohin Keikaku identified material issues in formulating its ESG strategy
through 2030. This process involved 1) identifying and understandingsocial issues, 2) conducting interviews with management, and
3) implementing a scoring system that is unique to Ryohin Keikaku
with the help of an external organization (shown in the matrix below).
We used the scoring system to ultimately narrow our focus to 12
material issues. The Board of Directors then approved the fourmaterial issues shown on the right of the matrix.

1. Build a sustainable society while achieving
circularity, and coexisting with nature• Reduce combustion of fossil fuels and use of their derivatives• Guarantee ethical production processes• Encourage participation in sustainability activities*

2. Revitalize communities and resolve their issues
through localization activities•R esolve issues arising from an aging society and declining population•O pen stores and revitalize industry and the economy in local communities•P reserve local communities, the environment and traditional culture

Materiality

3. Promote high employee engagement and acquisitionof problem-solving skills

Stakeholders•M aintain a corporate culture of acting proactively and independently• Be highly sensitive to social issues and finding solutions• Demonstrate commitment to diversity• Create workplaces where anyone can fit in and succeed

4. Achieve “public interest and people-centered
management”• Encourage co-owned management• Earn strong shareholder support•E arn strong support from residents, customers, local communities
and business partners

Ryohin Keikaku

Materiality* Encourage participation in sustainability activities: We believe that in the current consumer market, in general, companies strengthen ESG and sustainability
initiatives in a way that makes consumers bear some of the cost. Ryohin Keikaku conducts environmental and social initiatives naturally and effortlessly, andprovides products and services at affordable prices. Through MUJI, we want to reduce our environmental impact in a way that occurs seamlessly in daily
life—in fact, that is MUJI’s founding philosophy. By practicing and broadly expanding this philosophy, we encourage people to take part in sustainability activities.

57 MUJI REPORT 2022

ESG Promotion Organization
Ryohin Keikaku launched the ESG Promotion Committee at the start of the fiscal year ended August 31, 2022 to address its material issues
and further accelerate ESG management. The chairman & representative director chairs this committee, which addresses medium- andlong-term Company-wide ESG issues. Inside directors, executive officers, and managers of related business divisions participate in thecommittee’s monthly meeting.

Board of Directors
ESG Promotion Committee(Chairperson: Chairman & Representative Director)

Ryohin Keikaku’s
Material Issues

Public Relations & IR & ESG Division

1. Build a sustainable
society while achieving
circularity, and coexistingwith nature

2. Revitalize communities
and resolve their issues
through localization
activities

Environment

Social value creation

3. P romote high employee
engagement andacquisition of problemsolving skills
4. A chieve “public interest
and people-centered
management”

Human capital(“Public interest and peoplecentered management”)

Core initiatives for items
1-4 on the right

GovernanceCompliance withlaws and regulations

19 Projects InitiatedExecutive officers are responsible for each project and select project leaders.
Project leaders then select project members from throughout Ryohin Keikaku.
Progress toward achieving goals for 2030 is their benchmark.

Key Projects
Environment

Social value creation

Human capital(“Public interest and peoplecentered management”)

GovernanceCompliance withlaws and regulations• Projects looking ahead to 2030 and 2050 for reducing greenhouse gas (GHG) emissions globally and across
supply chains•P rojects that involve issues such as water, waste and biodiversity to minimize the negative impact of businessactivities on the environment• Projects that reduce the use of virgin plastic in products and packaging materials and that accelerate resourceand product recycling• Projects to develop new materials and new businesses that take the environment and socials issues into consideration• Projects that promote “public interest and people-centered management”•P rojects that improve diversity & inclusion and engagement• Projects that enhance the security of personal and other information and that ensure compliance with various laws
and regulations

MUJI REPORT 2022

58

Four Indices1. Build a sustainable society while achieving circularity, and coexisting with nature

Environmental Management
Environmental Policy
Ryohin Keikaku aims to solve social issues on a global level by incorporating simplicity and beauty into daily life through its products andservices. We also structure our business for sustainability by eliminating all forms of waste in our operations and the entire supply chain,effectively using and recycling resources, conserving energy, reducing waste, and preventing environmental pollution.

Environmental Management System
Based on our Environmental Policy, each Group company and all divisions of Ryohin Keikaku promote environmentally responsible initiatives
through their business activities. The ESG Promotion Committee receives reports on the progress of various initiatives and targets, andworks to implement measures and make improvements. For projects that require specialized knowledge, we collaborate with external
specialist institutions in testing, auditing and management. The committee is chaired by the chairman & representative director, and insidedirectors, executive officers, and managers of related business divisions participate in the monthly meeting.
At least twice a year, progress toward various targets and initiatives of the ESG Promotion Committee is reported to the Board of
Directors for deliberation, and the results are reflected in policies and activities.
In addition, the Compliance and Risk Management Committee reviews and discusses various risks and reports to the Board of Directors.

Resource Recycling
Basic Approach
Since creating the MUJI brand in 1980, Ryohin Keikaku has consistently approached product development from three perspectives:
selection of materials, streamlining of processes and simplification of packaging. We believe that selecting materials in consideration of the
global environment and producers, eliminating waste in all processes, and providing customers with what they actually need in the form
they actually want will help to reduce waste and environmental impact. Ryohin Keikaku aims to build an outstanding relationship with natureand communities. We contribute to a circular economy by reducing waste and circulating global resources in all of our business activities.

Goals
Ryohin Keikaku aims to contribute to society by creating new value through its businesses.
We are working toward achieving a circular economy by minimizing waste, eliminating
wasteful use of resources and promoting recycling and reuse through a series of activities
in areas ranging from product development through to the post-consumer phase. We willachieve our goals by promoting activities to reduce, reuse, replace (find alternatives) andrecycle from the perspectives of the Ryohin Keikaku Group, supply chains and customers
in order to reduce the amount of waste generated.

Waste Emissions(t)

General waste

15,00012,259Industrial waste

13,362
11,093

10,000XX.X

11,0185,000

012,25910,043

1,241

1,050

1,103

2020/22021/82022/8

Scope of aggregation: MUJI in Japan, Café&Meal
MUJI, IDÉE, headquarters, anddistribution centers
Note: Some estimates are included.

Participation in Initiatives: Japan Sustainable Fashion Alliance (JSFA)
JSFA is a platform for companies that are committed to sustainable fashion. Members work together to develop solutions to
issues that are difficult for individual companies to resolve. Ryohin Keikaku has been participating as a supporting member sinceAugust 2021.
JSFA shares knowledge about sustainable fashion, facilitates collaboration to achieve zero-waste fashion and carbon
neutrality, proactively identifies key domestic and international trends, and makes policy recommendations necessary to improvecommon issues within the industry.

59 MUJI REPORT 2022

Initiatives to Reduce Waste

Sustainability Strategy

Special Feature

Removal of Plastic from Packaging Materials andCollection and Recycling of Paper Hangers
One metric for realizing a recycling-oriented society is our progress toward our goal of 100%plastic-free packaging and materials by 2030.
For example, we eliminated the use of plastic bags and switched to recycled paper display
hooks for socks and scarves. In addition, we are phasing out paper in favor of bamboo fiber for
straws provided in the Café&Meal MUJI restaurant business. Made completely from natural
materials, these straws are 100% biodegradable and are more water-resistant than paper straws,
which improves convenience for customers.
In addition, we began collecting and recycling the paper hangers we use for products atstores in October 2022. Collected hangers and hooks are liquefied at a factory and recycled into
paper, then processed and used for paper hangers for some of our products. They have therefore
become a recycled resource instead of household trash.

Special Feature

Recycled Wool
Ryohin Keikaku offers a variety of products that use recycled wool. Some of the recycled wool handled by MUJI is made in Bishu,
which straddles Aichi and Gifu prefectures in Japan. Bishu has prospered since the Meiji era as one of the world’s three major
wool-producing areas. Bishu has a deeply rooted culture of reusing wool. This is an aspect of the culture that was little known in
the past. However, the situation has changed completely in recent years as companies and society have become more focusedon sustainable options. Recycled wool supported by advanced technology features high quality and is attracting attention
worldwide. Old clothes are reborn as new MUJI clothes in Bishu, which maintains Japan’s time-honored spirit of thrift.
Sorting and cutting
Wool products collected from all over Japan are first sent to a sorting and cutting facility. They aresorted by color, and skilled employees cut off the tags and buttons.
Reclamation
The recyclable wool is sent to a recovery facility and shredded using a grinder. It is gradually madefiner while being sprayed with oil and water, and finally processed in a garnet machine to complete
the reclamation process.
Spinning
Spinning is the process of spinning yarn from carded wool. Creating colors that address client
requests sometimes involves selecting small samples of more than 20 colors from a hugecatalogue we have built over many years. A sample is made by combing it with a stiff brush in aprocess called slapping, and the color is confirmed, thus completing the coloring process. Oncethe composition is decided, the carded wool is mixed in a large mixing machine, combed
lengthwise and crosswise, and spun into thread. The thread is finally completed by twisting it whilepulling it with a spinning mule.
Weaving
The weaving facility receives the thread and first runs it through a warping machine. After that,each piece is passed through a tool called a heddle and put on a loom, and the heddle frame is
moved up and down to pass the weft threads and weave the cloth.
Finishing and processing
The woven cloth is sent to a finishing and processing facility. The next step determines the textureof the wool. Washing and milling removes oil and thickens the texture of the cloth. The final recycled
cloth is achieved through processes including raising, compression, polishing and shearing as necessary.

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60

Four Indices1. Build a sustainable society while achieving circularity, and coexisting with natureSpecial Feature

Reducing Textile Product Waste
In 2010, Ryohin Keikaku launched an initiative to recycle used and soiled clothes, towels, covers, and clothing children had
outgrown. Textile products are collected at the end of their useful lives, and clothes are sorted, washed, re-dyed, remade, andotherwise recycled into products with new value, and are then sold at select MUJI stores under the ReMUJI brand. In addition,some textile products that don’t fall under the ReMUJI brand are recycled as raw materials for various other purposes.
Eligible products: All MUJI textile products (towels, sheets, covers, etc., excluding underwear and socks)
Collection sites: MUJI stores

1. Bring to the store

2. Check condition ofclothes at MUJI storesthroughout JapanReuse
Can be worn withsome modification

Upcycle products into
clothing.
New products all featurea different appearance.

Cannot be worn

Raw materials for clothing
and other products arerecycled

MUJI

Recycle

MUJI clothes (excluding underwear),
towels, sheets and covers

We have been selling re-dyed clothes since 2015. We add new value to clothing customers have used for several years by
re-dyeing it in indigo or black. As for clothing unsuitable for dyeing, we remake the items into either Arainaoshita fuku (carefully
washed second-hand clothes) or Tsunagaru fuku (patched clothes that connect both the clothes and the owners, new and old).
Adding a little touch and bringing new life to the clothing we collect is a way to collaborate with customers to conceptualize ways
to reduce waste, recycle resources, and wear clothes with care.

IndigoIn Japan, dye shops known as konya have been specializing in
indigo dyeing since the Edo period.
Indigo was widely popular as a clothing color in the Edo
period for people, from feudal lords to commoners.
Three shades stand out among the many shades of indigo:
hanada, or light indigo, ai, or blue-green indigo, and tomekon, or
dark indigo. Hanada is a bright pale blue, ai is a greenish bluethat is the original indigo color mixed with a little yellow, andtomekon is a dark navy blue that cannot be dyed any more.
Our method employs modern dyeing technology to prevent
color fading. Although different from original plant-based indigo
dyeing, our method offers the opportunity for people to enjoy
upcycled indigo clothing.

Volume of textile products recycled(Results for the fiscal year ended August 31, 2022)

61 MUJI REPORT 2022

49.1 tReMUJI unit sales volume(Results for the fiscal year ended August 31, 2022)

28,222 units

Sustainability Strategy

Water Resources
Basic Approach
Water is an essential natural resource for our daily lives and business activities. Ryohin Keikaku recognizes its responsibility to minimize
the environmental impact on the planet and strives to reduce the use of water in the production process from raw materials to finishedproducts. The increasing demand for water due to the world’s population growth exacerbates various issues such as water scarcity, floods,
and river pollution, which increases water risks. We aim to address various water-related issues and work toward tackling the issue of
unequal distribution of water resources that should be enjoyed equally.

Goals
Ryohin Keikaku is committed to preserving sustainable water resources in various areas such as within our Company, our supply chain,society, and local communities. Within our Company, we identify issues for each region where our stores and offices are located andpromote proactive and effective risk reduction activities. Throughout our supply chain, we strengthen our business partnerships withproduction partners who share our philosophy and work to reduce water usage in production processes that use large amounts of water,while also aiming to minimize the impact of our business activities on local communities and river basins.

Recognition of Risks and Issues
We identify water resource risks and issues from three main perspectives:
our own operations, the supply chain, and society/local communities. We
recognize that water usage in the raw material production and manufacturing
processes has a large impact on the environment and local communities
due to the potential impact on water sources and factory wastewater.
The shortage of freshwater resources has become a concern due to various
challenges posed by population growth, industrial development, global
climate change and water pollution. Ryohin Keikaku, which handles apparel,household goods and food, recognizes the risks that water scarcity poses
and is implementing various initiatives to address this issue.

Water Usage(m³)

Wastewater

Water usage

150,000

100,000

143,779
50,00097,4510140,887

146,008

144,41493,5632020/22021/82022/8

Scope of aggregation: M
 UJI in Japan, Café&Meal MUJI, IDÉE, headquarters,
and distribution centers
Notes:
1. Some estimates are included.
2. The main reason for the significant increase in water use from the fiscal
year ended February 2020 to the fiscal year ended August 2021 was thatthe number of stores with facilities such as toilets increased.

Special Feature

Denim
We have revamped our classic denim series for the 2022 fall/winter season with afocus on environmentally friendly and long-lasting basic denim. In traditional denim
production, the threads are dipped in indigo dye and pulled up repeatedly, undergoinga process called rope dyeing, which involves exposing the threads to air and oxidizingthem about 12 times to attain a deep blue color. In addition, light-colored denim has
typically required three times more water than regular indigo denim due to the needfor extensive washing to lighten the color after being dyed with indigo.
We have re-evaluated our dyeing process for two new denim colors for the2022 fall/winter season. For “blue,” we reduced the number of times the thread isdyed to four, while for “charcoal gray,” we shortened the dyeing time. This has not
only reduced the amount of dye used but also water usage during the washingprocess. Additionally, we have minimized the steps for creating damaged jeans,
which traditionally involved weathering and bleaching processing, in all of our denim
series to make them more environmentally friendly.

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Four Indices1. Build a sustainable society while achieving circularity, and coexisting with nature

Biodiversity
Basic Approach
Ryohin Keikaku has been promoting environmentally friendly manufacturing practices by utilizing appropriate materials. This is because theCompany recognizes the close relationship between business activities and the global environment and considers reducing the burden on
the natural environment and living beings as a critical issue. As we engage in manufacturing using a variety of raw materials sourced fromaround the world, we are committed to addressing procurement challenges and pursuing sustainable raw material acquisition. Moreover,
we are aware of the impact our business activities have on ecosystems and collaborate with producers, local authorities, and communities
to minimize such effects and protect the environment.

Goals
We aim to eliminate deforestation caused by resource extraction from protected areas designated by law, and our goal is to use sustainably
sourced materials for all products that use palm oil, timber, and cotton sold domestically by 2050. Our wool and down raw materials are
sourced with consideration for animal welfare.

1. Palm Oil
We conduct regular surveys to ensure traceability from the point of origin and promote
initiatives for sustainable use by verifying origin certificates and other means.

2. Paper and Wood
We conscientiously avoid the use of illegally logged timber. This involves conducting
timber due diligence that encompasses surveys and self-assessments for wood andpaper products* in accordance with the Clean Wood Act and other environmental laws
and regulations of the countries and regions where we operate.
* Excluding 100% recycled paper and cardboard products

3. Cotton
We consider biodiversity conservation, conscientiously ensure traceability to the point oforigin, and promote the procurement of sustainable cotton. We are committed toenvironmentally responsible product development and are considerate of producers.

Initiatives
Down
We only use down feathers with sufficient fill power that have been procured in a mannerthat meets the Five Freedoms of Animal Welfare* defined by the Farm Animal Welfare
Council and have been reviewed and certified as being such. We only use feathers thathave been rigorously screened and certified by a third-party organization to ensure thatthe animals were not force-fed or stripped of down while alive. We select raw materials on
the basis of their functionality, the people who use them, the people who make them, andhow they interact with nature.
*F ive Freedoms of Animal Welfare: 1) freedom from hunger and thirst; 2) freedom from discomfort; 3) freedom
from pain, injury, and disease; 4) freedom to express normal and natural behavior; and 5) freedom fromfear and distress. (Ministry of Agriculture, Forestry and Fisheries, “Livestock breeding management withconsideration of animal welfare”)

Wool
For wool, we emphasize natural and gentle breeding methods, and use only wool from
non-mulesed sheep. While sheep breeding methods vary from region to region, mulesing
is a practice common in regions with hot weather that involves removal of some strips ofwool-bearing skin from sheep to prevent parasitic infection by fly maggots.

Recycled Wool*
MUJI has placed importance on eliminating resource waste since its creation. Recycledwool involves grinding wool products we collect and re-spinning the resulting wool thread to create new materials. It has a deep mix ofcolors and a rustic texture. MUJI, which aims to create a better relationship with nature, will continue to do its best to help recycle resources
and reduce waste.
* See page 60 for details.

63 MUJI REPORT 2022

Sustainability Strategy

Chemical Management
Basic Approach
In its efforts to manufacture safer products and protect the health and safety of all stakeholders (customers, production partners, ouremployees and communities), Ryohin Keikaku considers the impact of chemicals on the environment and strives to prevent and reduce
global environmental pollution. We therefore prohibit the use of certain harmful chemicals and conduct thorough management of chemicals
in products and manufacturing processes.

Goals
We comply with laws and regulations and work to reduce our impact in order to conserve the global environment.
· We appropriately handle chemicals in our products and in the manufacturing process.
· We comply with all applicable environmental laws, regulations and standards.
· We prohibit the use of substances suspected of being harmful.
· We regularly inspect finished products to ensure compliance with substance prohibitions and restrictions.

Initiatives
Code of Conduct for Production Partners
Ryohin Keikaku requires its contract manufacturing partners to safely manage chemical substances that may pollute the environment, andto prevent and reduce water and air pollution in accordance with our Code of Conduct for Production Partners. A list of restricted substances
is provided in the Ryohin Standards. The document specifies our internal quality standards and shared safety standards and is madeavailable to our production partners. We do not use any prohibited chemical substances in our manufacturing processes, and for thosechemical substances designated by the laws and regulations of each country or region, we monitor the amount of emissions and reportthem to the governments in accordance with laws and regulations.

Environmental Audits of Business Partner Factories
Ryohin Keikaku only deals with production partners who pledge to comply with the Code of Conduct for Production Partners to protect thework environment, human rights, and conditions at factories. In addition, we confirm compliance with this code of conduct and ongoing
relevant initiatives by commissioning third-party organizations to monitor work environments as well as conduct environmental audits. We
work with factories to take corrective action for non-compliance with even one of our standards.

Special Feature

Support for Activities to Protect Endangered Species
More than 41,000 species of wildlife on Earth are in danger of extinction.
Ryohin Keikaku has been selling printed t-shirts depicting endangered
creatures since 2016, and we donate a portion of the sales proceeds toactivities to preserve biodiversity and the environment. We also donate to
the Japan Committee for the International Union for Conservation of Nature
to support its activities.
We hope that wearing the t-shirts we sell will encourage children to
become involved in activities to protect the animals they depict, while also
becoming interested in the reasons why the animals are endangered.
Donations

Cumulative total

JPY 8,142,335

2021/3–2022/2

JPY 2,101,335

2020/3–2021/2

JPY 1,458,170

MUJI REPORT 202264

Four Indices1. Build a sustainable society while achieving circularity, and coexisting with nature

Climate Change
Climate Change Initiatives and Information Disclosure
Ryohin Keikaku recognizes that climate change is seriously impacting society, and aims to achieve the international goals set in the Paris
Agreement by working with a wide range of stakeholders, including suppliers, in initiatives to create a sustainable society. In addition, we
recognize the importance of the Task Force on Climate-related Financial Disclosures (TCFD). We will continue to identify the impact ofclimate-related risks and opportunities on our business, formulate and implement strategies and enhance information disclosure in line with
the TCFD framework.
Note: Our website provides more details about how we are addressing the TCFD reporting recommendations.
https://www.ryohin-keikaku.jp/eng/sustainability/environment/climate-change/

Governance
Addressing climate change is one of the most important management issues for Ryohin Keikaku, and we have established a governancesystem centered on oversight by the Board of Directors and the ESG Promotion Committee.
The Board of Directors receives reports on ESG-related initiatives, including those that address climate change, at least twice a year
from the Public Relations & IR & ESG Division, which is the secretariat of the ESG Promotion Committee. The Board also supervises progress
and achievement of targets, and discusses and provides guidance on policies and initiatives. In addition, in the fiscal year ended August 31,
2022, we introduced a restricted stock compensation system for directors (other than outside directors), and have added the “achievementlevel of important ESG indices from a long-term perspective” to the evaluation index. The ESG Promotion Committee and Management
Executive Meeting report the results of their discussions to the Board of Directors for deliberation, resolution and incorporation into businessstrategies and management policies based on risks and opportunities.
Note: See page 58 for details on the ESG Promotion Committee and page 77 for details on corporate governance.

Strategy(1) Risk and opportunity assessment and action plans
We identify climate change-related risks and opportunities that could affect our business, and then implement relevant action plans after
qualitatively and quantitatively evaluating risks and opportunities based on their importance to business strategy, financial impact in terms ofrevenue and costs, and the relevant time frame. We organized the outcomes as follows, with emphasis on TCFD reporting recommendations.

Assessment of Degree of Impact of Key Risks and Opportunities and Action Plans
ImpactIntensity

Time
Frame

Cost

MediumMediumterm• R educe GHG emissions in accordance with medium-term business plan.
• Visualize GHG emissions throughout the supply chain and implement reduction
initiatives.

Action Plans

Risk

More stringent
regulation of plastics

Risk• Increase in procurement costs due to increased use of recycledplastics and biomass plastics

Cost

Large

Mediumterm

 inimize cost increases by eliminating plastics, reducing thickness and weight, and•M
switching to alternative materials for merchandise and packaging.

• Increase in operating and procurement costs due to rising prices forenergy consumed by Ryohin Keikaku and suppliers• Increase in procurement costs due to rising prices of raw materials
derived from fossil resources

Cost

Medium to
Large

Mediumterm• Promote energy conservation internally and among suppliers.
• Eliminate plastics, reduce thickness and weight, and switch to alternative materials
for merchandise and packaging.

• R ising prices for energy consumed by warehouses and delivery
companies

Cost

Large

Mediumterm• Implement energy-saving initiatives at distribution warehouses.
• Reduce energy use in ways such as cooperating with logistics companies toimprove transport efficiency and sharing transportation.

Revenue

Medium to
Large

Mediumterm• Promote reuse and recycling.
• Promote product development using recycled raw materials.
• Develop products for long-term use.
• Structure sustainable systems; e.g., commercialize secondary distribution.

• Increase sales by attracting new customers who focus on sustainability Revenue

MediumMediumterm• R aise awareness of Ryohin Keikaku’s commitment to sustainability and ESG byenhancing worldwide communication of corporate purpose, ESG commitment since
founding, product development perspectives, new initiatives to resolve social issues, etc.

• Loss of customers and decrease in sales due to a decline incompetitive advantage resulting from delays in addressing
sustainability issues

Revenue

MediumLong term• Promote ESG in accordance with the medium-term business plan and enhance
information disclosure and communication.
• Draw on external ESG evaluations to accurately identify and appropriately address
priority issues.

• S ales growth resulting from increased demand for environmentally
responsible materials

Revenue

Medium to
Large

Mediumterm• Use environmentally responsible materials such as kapok and hemp.
• Switch to environmentally responsible materials and develop associated products.

• S ales growth resulting from increased demand for low-carbon
protein foods

Revenue

Medium to
LargeLong term• Expand lineup of products that use pests and soy meat.
• Develop products that use low-carbon ingredients.

MarketRisk

Risk

Opportunity

Acute

ImpactType

More stringent GHG
emission regulations,incl. carbon taxes

Long-term product use

Chronic

Physical Risks and Opportunities

Specific Potential Impacts• Introduction of carbon taxes on GHG emissions• Introduction of carbon taxes, etc., on procured goods, or increase inoperating and procurement costs due to GHG reduction measures• Increase in transportation and storage costs due to introduction ofcarbon taxes, etc., for distribution centers, offices and delivery vehicles

Fossil resource pricefluctuations

Reputation

Transition Risks and Opportunities

Regulatory

Key Risks and Opportunities

Brands known forbeing sustainableRisk ecrease in replacement frequency and sales due to long-term•Dproduct use•D ecrease in sales due to relative decline in demand for new clothingGrowing demand for
products that use
sustainable raw
materials

Opportunity

Increase in extreme
weatherRisk• Increase in loss on disposal of products, etc., resulting fromincreased damage to stores, distribution centers and other facilities
due to extreme weather events including flooding and typhoons

Cost

Medium• Assess the physical risks of stores and distribution centers.
Short term • M itigate damage from flooding at sites with high hazard risk, and engage inbusiness continuity planning.

Rising sea level

Risk• Relocation costs resulting from increased risk of flooding wherestores and distribution centers are located

Cost

MediumLong term itigate damage from flooding at stores and distribution centers exposed to high•Mflood risk.
• Thoroughly assess climate change risk before opening stores.

Increase in averagetemperature

Risk• Increase in store cooling costs

Cost

MediumMediumterm• Install solar energy equipment.
• Install energy-saving equipment.

Changes inprecipitation andweather patterns, andrising averagetemperatures

Risk• Increase in procurement costs due to higher prices for materials
such as cotton and linen resulting from increased floods and droughts• Increase in timber procurement costs due to reduced timber supply
resulting from ecosystem changes

Cost

Medium to
LargeLong term•C ontinuously monitor price conditions by country.
•D iversify raw material production areas.

Impact assessment:
Revenue: Large = ¥10 billion or more; Medium = ¥1 billion to less than ¥10 billion; Small = less than ¥1 billion
Cost: Large = ¥1 billion or more; Medium = ¥100 million to less than ¥1 billion; Small = less than ¥100 million
Impact time frame: Short term = within 2 years; Medium term = over 2 years to 10 years; Long term = over 10 years

65 MUJI REPORT 2022

Sustainability Strategy(2) Scenario analysis
Ryohin Keikaku believes that mitigating risks and expanding opportunities is essential to being able to sustainably improve its corporate value
and social value. We have therefore conducted a scenario analysis of the risks and opportunities posed by climate change.
Transition Risks and Opportunities in 2030 under the 1.5°C Scenario

Policies and Actions for Transition Risks and Opportunities• Visualize Group-wide emissions and formulate a reduction roadmap to reduce GHG• We expect carbon tax liabilities to have a medium financial impact.
emissions. Initiate the use of renewable energy in ways that are aligned with the• We estimate that our GHG emissions (Scope 1 and 2 total) will increase by aboutlocation and characteristics of stores.
1.6 times through 2030 as our business grows if we do not implement initiatives to • Visualize GHG emissions throughout the supply chain with a view to reducing
reduce them.
Scope 3 GHG emissions.

Carbon Taxes

Fossil Resource Price
Fluctuations• We expect a large financial impact from rising energy costs.
• We estimate that our electricity consumption will increase by 3.2 times through2030 as our business grows if we do not implement initiatives to reduce it.

• R educe electric power consumption by conserving energy, proceeding with the useof renewable energy, and reducing the use of energy derived from fossil resources.
• Work with suppliers to help them conserve energy and initiate the use of renewableenergy among other means to mitigate increases in production costs.

• We expect a medium financial impact from rising plastic raw material prices.
• B ased on our reference scenarios, we set the unit price of plastic raw materials asof 2030 at 1.3 times the price for the fiscal year ended August 31, 2021, and set
the ratio of recycled materials to total plastic materials we procure at 60%.

• R educe the use of fossil resource-derived plastics, and reduce the weight ofproducts and packaging materials.
• Transition from fossil resource-derived materials to recycled materials andalternative materials.

• We expect a large financial impact from decrease in sales of products made withplastics from fossil resources.
• Given the projected increase in demand for sustainable products and services,• We expect a large financial impact from increased sales of products made withpromote the use of environmentally friendly materials and product development.
More Stringent
recycled plastics.
• Promote recycling of our own products, and transition from fossil resource-derived
Regulation of Plastics• Based on our reference scenarios, we assumed a 20% reduction in products madeto recycled raw materials.
and Market Fluctuations
with plastics from fossil resources due to regulations and greater product longevity, • Structure sustainable systems that include commercializing secondary distribution
and a 60% ratio of recycled materials to total plastic materials we procure due toin order to promote reuse.
changes in demand.
Physical Risks and Opportunities in 2050 under the 4°C Scenario

Damage Caused by
Natural Disasters• We expect that 2 main business sites in Japan and 11 overseas will experiencedamage from flooding or storm surge.
• Our analysis covered sites exposed to significant impact selected from among
stores, distribution centers and supplier production sites in the countries andregions where we operate, based on metrics including revenue, inventory value
and procurement volume.

Policies and Actions for Physical Risks and Opportunities• Implement countermeasures for flooding at stores, distribution centers, andsupplier production sites with high hazard risk.
• Fulfill our responsibilities and contribute to local communities by quickly reopening
stores in affected areas and delivering necessary supplies.

Risk Management
Ryohin Keikaku sees climate change risk as one of the most significant risks to which the Group is exposed. Our climate change risk assessment
process involves the Compliance and Risk Management Committee, which oversees Group-wide risks. The committee assesses probable
exposure to risks at least once a year based on their significance and likelihood of occurrence. For transition risks and opportunities, we will
reduce our carbon tax liability by achieving GHG emission reduction targets in accordance with our medium-term business plan, and by
visualizing and reducing GHG emissions throughout the supply chain. In addition, we will address more stringent regulations on plastics andfossil resource price fluctuations by offsetting cost increases through the use of plastic-free products and packaging materials, reducing
weight and switching to alternative materials. Furthermore, we will consistently communicate our corporate purpose, commitment to ESG
since our founding, and our three product development perspectives while expanding opportunities by promoting the use of environmentally
responsible materials and product development, and responding to growing demand for sustainable products and services.

Metrics and Objectives
Ryohin Keikaku calculates its GHG emissions using the GHG Protocol, a commonly used international guideline for calculating GHG
emissions. We are currently determining Scope 1 and 2 emissions in all countries and regions where MUJI stores have opened.
Goals for Fiscal Year Ending
August 31, 2030

Status as of Fiscal Year Ended
August 31, 2021

Status as of Fiscal Year Ended
August 31, 2022

GHG Emissions (Scope 1 and 2)1

50% reduction compared with fiscal
year ended August 31, 2021

30,839 t-CO2e2

34,874 t-CO2e2

Use Renewable Energy at Stores3

100%

In use at the Hatoyama Distribution Center4

Installed at select stores
Initiating the use of renewable energy will reduce CO2
emissions by 394 t

Install Solar Panels at Independent Store
Buildings5100%

Installed at the Hatoyama Distribution Center(installation completed in 2014)

Installed and began operation at several stores in the fiscal
year ending August 31, 2023

Index

1. Scope: Ryohin Keikaku Group
2. G
 HG emissions of Ryohin Keikaku Co., Ltd. The Ryohin Keikaku Group is currently calculating its GHG emissions for disclosure during the fiscal year ending August 31, 2023. Pleaserefer to the Ryohin Keikaku website for CO2 emissions data.
3. Stores for which Ryohin Keikaku manages electric power contracts. Excludes tenant stores.
4. A distribution center that Ryohin Keikaku manages.
5. Installation at stores when feasible given location, equipment and other conditions.

MUJI REPORT 2022

66

Four Indices

2. Revitalize communities and resolve their issues through localization activities

Sustainable Community Design
Ryohin Keikaku aims to support the foundation of daily life by taking root in local society and making a meaningful contribution as an integral
member of the regions in which it operates. We are promoting a variety of projects throughout Japan (both inside and outside our stores),and have established the Social Good Business Division to implement those initiatives.
Since 2022, we have been focusing on the four themes of “health and safety,” “community,” “culture and art,” and “food and agriculture,”
in promoting regional production and businesses to resolve regional issues.

Key Initiatives
Theme: Health and Safety – Aging and Health Issues

Healthcare Centers
Ryohin Keikaku has initiated the Healthcare Center Project as part of its commitment to resolving
the social issues of maintaining mental and physical health, preventing illness, extending healthy
life expectancy, reducing social security costs, and preventing social isolation. We have createdlocal healthcare centers at MUJI stores that provide products, information and services for healthmaintenance and disease prevention, along with informal health consultations with experts such as
pharmacists, nurses and registered dietitians. These centers also cooperate with local hospitals
and healthcare providers in various initiatives that serve as a bridge to local residents. In addition,
our centers link local residents with community activities such as clubs, work together withgovernment institutions, and serve as local community centers throughout Japan.
Stores with healthcare centers: M
 UJI Naoetsu (Joetsu, Niigata Prefecture); MUJI Hiroshima Alpark(Hiroshima, Hiroshima Prefecture)
Note: We plan to increase the number of such stores in the future.

Visitor Comments
Sometimes my family and I have physical or emotional discomforts or concerns that do notnecessitate a hospital visit, but we want to talk about them with someone knowledgeable.
I am glad that I can go to a MUJI healthcare center and easily consult with nurses, registereddietitians, and other people with specialized knowledge.

Theme: Community – Declining Regional Population

Putting Vacant Housing and Idle Real Estate to Use
The amount of vacant housing and idle real estate is increasing throughout Japan due to population
decline. Ryohin Keikaku transforms vacant housing and idle real estate into places that draw
people to visit and perhaps to live. In September 2022, we signed a comprehensive partnershipagreement with Airbnb Japan Co., Ltd. to handle renovation and interior design for houses that let
people experience life in Shimizu-cho, Hokkaido. The rooms are furnished with MUJI furniture,
tableware, cooking utensils, home appliances, and other daily necessities, effectively recreating theexperience of living in small-town Hokkaido. We will accelerate initiatives that encourage visits andsettlement by fully utilizing local resources throughout Japan, increasing the utility value of idle realestate by turning it into a tourist destination, and communicating the appeal of local areas both inJapan and internationally.

Comments from Shimizu-cho, Hokkaido
Ryohin Keikaku has faithfully embodied the Airbnb concept of making travel like living. The
space has a well-equipped kitchen where visitors can enjoy the wonderful food of Shimizu-cho
as they gather at the family friendly table, and it also features a comfortable working space.
Living is good here, and guest ratings are strong.

67 MUJI REPORT 2022

Sustainability Strategy

Support for Ukraine
In 2022, Ryohin Keikaku subsidiary MUJI EUROPE HOLDINGS LIMITED provided approximately 20,000 products as humanitarianassistance to people living in evacuation shelters in neighboring countries of Ukraine. In addition, more than 2,000 Ukrainian
refugees were living in Japan as of February 2023, and many organizations, companies and individuals in Japan are providingthem with various forms of support. Since April 2022, Ryohin Keikaku has been providing futons (Japanese-style bedding),
refrigerators, curtains, tableware, stationery, and other essential items for daily life through local governments and organizations
that accept evacuees. As of February 2023, we had provided daily necessities valued at more than JPY12 million to 471 evacueesin 57 regions.

Theme: Culture and Art – Energizing Towns

Art Events
Naoetsu Umimachi Art focuses on the creativity of contemporary art in order to bring out the charmof Naoetsu and to create a lively atmosphere. It started in 2021 as an art event for creating new
encounters and exchanges that would invigorate the town. Naoetsu is a port town that has prospered
because of shipping and the blessings of nature. Many generations of residents have passed along
the wisdom and pride of life in a town with a varied climate. The goal of Naoetsu Umimachi Art isto make beauty, culture and art a bridge to “a truthful and sustainable life for all” over the coming
100 years. In 2022, local residents took the lead in holding the event in a way that involved the local
community. Participants are eager to do it again in 2023, with the event beginning to take root in
local society.

Comments from the Executive Committee Chairman of Naoetsu
Umimachi Art (Regional Confectionery Representative)
Naoetsu is a wonderful town where residents are connected, and Naoetsu Umimachi Art
really brought out that feeling as it created a sense of unity and energy among thecommunity. I was pleased to see that the event brought smiles to residents and visitors
alike. The event inspired everyone to think about the town, and reminded me how glad I am
to have been born here.

Theme: Food and Agriculture – Agricultural Issues

The Shokoku Ryohin Program
We want to create lasting agricultural systems because they are critical shared social capital that
contributes to regional revitalization. We are therefore rethinking ideals for agriculture, local
production for local consumption, and plentiful food. We want to connect producers andcustomers through traditional vegetables and specialty ingredients that are unique to particularregions. Shokoku Ryohin is a direct-delivery e-commerce site that showcases and sells food anddaily necessities born from the environment and lifestyles of a particular region. Focusing on
small-scale producers with their own specialties and ideals, Shokoku Ryohin delivers locally rooted
food products that are available only in limited quantities or are not widely available. The program
delivers products together with the aspirations of producers.

Comments from a Store Owner (Muchachaen Co., Ltd., a regional corporation)
Farmers face various issues ranging from an aging and declining population to environmental
change, all while working to enhance the sustainability of agriculture and local communities.
We are pleased that MUJI is putting its unique attributes to work in helping us.

MUJI REPORT 2022

68

Four Indices3. Promote high employee engagement and acquisition of problem-solving skills

Human Resources and Labor Practices: Initiatives for
Diversity & Inclusion
Recruitment and Employment
In its employment activities, Ryohin Keikaku makes sure to understand the customs of the countries and regions in which it does business.
We also make sure to comply with the laws and regulations of those countries and regions.
In addition, Ryohin Keikaku publishes the MUJI Employee Handbook in three languages (Japanese, English and Chinese) to describe
its employment and labor policies and the Group Compliance Code of Conduct, etc. To ensure that all employees understand its contents,
explanations and training are provided to all employees when they join the Company.
1. We aim to achieve lasting happiness for MUJI employees.
2. W e strive to ensure the mental and physical comfort, enrichment and professional
growth of our employees.
3. W e respect the individuality, human rights and privacy of our employees. We work
to eliminate discrimination and do not tolerate harassment of any kind.
4. W
 e respect gender, nationality, ethnicity and religious diversity, learn from ourdifferences, and help each other grow.

Number of Employees(Ryohin Keikaku Group)
Temporary employees*

24,000

Employees

18,16319,009

8,050

9,281

9,834

9,046

8,882

9,175

2020/82021/82022/817,096
16,000

8,000

0

*A
 verage number of employees per year based on aneight-hour workday calculation method

Work-Life Balance Proposals
We have systems that allow employees to choose from a variety of work styles in order tofind balance between work and life events such as childbirth, childcare and nursing care.
We have established systems to support work-life balance that can be used by all
employees, regardless of gender. These systems include a childcare and nursing careleave system, a shorter working hour system, a childcare system, a family care system,
a flextime system, among others. We have also offered a balanced four-day workweek
system since May 2021.
In 2016, we extended the applicability of our childcare system, which allows for
shorter working hours for employees who take care of their children, from the first year ofelementary school to the end of the fourth year of elementary school. This is part of ourefforts to create an environment in which employees can work with peace of mind.
We have also implemented a telecommuting program for headquarter employees inJapan, starting from the fiscal year ended February 2019. In addition, from September
2020, we further strengthened our support for employees working from home byproviding an allowance for utilities and communication expenses (paid on a daily basis)and by lending computer monitors.

Average Number of Employees* Using
the Childcare System
400
300

332
219

227

2020/82021/8200
100
02022/8* Including partner employees
Note: R yohin Keikaku Co., Ltd. only
(As of August 31, 2022)

Employment of People with Disabilities
Ryohin Keikaku began hiring individuals with disabilities in Japan in 2000. In 2009, welaunched the Heartful Project to promote the “sustainable happiness of co-workers,”“self-development through mutual trust and cooperation” and to “increase and stabilize
employment at stores” for those with disabilities. We have also established a support
system that includes employment management and guidance tailored to the characteristics
and individuality of each person and an evaluation-based step-up system to help people
with disabilities reach their full potential.
Our stores, using the “Second Founding” as an opportunity to take root in local
society, will promote the Heartful Project together with local communities and move
forward with people with disabilities to create places in which they can make the best useof their skills.

69 MUJI REPORT 2022

Ratio of Employees with Disabilities
(%)

4.5

3.78

3.41

3.69

3.0
1.5
0

2020/82021/8

Note: Ryohin Keikaku Co., Ltd. only
(As of August 31, 2022)

2022/8

Sustainability Strategy

Diversity Committee
Ryohin Keikaku launched the Diversity, Equity & Inclusion
Committee in the fiscal year ended August 31, 2022 inorder to achieve a multicultural society* within the Company,
which is a goal of the medium-term business plan. In
the first year, the director in charge of the Public Relations& IR & ESG Division served as the chairperson, andvolunteers from within the Company joined in carryingout the committee’s activities. Activities included inviting
An experiential workshop titled “What Is a Disability” Diversity Week 2022
external experts on a wide variety of industry trends
and consumer trends to hold online seminars about
global trends in diversity. The committee also heldroundtable discussions and workshops under the themes of disabilities, inclusion, nationality, life stage, and gender. In addition, we
conducted employee surveys and held Diversity Week 2022 to create an inclusive environment for all employees, including part-time andpartner employees.
To ensure that initiatives such as surveys and workshops lead to organizational reform, in the fiscal year ending August 31, 2023 we will
focus on promoting the participation of women, which is an urgent priority, and create an organization where diverse people can play anactive role.
* A society in which everyone can play an active role regardless of gender, nationality, age, race, religion, social status or work conditions.

Promotion of Women’s Participation and Advancement in the Workplace
In order to promote the success of all employees, Ryohin Keikaku is working on actionplans that take into account the various lifestyle changes its employees might encounter,such as nursing care, medical treatment, and childcare. To this end, we will makenecessary arrangements to make sure female employees can work with us for a longtime with peace of mind. On the other hand, we have implemented measures to give theyounger generation of employees more challenges and opportunities to gain experience
before they have to worry about lifestyle changes. We also provide training based on job
description to help them draw up their career plans at an early stage.

Numerical target for ratio of female managers
at the store manager level or above: 50%
Actual ratio of female managers
at the store manager level or above: 39.1%
Actual ratio of female managers
at the department manager level or above: 20.7%
Ratio of female directors: 37.5%*
Ratio of female employees: 55.6%* As of November 23, 2022

Special Feature

Balanced Four-day Workweek System
In May 2021, we introduced a balanced four-day workweek system that allows employees to select a work style that fits theirneeds as one way to realize the concept of being useful to society and the community while maintaining a good work-life balance.
We want employees to enjoy their work and find fulfillment and to be able to flexibly change their work styles according totheir changing personal goals and life events. More days off gives employees time to focus on the outside world, learn, spend
more time with their families, and also to accommodate diversifying work styles.
Ryohin Keikaku has introduced this system with the aim of creating an environment in which all employees can take onchallenges with peace of mind, enjoy their work, think about what they want to do on their own initiative, and be useful to society.
The number of users is increasing year by year.

Comments from Users
Time for Personal Growth (Male, 40s, Store Employee)
I wanted to contribute to society not only as a company employee but also as an individual, so I started using thesystem to set aside time for personal growth. As an individual, I was able to meet people from various communities byworking side by side with them. I want to use the time the system gives me to help make improvements in the Company
and in the community by linking the people I meet and the information I acquire in my work.

Good Balance between Childcare and Work (40s, Female, Store Employee)
My husband and I both work and we have three children. Switching to the balanced system has given me greater
flexibility in terms of time as well as mental and physical health. I can now enjoy my days off with my children. Participatingin school and nursery school events is much easier, and I can experience my children’s growth. I have greater peace ofmind, so I am enjoying my work even more.

MUJI REPORT 2022

70

Four Indices4. Achieve “public interest and people-centered management”

Initiatives to Realize Co-owned Management(E-Ship, J-ESOP)
In order to realize co-owned management, it is important that our people encompass the three roles of employee, manager and shareholder.
To foster ownership in each employee, we are actively sending out management information and increasing opportunities forcommunication between management and employees.
We are also expanding the employee stock ownership plan,* and the number of employee shareholders is increasing every year.
* This is an incentive plan mainly for Group employees who are residents of Japan. Eligibility was expanded to partner employees in Japan in December 2021.

E-Ship (Trust-type employee stock ownership plan)
Ryohin Keikaku introduced E-Ship to incentivize employees to improve corporate value over the medium and long term, to enhance benefit
programs, and to promote constant development through the increased employee motivation that results from equity participation asshareholders. E-Ship is an incentive plan for all employees who join the Ryohin Keikaku Employee Shareholding Association. Dividends may
be paid after three years according to the share of contributions to the employee shareholding association.

J-ESOP (Employee stock ownership plan)
Shareholding association incentive points are granted based on the stock benefit regulations for the amount of contributions to the employee
shareholding association, and the accumulated points are paid as shares at the time of retirement. At the same time, we established“Challenge Expectation Points,” which are not conditional on membership in the shareholding association. Points are awarded for taking onchallenges at a high level. The program is expected to raise the level of commitment of employees and encourage them to take on challenges,
which in turn will lead to Ryohin Keikaku’s long-term growth.
Number of Employees in Employee
Shareholding Association
2022/8

Short term

2,626

2021/81,848

2020/8

1,425

Fixed salary+
Annual bonus

Medium term

(upon retirement)

E-ShipJ-ESOP

Shareholding
association

Special Feature

Collaboration with Universities and Think Tanks
Ryohin Keikaku is involved in a variety of initiatives to achieve“public interest and people-centered management.”
Specifically, we are collaborating with universities, thinktanks, and other organizations to discuss the design of
new systems and the economic ideals that will make thesociety of the future more attractive. We are also building
an internal system that allows employees who haveownership to energetically work with local communities tosolve problems. We have communicated the “public
interest and people-centered management” that Ryohin
Keikaku aims for through the Shareholders’ Meeting andlectures at universities, and we will continue to disseminate
it widely. We will continue to collaborate and co-create withall of our stakeholders and move forward with initiatives toachieve “public interest and people-centered management.”

71 MUJI REPORT 2022

Long term(3 years)Shareholders’ Meeting held at a store

Shareholding
association

Challenges
Expectations

Sustainability Strategy

Stakeholder Engagement
We believe that we need to accurately understand and respond to the demands and expectations of stakeholders to contribute to “a truthfuland sustainable life for all.” We therefore engage in constructive communication with customers, local communities and society, shareholders
and investors, business partners and employees.

Communication with Stakeholders
Stakeholder

Main Method of Communication

Relevant Initiatives

Customers

Customer service at stores/events
Distribution of articles via social media, including the MUJI passport app
Inquiries to the customer support center
Customer participation-type community site (IDEA PARK1)

We have increased opportunities to connect directly with customers
through the free MUJI passport app. The app has launched in 11
countries and regions including Japan, where the total number ofdownloads has reached 28.18 million. In addition, stores distributed
35,258 articles during the year.

Local communities,
society and governments

Participation in community activities
Regional cooperation agreement with local governments
Disaster relief support

Since 2017, we have concluded regional cooperation agreements
for revitalization activities with 22 local governments, including
Toshima Ward in Tokyo, Kamogawa City in Chiba Prefecture, andSakata City in Yamagata Prefecture.
Note: Number of agreements is as of September 30, 2022

Shareholders andinvestors

General Meeting of Shareholders2
Shareholders’ Meeting3
Business results briefing
Meetings with investors

About 790 shareholders attended the 44th Ordinary General
Meeting of Shareholders (460 at the venue and approximately 330
online), and the meeting was streamed on the Company website.
After the General Meeting of Shareholders, we held a Shareholders’Meeting to deepen communication.

Business partners

Briefing for business partners
Audits of business partner factories
Business partner helpline (contact point for making reports)

We hold regular briefings for business partners to explain productpolicies and strategies.

Employees“Good Meeting” venue
Employee meetings
Employee training
Self-assessment and feedback meeting
In-house portal site and in-house newsletters
Employee helpline (whistleblowing hotline)“Good Meeting” is our term for an assembly that raises the senseof ownership among Group employees and challenges them toachieve management targets. Held once every six months, themeetings are an opportunity for recognizing outstanding employees,
sharing the achievements of the Group during the preceding six
months, and encouraging forward-looking action by helping employees
understand the vision for the coming six months and beyond.

1. https://lab.muji.com/jp/ideapark/ (Japanese only)
2. https://www.net-presentations.com/7453/20221123sr/fa33/ (Japanese only)
3. https://www.net-presentations.com/7453/20221123srmtg/bnczxv73e/ (Japanese only)

Special Feature

Shareholders’ Meeting

Investor Interview with an Outside Director

After the General Meeting of Shareholders on November
23, 2022, we held a Shareholders’ Meeting (with theparticipation of shareholders and Ryohin Keikaku management)
as a forum for the direct exchange of opinions on issues
including our vision, products, and store operations. About
300 shareholders participated. We received frank opinionsfrom shareholders during the meeting that covered a wide
range of topics, including products, operations, andmarketing. We appreciate theopinions of our shareholders
and consider them an expressionof their expectations for Ryohin
Keikaku, and we will continue
to address any areas for
improvement as needed.

Atsushi Yoshikawa, an outside director of Ryohin Keikaku,
held an interview with institutional investors on December
14, 2022. Mr. Yoshikawa earned the appreciation ofparticipants by answering various questions from institutional
investors covering topics such as business performance,
the state of the Board of Directors, and internal issues.
Ryohin Keikaku will continue to include outside directors incommunication activities as part of its commitment todialogue with investors.

A hybrid virtual and real-time event

MUJI REPORT 2022

72

Basic Information

Directors and Corporate Auditors (As of November 23, 2022)
Directors

Masaaki Kanai

Nobuo Domae

Chairman & Representative Director

President & Representative Director

22 years, 6 months

113,000 shares

3 years, 6 months

 r. Kanai has been involved in management as a director for many years
Mand has been performing a central role in the expansion and growth of theCompany and its business. He is expected to continue contributing to theenhancement of corporate value.

Atsushi Yoshikawa

OutsideIndependent

Outside Director

4 years, 6 months

66,300 shares r. Domae has extensive experience and broad knowledge as a management
M
executive at various companies, and is expected to continue playing a mainrole in the Company’s “Second Founding.”

Kumi Ito

OutsideIndependent

Outside Director

3,600 shares

Mr. Yoshikawa is expected to draw on his extensive experience and broad
insight as a corporate manager to continue contributing as an outside
director to the sustained growth and increased corporate value of the Company.

Newly elected

0 shares s. Ito has deep insight into the management of digital technology andM
healthcare from her experience as an outside director at several companies.
We expect Ms. Ito to provide valuable suggestions and advice.

Corporate Auditors

Kei Suzuki

Kosuke Yamane

Full-time Corporate Auditor

Full-time Outside Corporate Auditor

1 year73

37,200 shares r. Suzuki has served as general manager of the Household Division, and asMa director and executive officer he has held important positions in overseeing
overseas business management, the HR & General Affairs Division, legal
affairs and intellectual property, and the Internal Audit Office. Based on his
deep insight into Ryohin Keikaku’s business, we expect him to function
appropriately as a full-time corporate auditor.
MUJI REPORT 2022

Newly elected

OutsideIndependent

0 sharesAs a full-time outside corporate auditor, Mr. Yamane is expected to audit
operations based on his wide-ranging knowledge in the fields of accounting,finance, and information systems, based on his extensive experience inimportant positions related to public relations, investor relations, finance andinformation strategy.

Number of years in office

Number of shares owned

Satoshi Shimizu

Masayoshi Yagyu

Executive Vice President & Director

Outside Director

7 years, 6 months

3,900 shares

6 years, 6 months

 r. Shimizu has extensive experience in the areas of products and stores,Mand is expected to play a main role in the globalization that is part of theCompany’s “Second Founding.”

Yuriko Kato

OutsideIndependent

Outside Director

Newly elected

OutsideIndependent

2,700 shares r. Yagyu has extensive experience and broad insight as a corporateMmanager. He is expected to function appropriately in his role as an outside
director in areas such as supervising business execution.

Mayuka Yamazaki

OutsideIndependent

Outside Director

0 shares

Newly elected s. Kato is expected to give valuable suggestions and advice as she hasMexpert knowledge in agricultural and digital businesses. She also has deep
insight into corporate management based on her experience as anentrepreneur and as an outside director at several companies.

Masaru Hattori

OutsideIndependent

Outside Corporate Auditor

14 years, 6 months

Reason for appointment

0 sharesMs. Yamazaki is expected to give valuable suggestions and advice fromvarious points of view. She has experience at an international post-graduate
business school and as an outside director at several rapidly growing
start-up companies. She is also well versed in traditional culture and art as apractitioner of Japanese flower arrangement.

Jun Arai

OutsideIndependent

Outside Corporate Auditor

20,700 shares

Mr. Hattori was appointed as an outside corporate auditor of Ryohin
Keikaku in 2008 based on his experience as an accounting manager,
corporate auditor and director at multiple companies. He is expected tocontinue functioning appropriately in this role.

2 years, 6 months

1,400 shares

Mr. Arai has extensive experience as a manager at multiple companies and awide range of knowledge in accounting, finance, and corporate governance.
He is expected to function appropriately as an outside corporate auditor.

MUJI REPORT 2022

74

Basic Information

Directors and Corporate Auditors (As of November 23, 2022)
The Ryohin Keikaku Group redefined its corporate purpose as creation of “a truthful and sustainable life for all” with the goal of creating abetter world 100 years from now. With that in mind, the Group has set two themes in developing its business: “to be a part of people’s daily
necessities” and “to take root in local society.” In order to achieve these goals, we will select directors and corporate auditors who have theappropriate experience and knowledge and who will increase the diversity of the Board of Directors and Board of Auditors, from inside as
well as outside of the Company.
Competency

Prerequisite

Overall corporate
management

The Board of Directors needs to make decisions after engaging in frank discussions of medium- to long-term strategies. We have therefore
selected diverse knowledge of corporate management that is not limited to a particular industry as a prerequisite.

Operations

Stores are central to our business, and effective operations and expansion are central to our competitiveness. We have therefore selected
knowledge about operations in the retail, distribution and manufacturing industries as prerequisites.

Business entrepreneurshipand social entrepreneurship

We have selected knowledge about business entrepreneurship and social entrepreneurship as prerequisites for achieving our corporate purpose.

Technology

We aim to create services that make good use of technology as a tool and improve convenience for our stakeholders. We have therefore
selected knowledge about digital and technology management as a prerequisite.

Name

Current position

GenderAttendance at meetings ofthe Board of Directors

OutsideOutside(Fiscal year ended August 31, 2022)

Overall corporate
management

Operations

Business
entrepreneurshipand social
entrepreneurship

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

Masaaki
Kanai

Chairman &Representative
Director

Nobuo
Domae

President &Representative
Director

Satoshi
Shimizu

Executive Vice
President &Director

Masayoshi
Yagyu

Outside Director

Atsushi
Yoshikawa

Outside Director

Kumi
Ito

Outside Director

Newly elected〇

YurikoKato

Outside Director

Newly elected〇

MayukaYamazakiOutside Director

Newly elected

Kei
SuzukiFull-time Corporate
Auditor13/13*〇〇

KosukeYamaneFull-time Outside
Corporate Auditor

Newly elected〇〇

MasaruHattori

Outside Corporate
Auditor

16/16

〇

Jun
Arai

Outside Corporate
Auditor

15/16

16/16
(100%)

16/16(100%)

16/16(100%)

16/16(100%)

16/16(100%)(100%)(94%)

Technology

Humanities
and art

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

〇

Notes: 1. The above does not encompass all of the experience and knowledge possessed by the officers. Only the major aspects are presented.
2. ◎ indicates the chairperson of each meeting or committee.
* The Board of Directors has met 13 times since Mr. Suzuki took office.

75 MUJI REPORT 2022

International
mindset〇〇〇Competency

Sustainability
and diversity

Prerequisite

International mindset

Achieving our corporate purpose requires us to contribute to various countries and regions around the world through future store development
and product manufacturing. We have therefore selected knowledge that includes experience in an international environment as a prerequisite.

Humanities and art

We have selected understanding of the culture and history of the countries and regions we serve and knowledge of art and design as prerequisites
for achieving our corporate purpose.

Sustainability and diversity

We position achieving sustainability and diversity at the center of our business activities in order to achieve our corporate purpose. We havetherefore selected an understanding of social issues such as sustainability and diversity and a strong desire to address those issues as prerequisites.

Administration and risk
management

We have selected knowledge of personnel and labor affairs, finance, legal affairs and risk management as prerequisites for achieving ourcorporate purpose.

Administration
and riskmanagement

Meetings and Committees
Board ofDirectors

Nomination
Advisory
Committee

Remuneration
Advisory
Committee

〇

〇

〇

〇

〇

◎

〇

〇

〇

〇

〇

Board ofAuditors

Concurrent positions∙ Outside Director and Audit and Supervisory
Committee Member, Members Co., Ltd.

∙ President & Representative Director, MUJI
HOUSE Co., Ltd.
∙ Outside Director, Monex Group, Inc.
∙ Scholarship Director, Coop Sapporo

Ratio of Outside Directors to All Directors

〇

〇

◎

〇

∙ Outside Director, Chubu Electric Power Grid Co., Inc.

〇

〇

◎

∙ Advisor, Nomura Real Estate Development Co., Ltd.

〇

〇

〇

∙ Outside Director, SOMPO Holdings, Inc.
∙O
 utside Director, Fuji Furukawa Engineering &Construction Co., Ltd.
∙ Outside Director, True Data Inc.
∙E
 xecutive Director, Tsukuba University

〇

〇

〇

〇

∙ President & Representative Director, M2 Labo. Inc.
∙ President & Representative Director, Vegibus Inc.
∙O
 utside Director, Shizuoka Gas Co., Ltd.

〇

〇

〇

〇

∙ Outside Director and Audit and Supervisory
Committee Member, M3, Inc.
∙O
 utside Director, RENOVA Inc.

〇

〇

〇

〇

〇

〇

◎

〇

〇

〇

〇

〇

〇

〇

〇

〇

5:8

62.5%

Ratio of Female Directors to All Directors

3:8

37.5%

∙ Outside Director, Sumitomo Mitsui DS AssetManagement Company, Limited∙O utside Director, Kyowa Kirin Co., Ltd.

MUJI REPORT 2022

76

Basic Information

Corporate Governance
Basic Policy
We place a high priority on the creation of a highly transparent management system based on our belief that establishing an effective
management structure and internal control system and improving corporate governance will lead to continuous improvement of corporate
value. In addition, we strive to maintain and develop good relationships with all stakeholders (shareholders, customers, employees, society,and partner companies), and to proactively disclose information in a timely manner.

Corporate Governance System
General Meeting of Shareholders
Appointment & Dismissal

Board of Auditors

2

One insidecorporate auditor
Audit

Three outside
corporate auditors
Coordination

Board of Directors

1

Coordination

Three insidedirectors

AdviceTwo directors

Directors & Executive Officers

AdviceReportAdvice3 Remuneration Advisory Committee
Audit

Executive Advisory Committee

Five outside directors(of which, three women)

4

Five outside directors(of which, three women)

Nomination Advisory Committee
Two insidedirectors

Five outside directors(of which, three women)

Appointment, Dismissal & Supervision

5

Accounting Auditor 6

Coordination

Internal Audit Office

ReportChairman & Representative Director
President & Representative Director

7

Advisory Board

Management Executive Meeting
ESG Promotion Committee
Business Process Standardization Committee
Executive Officers

Internal Audit

Compliance and Risk Management Committee

Accounting
Audit

ReportHelpline
Consultation

Each Division and Group Company(As of November 23, 2022)

Activities During the Fiscal Year Ended August 31, 2022
1

Board of Directors

Number of meetings: 16
Attendance rate: 99%

2

Board of Auditors

Number of meetings: 16
Attendance rate: 100%

Objectives

Objectives

Makes statutory resolutions on important matters related to mediumto long-term management, and matters stipulated by laws, regulations
and the Articles of Incorporation. Supervises the execution of duties byexecutive directors and executive officers.

Audits the general execution of duties by directors from the perspectivesof legality and appropriateness. Precludes or corrects fraudulent acts,and violations of laws, regulations, and the Articles of Incorporation.

Activities

Activities

The Executive Advisory Committee, which is composed of members of
the Board of Directors, convenes regularly to discuss important
themes multiple times before making resolutions at Board of Directors
meetings. Key discussion themes during the fiscal year ended August
31, 2022 included ESG targets and achievement metrics related to
executive compensation, and organizational culture reform aligned withgrowth strategies.

In order to accurately understand the status of management, theBoard of Auditors participates in meetings of the Board of Directors
and other important meetings; interviews directors, executive officers,
and managers of subsidiaries; and conducts inspections of businesssites. In addition, the Board of Auditors cooperates with the accounting
auditor and the Internal Audit Office to understand the status of businessand internal control; holds regular meetings with representative directors
and outside directors; and raises issues and makes recommendations
regarding important Group-wide issues based on the results of audits.

77 MUJI REPORT 2022

3

Remuneration
Advisory Committee

Number of meetings: 6
Attendance rate: 97%

4

Nomination
Advisory Committee

Number of meetings: 9
Attendance rate: 96%

Objectives

Objectives

Reports to the Board of Directors and the Board of Auditors regarding
issues including compensation for directors, auditors and executive officers.

Reports to the Board of Directors and Board of Auditors on issues
including the appointment and dismissal of directors, auditors andexecutive officers.

Activities

Activities

During the fiscal year ended August 31, 2022, the committee discussed
the evaluation of ESG initiatives in relation to long-term compensation for
directors and the review of the compensation system for executive officers.

During the fiscal year ended August 31, 2022, the committee discussed
the composition of the Board of Directors for the fiscal year ending
August 31, 2023 based on the evaluation of the Board of Directors.

5

Internal Audit Office

The Internal Audit Office, which currently comprises eight members, conducts internal audits. The office audits thestatus of compliance with internal rules and manuals at stores and headquarters, the appropriateness and effectivenessof overall business activities and procedures, etc. Audit results are regularly reported to the representative directors andthe Board of Directors.

6

Accounting Auditor

As for financial audits, we have established an environment for fair auditing with a team comprising two certified public
accountants (Ms. Miho Kawabata and Mr. Yosuke Sato), six assistant certified public accountants, and 18 othermembers associated with KPMG AZSA LLC.

7

Advisory Board

The Advisory Board is an organization unique to Ryohin Keikaku. It meets to discuss and make policy on the path MUJI
should take and how to respond to the times based on our founding philosophy and sense of incongruity with society.

Assessment of Effectiveness of the Board of Directors
The Board of Directors conducted an analysis and assessment of the Board’s effectiveness based on the corporate governance policy set
by the Company. The results of that assessment are summarized below.
Summary of Assessment Process(1) The Board of Directors set the following evaluation categories it believes are necessary for assessment of the Board’s effectiveness andconducted a survey of and interviews with directors and corporate auditors.
Evaluation categories in the questionnaire:1) Composition of the Board of Directors2) Operation of the Board of Directors
3) Enhancement of discussions at Board of Directors meetings4) System supporting the Board of Directors
5) Enhancement of relationship with shareholders and other stakeholders
6) Other comments(2) T he Board secretariat summarized the results of its assessment of directors and corporate auditors using the above questionnaire format
and interviews.
(3) Based on these results, the Board held discussions on each issue.
Results of the Assessment(1) Summary of Scores(Average score for each category) ssessment scores are set on a scale of 1 to 5, with “1” meaning improvement necessary, “3” meaning the minimum necessary level,
Note: Aand “5” meaning adequate.
1) Composition of the Board of Directors (Average score: 3.4) (Previous assessment: 3.9)
2) Operation of the Board of Directors (Average score: 3.4) (Previous assessment: 3.6)
3) Enhancement of discussions in the Board of Directors (Average score: 3.6) (Previous assessment: 3.7)
4) System supporting the Board of Directors (Average score: 3.2) (Previous assessment: 3.4)
5) Enhancement of relationship with shareholders and other stakeholders (Average score: 3.5) (Previous assessment: 3.4)
(2) Summary of Assessment Results
The results of the questionnaire and interviews above showed that the Board of Directors is evaluated as exceeding the minimum necessarylevel for the most part. However, we identified issues related to the diversity of the Board of Directors, ensuring enough time for discussing
management strategies and key issues, and information sharing (including internal meetings) with outside officers regarding the status of execution.
Future Initiatives
Based on the issues identified through the effectiveness assessment of the Board of Directors, we will work on the following measures to further
enhance the Board’s effectiveness.
(1) Increasing the number of outside directors on the Board of Directors and improving diversity(2) Adding additional focus on proposals related to medium- to long-term management strategies and important Company-wide issues(3) Enhancing information sharing with outside officers(4) Ensuring advance (early) distribution of documents for Board of Directors meetings(5) Enhancement of appropriate disclosure of information to all stakeholders
MUJI REPORT 2022

78

Policy for Appointment and Dismissal of Directors
Policy for Appointment of Officers
In nominating directors, the Nomination Advisory Committee, of which independent outside directors make up the majority, discusses eachcandidate’s qualifications, taking into consideration their previous experience, accomplishments, ability to execute tasks, and character, andreports its recommendations to the Board of Directors. In addition, when nominating outside director candidates, we select management
professionals who have experience, accomplishments, and knowledge in their respective fields. The nomination is discussed by the
Nomination Advisory Committee, taking into consideration the candidate’s ability to provide opinions and judgments that will contribute toenhancement of the Company’s medium- to long-term corporate value, and is then reported to the Board of Directors.

Number and Term of Directors
The Company’s Articles of Incorporation stipulate that the number of directors shall be no more than 11. For the term of directors, a
proposal to shorten the term from two years to one year was approved at the General Meeting of Shareholders held in November 2021,
for the purpose of clarifying the management responsibilities of directors and creating a management structure that enables us to respondquickly to changes in the business environment.

Support and Training Policy for Outside Directors and Outside Corporate Auditors
Support System for Outside Directors and Outside Corporate Auditors
There is no specific person or division in charge of the support system for outside directors and outside corporate auditors, but the Business
Management Division provides information, including distributing the agenda of Board of Directors meetings in advance, and the Internal
Audit Office, which conducts internal audits, assists outside auditors in the execution of their duties.
In the fiscal year ending August 31, 2023, we have begun holding executive sessions that involve informal interviews with executive
officers in order to enhance information sharing with outside directors. In addition, we have enhanced support for the smooth operation of
the Board of Directors by introducing a cloud-based Board management tool to improve the security of confidential information and enhanceoverall efficiency.

Training Policy
We encourage directors and corporate auditors to learn about matters such as the responsibilities, duties and legal risks of officers, and to workon self-improvement such as acquiring business knowledge of the operations they supervise. External training is also provided as necessary.

Executive Remuneration System
Policy for Determining Executive Remuneration
To enhance corporate value, remuneration of the Company’s directors consists of three types: payment of base compensation, which is a
fixed amount (according to the director’s position) within the total remuneration limits set by the General Meeting of Shareholders; paymentof performance-based bonuses as a short-term incentive linked to the Company’s performance; and non-monetary compensation as along-term incentive to continuously increase long-term corporate value and shareholder value.
Remuneration of outside directors and corporate auditors consists solely of base compensation, and there are no components thatfluctuate with performance. In addition, no executive retirement benefit system is available.
Compensation Structure and Components

Base compensation
Performance-based bonuses(Excluding outside directors and outside corporate auditors)

Non-monetary compensation(Excluding outside directors and outside corporate auditors)

79 MUJI REPORT 2022

Summary
The base compensation of the Company’s directors is determined based on each director’s
position, and by the Board of Directors pursuant to the deliberations of the Remuneration
Advisory Committee.
The coefficient for determining bonuses is calculated (from the perspective of pursuing profit incore businesses) by modifying the base bonus using the ratio of actual to planned consolidated
operating profit. It ranges from 0% to 200%.
Non-monetary compensation is in the form of grants of restricted shares that vest uponretirement. Base grants are determined in relation to achievements in areas such as ESG thathave long-term significance, and vary from 30% to 100% according to director position.

Corporate Governance

Determination Process
Chaired by an outside director, the Remuneration Advisory Committee determines director compensation. The committee deliberates onmonetary and non-monetary compensation for each director individually, and is committed to transparency, validity and objectivity. Its
reports are referred to in Board resolutions. The Remuneration Advisory Committee consists of seven members, of which five are outside
directors. Having a majority of outside directors ensures thorough governance.

Ratio by Type of Compensation
The ratio of performance-linked compensation for directors of the Company increases the higher the position.
The ratio of base compensation, performance-based bonuses, and non-monetary compensation, etc., is shown in the table below
assuming 100% of the target is achieved.
In addition, performance-based bonuses range from 0% to 200%, depending on the level of achievement. The percentage of longterm incentive (LTI) non-monetary compensation varies from 30% to 100% depending on the level of target achievement.
Monetary compensation

Representative Director

Base compensation 33.3%

Performance-based bonuses 33.3%

Non-monetarycompensation
Restricted shares 33.3%

Monetary compensation

Director

Base compensation 40%

Performance-based bonuses 40%

Non-monetarycompensation
Restricted shares 20%

Monetary compensation

Outside Director

Base compensation 100%

About Cross-Shareholdings
Ryohin Keikaku’s policy is to sell cross-shareholdings in principle, and the Board of Directors receives reports on the reduction of crossshareholdings every year.
In exercising voting rights of shares held as cross-shareholdings, we vote appropriately after judging the pros and cons of each
proposal. We comprehensively examine factors such as whether the proposal will contribute to enhancement of the investee company’s
corporate value, whether it will contribute to enhancement of the Ryohin Keikaku Group’s sustainable growth and medium- to long-term
corporate value, and whether it conforms to the purpose of holding the shares.

Number of stocks (Right scale)

Carrying value (Left scale)(Million JPY)

4,730

5,000
4,199
4,000
3,000

3,791

3,792

5

5

4,573

(Stocks)

10
8

6

6
4

4

2,000

4

1,000

2

0

2019/2

2020/2

2020/82021/82022/80

MUJI REPORT 2022

80

Basic Information

Messages from Outside Officers
The Company is reconfiguring the Boardof Directors for the future. Ryohin Keikaku
can expect success by taking on the boldchallenges of its ambitious goals.
Atsushi Yoshikawa
Outside Director

A New Board of Directors in Line withManagement Policy
The Ordinary General Meeting of Shareholders held in November
2022 approved the appointment of three new outside directors,
bringing the number to five, meaning outside directors now
comprise the majority of the Board. Based on an evaluation of theBoard’s effectiveness to date, the Nomination Advisory Committee
began deliberations in April 2022, which I participated in as acommittee member.
As for the appointment of female outside directors, manyof MUJI’s customers are women, and I expect the three new
appointees will make use of their respective careers and extensive
life experience in Board discussions. I also believe that having
outside directors as the majority will enable the Company to getcloser to its goal of realizing its management policy of “public
interest and people-centered management.” You can expect
improved governance from the new Board of Directors.
To achieve better operation of the Board of Directors, efficient
information sharing methods have been adopted. A new system
for sharing materials for Board of Directors meetings has been
introduced, enabling us to check the latest materials wherever
we are. In addition, I have more opportunities to communicate
with on-site general managers and other people in charge.
These opportunities help me to understand the current corporate
conditions and matters, as well as concerns on the front line.
Medium- to long-term management agenda items had been
discussed mainly at the Executive Advisory Committee, which
includes outside directors and auditors, before being submitted to
the Board of Directors. Going forward, I expect to have more time
to discuss those agenda items deeply at Board meetings.

ESG Achievement included in Non-monetary
Compensation
At the General Meeting of Shareholders held last year, Ryohin Keikaku
introduced restricted stock as non-monetary compensation in
addition to monetary compensation such as basic compensationand performance-based bonuses in order to share value with its
shareholders. The amount of non-monetary compensation granted
will be determined by the level of achievement of ESG-related
targets approved by the Board of Directors. The Remuneration
Advisory Committee evaluates the level of achievement. Granting
restricted stock as executive compensation is common; however,

81 MUJI REPORT 2022

Ryohin Keikaku’s compensation plan is outstanding in the sensethat it is consistent with its corporate purpose. For example, onethird of representative directors’ compensation will be in the form of
restricted stock. The Company has a strong belief that increasing
corporate value over the medium to long term is essential inproceeding with initiatives toward 2030, as it aims to redefine its
business model under the “Second Founding.”
We, as outside directors, will evaluate what Ryohin Keikaku
must do as a company that aims to be a front runner in ESG
management, as well as whether the Company’s efforts are inharmony with society and the Earth, from the three perspectivesof ESG in products, ESG in business activities and ESG throughactivities in regions.

Achieving Success beyond the “Second Founding”
Ryohin Keikaku has set challenging and ambitious goals for its“Second Founding,” and it expects all members working for MUJI
to change their behavior to achieve those targets. If I were to usean analogy; a locomotive (Ryohin Keikaku in this case) would now
be at the point where the drive wheels are very hard to move.
Once it starts moving, the train can rely on momentum, but it isdifficult until then, and sometimes friction or even collisions may
occur. Issues will become apparent as the Company takes amajor turn in its management approach and works to change theway it operates.
Even so, I have been moved by the resolve the Company
has shown in taking risks and challenging itself in order to realize
its vision in a new way, rather than following old ways. I want towitness the success, revival and rebirth of Ryohin Keikaku fromthe bottom of my heart. As an outside director, I will support
and carefully supervise and monitor corporate activities from thefollowing viewpoints. Is the Company truly committed to what
it has decided to do? Is it taking effective measures to address
the series of problems that will arise in its operations? Is the
management team maintaining a strong sense of responsibility
and fighting spirit?
We believe that the “Second Founding” is a chance todevelop as many people as possible who will view addressing
the challenges of the changing times as an opportunity. Before
you know it, the drive wheels will be set in motion, leading to asignificant increase in corporate value.

The Company is contributing to abrighter future by working toward its“Second Founding”—a vision of a newcompany and a new society.
Mayuka Yamazaki
Outside Director

A Company Vision That Resonates withMy Views
Before I was appointed as an outside director, my impressionof MUJI was that it was a store frequented by people who
lead mindful lifestyles and that it uses “not having a brand” asits brand. To be honest, I had little affinity for the brand as aconsumer. However, at Harvard Business School, where I worked
for 10 years, professors who specialized in marketing and brands
had respect for MUJI as a subject for case studies, and Ryohin
Keikaku was recognized as an appealing business enterprise.
When I was contacted about the possibility of becoming
an outside director, I took the opportunity to find out more about
Ryohin Keikaku. I learned that it goes beyond the framework of alifestyle brand in its attempts to resolve social issues through its
business and work together with local communities to create abetter future 100 years from now. The primary reason I accepted
the position of outside director is that this corporate approachresonates with me.
Since its founding, Ryohin Keikaku has valued ideas, artand culture. Because I also have a desire as a Japanese flower
arrangement artist to spread Eastern ways of thinking and spirituality
to people outside of Japan and to find ways to make connections
with business. I think there is an overlap in our orientation. In
addition, I believe I can utilize my findings and experience fromworking with people trying to create new businesses in the disasterareas of the Great East Japan Earthquake.

Surprises at the General Meeting of Shareholders
and Board of Directors Meetings
The first thing that surprised me after taking office was thatmost of the shareholders who attended the General Meetingof Shareholders were “fans” supporting Ryohin Keikaku. At themeeting, President Domae and the other executives came off
as very authentic. I realized that they are committed to sincerely
accepting suggestions and criticisms and engaging in dialogue withshareholders. I feel that this attitude toward a new type of company
and society will power the Company’s “Second Founding.”
Board of Directors meetings at Ryohin Keikaku offer a
psychologically safe space where the open atmosphere isconducive to discussion. By speaking based on my experience
as an outside director at other companies and as a flower
arrangement artist, I would like to make the Board a place

where executives can encounter new ideas that might not haveoccurred to them. In flower arranging, the process of accepting
the sensibilities of others can be painful, but it changes the way
one sees the world. Letting go of your ego to see how to best
present the flowers results in a beautiful arrangement. Likewise,in an organization, accepting multiple sensibilities and ways ofthinking as a team leads to good results. I would like to instill thisapproach more deeply at Board of Directors meetings by making
them a forum and an opportunity for broadening our thinking as
we go through both good and bad times together.

Realizing Ryohin Keikaku’s Vision Requires a
Company-wide Transformation
For Ryohin Keikaku to achieve the aims of its “Second Founding,”
its organization must embrace the above philosophy. It is therefore
disseminating its corporate purpose throughout the Company andreforming its corporate culture, although various issues arise indoing so.
In taking an ambitious approach to realizing our ideals at
the school I started and am involved in running, we also face
unforeseen issues and obstacles, and often things do not go
well. Nevertheless, it is only by seriously confronting these issues
and overcoming them one by one that we can create a new
future. To do so, individual growth and organizational strength
are key. Deeper self-awareness makes clearer your relationships
with others and what you should do, thus leading to growth. By
fostering a corporate culture that values individual sensibilities andways of thinking, Ryohin Keikaku is creating a foundation that willlead to greater organizational strength and further growth. I intend
to take on the challenge of ensuring that Ryohin Keikaku’s ESG
management contributes to its future.

MUJI REPORT 2022

82

Basic Information

Message from an Outside Corporate Auditor
As a representative of stakeholders,
I try to look at matters from multiple
perspectives in working for theCompany’s further development.
Masaru Hattori
Outside Corporate Auditor

Understanding Risks from Multiple Perspectives
I worked at Orient Leasing Co., Ltd. (currently ORIX Corporation)for 37 years in its accounting, corporate planning, auditing, andpersonnel and general affairs divisions after time at a securities
company and a manufacturing company. After that, I was involvedin communication with investors and internal control. Since 2008,
I have been serving as an outside corporate auditor at Ryohin
Keikaku. Since its founding, the Company has been operating abusiness that is ahead of the times, with an orientation toward
ESG. Its clearly defined social significance and concepts, startingwith “lower priced for a reason,” have earned broad acceptancefrom consumers and society.
The fundamental role of an outside corporate auditor is to
not only appropriately express opinions on audits of business
reports but also to be a representative of stakeholders of theCompany. I try to keep Ryohin Keikaku’s corporate purposein mind, to consistently pay attention to risks so there is nodamage to shareholder value, and to look at matters from multiple
perspectives. Depending on how a certain risk is perceived, theinterests of Ryohin Keikaku and its stakeholders may be opposed.
In that case, considerations from various viewpoints are necessary
to come up with a more suitable alternative, rather than making it
an either-or situation. That is why I stay in close communication
with the other corporate auditors, and repeatedly interview andmonitor directors, executive officers, employees, certified public
accountants and other parties.

Reconfiguring the Board of Directors throughGovernance Reforms
The presidency of Ryohin Keikaku changed hands in September
2021 as it started a transformation under its medium-termbusiness plan “to create a better future society in 100 years.” Thecomposition of the Board of Directors, which is the core of theCompany’s governance structure, changed significantly.
Ryohin Keikaku’s Board of Directors previously consistedof nine members, three of whom were outside directors. Since
November 2022, the Board has had an eight-member structure,
five of whom are outside directors, and three of those five are
newly appointed female directors. For some time, there had been
discussions about selecting more diverse outside directors, and I
now realize the strength of this desire for change as demonstrated
by the speed with which it was carried out.

83 MUJI REPORT 2022

From the perspective of diversity, this is a groundbreaking
board lineup. A wide variety of people with extensive experience
have been selected, and even newly appointed members havebeen proactive in expressing their opinions from their first meeting.
We engage in deep discussions of medium-term business plansand other management issues at Board of Directors meetings, andI sense that the meetings themselves will become even more lively.
The Board is also increasing the number of meetings eachyear to enhance communication with outside directors andoutside corporate auditors. Because changes in the external
environment are accelerating, we share information and exchange
opinions, so we do not lose track of these changes.

Deepening Understanding of the Company’s
Corporate Purpose
Ryohin Keikaku considers the introduction of a new management
structure in September 2021 to be a part of its “Second
Founding,” and has redefined its corporate purpose as “tocontribute to the creation of a truthful and sustainable life for all.”Based on this purpose, the Company has stated its vision forthe period leading up to 2030 and formulated a medium-termbusiness plan to the fiscal year ending August 31, 2024 as thefirst step.
In this plan, Ryohin Keikaku aims “to be a part of people’s
daily necessities” and “to take root in local society” under the themeof “working to build the future together with local communities.”
I believe that the Company should be highly evaluated for
redefining its corporate purpose in this way and sharing it with
employees. Specific measures include establishing procurement
and production processes for the core product lineup, accelerating
new store openings throughout Japan, promoting independent
activities and growth, and building a business infrastructure
centered on independent store management and localization.
The key is for officers and employees to all work together,starting with deepening their understanding of Ryohin Keikaku’s
corporate purpose. It will be important to strengthen the hiring,training and education of people, and to then create a corporate
culture in which diverse employees in tune with the corporate
purpose can act independently. From my standpoint as an outside
corporate auditor, I will contribute to the development of Ryohin
Keikaku as it works to achieve its goals, and in so doing help
resolve social issues.

Basic Information

ComplianceApproach to Compliance
Ryohin Keikaku believes that the foundation for gaining the trust and support of local communities is not only legal compliance, but also fair,honest and ethical conduct by all Group employees. Therefore, the Ryohin Keikaku Group Compliance Code of Conduct has been
established and is posted on the internal Company website as well as in a booklet distributed to directors, corporate auditors, executive
officers and employees. The Group Compliance Code of Conduct is reviewed by the Board of Directors periodically, and decisions
regarding its revision are made after discussion at meetings of the Board of Directors.

Initiatives for Fostering Compliance Awareness
The Ryohin Keikaku Group Compliance Code of Conduct has been established to promote compliance with ethical standards and social
norms, laws and internal regulations through in-house training programs and awareness raising activities. Based on the Group Compliance
Code of Conduct, anti-harassment training is conducted regularly for newly appointed managers to prevent harassment and improve
management skills. In the fiscal year ended August 31, 2022, 206 employees participated in the training. The Compliance and Risk
Management Committee, which meets regularly, reviews the status of compliance with the Group Compliance Code of Conduct,investigates any violations, identifies details and causes, and considers measures to prevent recurrence. In addition, the Compliance andRisk Management Committee regularly verifies the effectiveness of the Group Compliance Code of Conduct. No material complianceviolations related to the business operations of the Group occurred in the fiscal year ended August 31, 2022. The committee also confirmed
no political contributions were made. Ten compliance violations occurred in the fiscal year ended August 31, 2022. All Group companies
were notified of the incidents, and the importance of compliance was inculcated through in-house training and other measures.

Internal Reporting System
We have established the Ryohin Keikaku Group Helpline to improve the effectiveness of the self-correction process, control reputationalrisks, ensure public trust and protect whistleblowers. The helpline prevents and detects legal violations, misconduct and harassment at an
early stage, and also adds to the compliance knowledge of officers and employees.
This support system is available to all employees of Ryohin Keikaku and its domestic and overseas subsidiaries. This includes directors,
employees (including contract employees, partner employees and part-time workers) and temporary employees.
Any person may make a report to the helpline by telephone, email (including those using an anonymous system) or in person.
The results of investigations, with the exception of the names of whistleblowers, will be reported to the president, and, if necessary,internal procedures may be taken as provided in the Rules of Employment, including the formulation of measures to prevent recurrence, theissuance of work orders and instructions, and disciplinary action and other personnel measures, as well as necessary external measures
such as press releases, media relations and criminal charges.
A total of 148 consultations were received in the fiscal year ended August 31, 2022.

Measures to Prevent Corruption and Corrupt Practices
Ryohin Keikaku has established anti-corruption regulations (Ryohin Keikaku Group Anti-Bribery Regulations, Anti-Bribery Guidelines)
approved by the Board of Directors, which aim to prohibit bribery of public officials and ensure compliance with anti-corruption laws andregulations with regard to entertainment, gifts, invitations, donations, facilitation payments, insider trading, money laundering, embezzlement,
obstruction of justice, etc. Bribery is explicitly prohibited in these regulations. Entertainment, gifts, invitations and donations are subject to theprior approval of either the division manager or the Compliance and Risk Management Committee chairperson, who approves only those
items that are not deemed to be bribery. In addition, the Company seeks to fully prevent corrupt practices through the implementation of
employment regulations stipulating that employees shall not offer improper entertainment, lend or borrow money or goods, or give or receive
money or goods improperly in the course of business. In order to ensure that employees comply with anti-corruption measures, we regularly
provide training and inform all employees of our anti-corruption policy. In the fiscal year ended August 31, 2022, no employees weredisciplined or dismissed for violations of our anti-corruption regulations or for violations of regulations related to corruption as set forth in theemployment rules. In addition, we have not paid any fines, penalties or settlements in connection with corrupt practices.

MUJI REPORT 2022

84

Basic Information

Risk Management
Approach to Risk Management
Ryohin Keikaku assesses potentially material risks according to their significance and likelihood. We then take action to minimize thepossible materialization of material risks and mitigate impact if they do materialize.

Compliance and Risk Management Structure
Risk management is overseen by the Compliance and Risk Management Committee under the supervision of the Board of Directors. The
Compliance and Risk Management Committee, chaired by an officer of the Company, meets regularly to gather information on complianceand risks and to further discuss important issues. Matters discussed by the Compliance and Risk Management Committee are regularly
reported to the Board of Directors and are shared with directors and corporate auditors.

Board of Directors
ReportingCompliance and Risk Management Committee
Personal information protection
Natural disaster risk
Domestic/overseas economic conditions
Human rights in supply chain, etc.
Reporting of individual risks
Each division

Domestic Group companies

Overseas Group companies

Risk Assessment Process
Ryohin Keikaku’s risk assessment process involves Company-wide risk oversight by the Compliance and Risk Management Committee. We
assess potential material risks at least once a year according to their significance and likelihood. We also recognize climate change risk as amaterial risk.

Risk Management Initiatives
The Compliance and Risk Management Committee has prepared a risk management list to help each division recognize possible risks andunderstand how to respond to them. The risk management list corresponds to Ryohin Keikaku’s operations manual, ensuring that
information on specific responses and measures is made easily accessible. Moreover, each division regularly reviews risk-related issues andupdates the risk management list. The Compliance and Risk Management Committee meets at least four times a year to determine issues,
discuss responses and monitor the progress of responses. It reports the results periodically to the Board of Directors. In addition, theManagement Executive Meeting discusses, considers, and provides management guidance twice a year on measures to minimize theprobability of material risks and mitigate impact if they do materialize.
A reporting contact point has been set up to collect comprehensive information on risks. Meetings of committees in various specialized
fields are also held regularly. In particular, product quality, the Group’s most important operating resource, is discussed from various angles
in the Quality Improvement Committee, with the aim of further enhancing quality control.

85 MUJI REPORT 2022

Quality
Basic Approach and Challenges
Ryohin Keikaku inspects each process of design, development, procurement and production based on the “Ryohin Standards.” We strive
to provide safe and secure products, and aim to continuously realize the following:• Quality products with a reason and value sought from a customer’s perspective• Consideration for customers, producers and the environment• Solving issues for society as a whole and as inhabitants of the Earth• Zero market quality faults• Reduction of defect rate
• Thorough quality-oriented awareness
View the “Ryohin Standards” at https://ryohin-keikaku.jp/eng/sustainability/activities/quality/

Initiatives for Quality Control
The “voices” (comments) of customers regarding our products are all registered in a dedicated database (“voice navigation system”), andthe Development & Production Division, merchandising divisions and other related divisions cooperate and respond quickly in accordancewith the content. By enabling our business partners and factories to directly access the database to confirm the content, we have createdan environment where we can respond to quality problems quickly. In addition, the Development & Production Division cooperates withexternal inspection organizations as needed. We also continuously work to improve quality. The Development & Production Division leads
weekly meetings to detect defects at an early stage, and monthly Quality Improvement Committee meetings to confirm the progress ofquality improvement activities in merchandising divisions.

CustomerInquiryStores

Product

Consult
Product

Customer
Relations
OfficeReturnReply/Response

Consult
Product
Card

Reply

Reply

RequestConsult

Merchandising Inspection request
divisions/
Development &Product
Production
Card
Division

Production
partnerfactories

Reply

Inspection
Info
Questions
Complaints
Suggestions

Via telephone

Product

Quality

Reply/Response

Collection
Inspection
Improvement
Refinement

Inspection request
Product

Via e-mailExternal
inspection
organization

Reply

Product

Inspection

Reply/Response

Consult
Reply

ReportTopmanagement

Other
divisions

ReportOperation
improvement
ReturnProduct return slips with details

Card

Information card

Quality

Quality report

ReportResult report

Quality Risk Assessment
Ryohin Keikaku conducts risk assessments of product design, layout, manufacturing, distribution and usage environments for the purposeof preventing product accidents, defects and complaints. We also identify the above risks (including accidents, defects and complaints due
to reasonably foreseeable misuse) at the product planning/development/design stage to deal with the risk factors in advance.
By implementing risk assessments in the early stages of design, we can identify risks throughout the product lifecycle from productplanning and development to use and disposal, incorporate solutions for identified risks into the design, and reduce the risk of accidents,
defects, complaints, etc. to achieve a smooth launch of our products.

MUJI REPORT 2022

86

Basic Information

Risk Management
Human Rights
Human Rights Policy
We have been implementing human rights initiatives based on our Global Compliance Code of Conduct and our Code of Conduct for
Production Partners. In December 2022, we formulated the Ryohin Keikaku Human Rights Policy with the commitment of senior
management and the approval of the Board of Directors.
Additional details are available at: https://www.ryohin-keikaku.jp/eng/sustainability/supply-chain/humanrights/

Approach to Human Rights and Scope of Application of Human Rights Policy
Ryohin Keikaku understands that the entire supply chain for its business activities can have a direct or indirect negative impact on humanrights, and recognizes the importance of its responsibility to respect human rights. Based on this awareness, Ryohin Keikaku supports andcomplies with the United Nations Guiding Principles on Business and Human Rights and other international standards for respecting humanrights, and strives to fulfill its responsibility in that regard. Human rights to be respected under this Human Rights Policy include a wide
range of internationally recognized human rights, including core labor standards set forth in the International Bill of Human Rights and theInternational Labor Organization (ILO) Conventions. Our Human Rights Policy applies to all officers and employees of Ryohin Keikaku. In
addition, Ryohin Keikaku expects and requests the understanding and observance of this Human Rights Policy from all related parties,
including suppliers of its various businesses, products and services.

Code of Conduct for Production Partners
Ryohin Keikaku established its Code of Conduct for Production Partners in July 2020 to facilitate good partnerships based on mutual trust
and to fulfill our responsibilities to the environment and to ensure fair, safe and healthy working environments throughout the supply chain.
We only contract with factories that pledge to comply with our code of conduct. In addition, we monitor the working environment at
production partner factories based on our code of conduct. The code of conduct is available in Japanese, English, and Chinese on our
website, and we distribute it and explain it to production partner factories to ensure thorough awareness. We hold supplier meetings asnecessary to reflect revisions to our code of conduct in order to help ensure thorough CSR throughout the supply chain.
Additional details are available at: https://www.ryohin-keikaku.jp/eng/sustainability/supply-chain/code-of-conduct/

Monitoring of Production Partner Factories
Ryohin Keikaku regularly utilizes a third-party organization to conduct onsite audits of its production partner factories based on the Code of
Conduct for Production Partners. The audits cover items such as human rights infringement, the working environment and environmental
conservation. We also share the result of the audits with production partner factories and work together with them to make improvements incase of any non-compliant items.

D
Assessment

E
Assessment

6 months to 1 year
after audit

Improved

Within 3 monthsof audit

Not
improved

Assessment

Follow-up audit

Within 3 monthsof audit

Improvement
implementation report

B/C

Deliberation at an internal meeting to review
whether to continue doing business with the
production partner

A
Assessment

Regular audit

Working Environment
Monitoring System

Pledge to the Code of Conduct for
Production Partners

Additional details are available at: https://www.ryohin-keikaku.jp/eng/sustainability/supply-chain/monitoring/

Participation in Initiatives
1. Better Work Programme
The Better Work Programme is a joint program between the International Labour Organization (ILO) and the International Finance Corporation(IFC), which is a member of the World Bank Group. Ryohin Keikaku has participated in the Better Work Programme since 2016.

2. Japan Platform for Migrant Workers towards Responsible and Inclusive Society
The Japan Platform for Migrant Workers towards Responsible and Inclusive Society works with companies and organizations that
support the platform’s Code of Conduct, which is aligned with international standards, to improve the working and living environment
for foreign workers in Japan. We have been a member of the platform since May 2022.

87 MUJI REPORT 2022

Information Security and Protection of Personal Information
Objectives
Ryohin Keikaku has formulated an Information Security Policy to ensure it continues to earn the trust of its customers and society by taking
fundamental and sophisticated measures to protect the information assets entrusted to it by its customers and other related parties, tomaintain and improve its global corporate brand, and to comply with laws and regulations. We strive to maintain and increase information
security by complying with our Information Security Policy and Privacy Policy, protecting information assets from various threats, andhandling them appropriately.
Additional details are available at: https://www.ryohin-keikaku.jp/eng/sustainability/governance/informationsecurity/

Management System
At Ryohin Keikaku, the Compliance and Risk Management Committee, which is chaired by the Executive Officer in charge of Overall
Administration, oversees relevant activities of the entire Group based on its basic policies. The committee has established the IT Security
Office and Personal Information Protection Office to accurately grasp the status of information security and to discuss and promote
countermeasures. Each Group company and divsion appoints a person in charge of information security, and strives to strengthen andthoroughly implement the information management system throughout the Group.
The Personal Information Protection Office formulates rules and policies for personal information management and manages the overall
process. The IT Security Office builds, maintains and operates the IT infrastructure environment in compliance with regulations and policies,
and works for its continuous improvement.
The IT Security Office also reports on its activities to the Compliance and Risk Management Committee, which meets four times a year,
and the details of deliberations are reported to the Board of Directors at least twice a year.
Board of Directors
President & Representative Director
Internal Audit OfficeCompliance & Risk Management Committee
Responsible Executive: Executive Officer in charge of Overall Administration
Secretariat (General Affairs Division)

Personal Information
Protection Office
Responsible Executive:
General Manager of
the General Affairs Division

Countermeasure
instruction/monitoring
ReportingGroupcompanies

IT Security Office
Responsible Executive:
General Manager of
the IT Services Division

Each division

Protection of Personal Information
Ryohin Keikaku conducts personal information protection activities based on its Privacy Policy for personal information handled in all
business activities and adopts necessary safeguards and appropriate security measures.
We appoint a person from within the organization with the ability to understand and implement personal information protection as a“personal information protection manager.” This person assumes responsibility and authority for implementing and operating the personal
information protection management system, regardless of other responsibilities.

Education on Information Security
Ryohin Keikaku recognizes that the thorough comprehension and participation of all employees is essential for information security
management. Based on this understanding, we provide information security training to all officers and employees. We also regularly conduct
the following initiatives, which are effective for continuously improving security literacy, assessing the level of understanding, and raisingawareness. By fostering a culture of security throughout our organization, we aim to become a company that is resilient to cyber risks.
(1) Conduct an e-learning course on information security for all employees once or twice a year
(2) Conduct training on targeted e-mail attacks for all employees twice a year(3) P rovide appropriate reminders prior to long vacations and other events, and conduct awareness-raising activities and follow-ups during
daily work
MUJI REPORT 2022

88

Basic Information

Financial and Non-Financial Highlights

Operating Revenue

Operating Profit/
Operating Profit Ratio(Million JPY)

496,171

500,000(Million JPY)(%)

50,00015453,689438,713Net Assets/ROE

244,852(Million JPY)

240,000

44,743400,000

195,189

40,00010.9

300,000

12

180,000

9

120,000

36,380182,992

8.3

100,000

20,000

6

60,00010,000300(60,000)

872
0

2019/2 2020/2 2020/8

02021/8 2022/8

Total Assets/ROA

0.5

2019/2 2020/2 2020/8

2021/8 2022/8(Million JPY)(%)

393,357 399,324 40

306,512(8.8)
2019/2 2020/2 2020/8

2021/8 2022/8

店舗数（合計）国内／海外(Includes licensed stores, Cafe&Meal MUJI and IDÉE)

(%)

50

30

(10)

Number of Stores (Total)
in Japan and Overseas

50

38.7

10

0

Net assets (Left scale)343,918

300,000

10.8

ROE (Right scale)

(JPY)

40

11.8

Operating profit ratio (Right scale)

配当金／配当性向

400,000

17.3

Operating profit (Left scale)

Dividends per Share/
Dividend Payout Ratio

総資産／ROA

20

18.8

6.6
179,392

30

32,7739.4

30,000200,000

40

214,871

208,492

42,447

409,697

(%)

41.1

40.0

1,200

1,136
1,033

42.9
40.0 40

1,029

1,068

975
900

36.4

604

260,075
30

31.8

30.0

30

20

200,000

517

556

550

477

479

571

600

18.4

12.8

12.3

20

20

10

10

9.4
10

100,000

300
458

497

532

5.0
0

0.2
2019/2 2020/2 2020/8

2021/8 2022/8

002019/2 2020/2 2020/8

2021/8 2022/8

002019/2 2020/2 2020/8

2021/8 2022/8

Total assets (Left scale)

Dividends per share (Left scale)

Number of stores overseas

ROA (Right scale)

Dividend payout ratio (Right scale)

Number of stores in Japan

Note: The dividend payout ratio for the fiscal year
ended August 31, 2020 is not presented as
the Company recognized net loss per share.
Note: 2020/8 was a six-month period from March 1 to August 31, 2020 due to a change in the fiscal year.

89 MUJI REPORT 2022

Number of Employees1

Number of Women in Managerial
Positions (Store Managers andAbove)/Percentage of Total
Managerial Positions1

Number of employees at the end of the period.

2,527

2,446

2,500
2,234

282

240

2,000
1,229

1,250

1,374

1,295

39.1

35.7

1,404

210

180

1,500

35.0
216

34.5
211

50

300

252

228

40

208

62

35.0
200

221
30

173

103

200
20

120

1,000
1,005

1,035

1,072

1,048

0,000

2,343

(%)

300

2,343

2,285

Number of New Employees Hired1

116
166

100

1,123

75

500

60

10

0

0

0

32
57

2019/2 2020/2 2020/8 2021/8 2022/8

2019/2 2020/2 2020/8 2021/8 2022/8

0

52

105

43

2019/2 2020/2 2020/8 2021/8 2022/8

Number of male employees

Number of women in managerial positions (Left scale)

Number of new university graduate hires

Number of female employees

Percentage of total managerial positions (Right scale)

Number of mid-career hires

Volume of Textile ProductsCollected1

ReMUJI1, 2 Sales Volume(t)(Textile products)

80

30,000CO2 Emissions/Emissions per
Unit of Operating Revenue
Note: Scope 1 and 2 only
(t-CO2e)28,222(t-CO2e per JPY 100 million)

40,00016.0

34,87435,00066.9
25,00060

30,00030,83929,486
12.0

12.0

11.3

27,07349.1
44.2

25,00020,000

10.1
10.0

10.0

9.5

40

20,00015,0008.0

15,000

24.2
20

14.0

6.0
11,61417.1

10,000

4.0

5,000

2.0

10,0002,902
02019/2 2020/2 2020/8 2021/8 2022/8

0

3,927

3,214
224

2019/2 2020/2 2020/8 2021/8 2022/8

Sales grew substantially in the fiscal year ended
August 31, 2022 due to the expansion of ReMUJI
sales at MUJI Shinjuku from September 2021.

0

2019/2 2020/2 2020/8 2021/8 2022/8

0.0

CO2 emissions (Left scale)Emissions per unit of operating revenue (Right scale)

1. Ryohin Keikaku Co., Ltd. only
2. R
 esale of goods reprocessed from products collected at stores for recycling and from products soiled or damaged during the manufacturing process

MUJI REPORT 2022

90

Basic Information

ESG Data
2030 ESG Indices
Items

Key Performance Indicators

Initiatives (As of August 31, 2021)

Initiatives (As of August 31, 2022)

Percentage of packaging and materials
for apparel, household goods and foodproducts that do not use plastic(except when plastic is required forhygiene, quality and safety)

Apparel: 14.0%
Household goods: 13.2%
Food products: S witched from plastic bottles
to bottle-shaped cans

Apparel: 74.8%
Household goods: 47.0%
Food products: Some stores sell coffee
beans, nuts, and other items
by weight

Total weight of plastic reduction(comparative reduction of current versus
previous plastic packaging)

Apparel: 52 t
Household goods: Under review
Food products: 213 t

Apparel: 59 t
Household goods: 91 t
Estimated annual reduction
resulting from the launch ofrefill pouches for skin careproducts
Food products: 251 t

Eliminate plastic inpackaging andvarious materials

100%

Design products forreuse and recycling

100%

Percentage of items designed withrecycling in mind
(except when hygiene concerns preclude
recycling)

Household goods: 28.4%

Household goods: 36.0%

Reuse of plastic
products we collect100%(1) Total weight of collected plastic products(2) T otal weight of plastic collected for reuse(including products other than ours)(1) 729 kg(water bottles and toning water bottles)(2) 729 kg(1) 1,130 kg(water bottles and toning water bottles)(2) 1,130 kg

ApparelCotton: 100% organic cotton(excluding MUJI Labo and productsthat utilize recycled cotton and yarn
scraps/remnants)
Wool: 100% non-mulesed
Down: 100% down certified to ensure animal
welfare1

ApparelCotton: 100% organic cotton(excluding MUJI Labo and productsthat utilize recycled cotton and yarn
scraps/remnants)
Wool: 100% non-mulesed
Down: 100% down certified to ensure animal
welfare1

Household goods
Cotton: 8
 5.6% organic cotton
Wool: 100% non-mulesed
Down: 100% down certified to ensure animal
welfare1

Household goods
Cotton: 81.9% organic cotton
Wool: 100% non-mulesed
Down: 100% down certified to ensure animal
welfare1

Use of natural fiber
materials that areorganic and respect
animal welfare

Perform human rights
due diligence on
business partners,
traced back to raw
materials

100%

100%
disclosure

Percentage of products that have beencertified or have their own standards thathave been audited by a third party(1) Number of audits conducted (annual)(2) Breakdown of evaluation

Product manufacturers(1) 20 factories(2) A Assessment: 0 factories; B Assessment:
9 factories; C Assessment: 7 factories; D
Assessment: 4 factories; E Assessment: 0
factories
Of the four factories with D assessments, wehave terminated business with two of them.
The other two companies made improvements
and received A and B assessments, respectively,
in follow-up audits.
Material and raw material manufacturers
We are currently formulating a human rights due
diligence process.
(We have already conducted some due
diligence. No significant violations of law
or Ryohin Keikaku’s Code of Conduct
were found.)

Product manufacturers(1) 27 factories(2) A Assessment: 0 factories; B Assessment:
18 factories; C Assessment: 2 factories; D
Assessment: 3 factories; E Assessment: 4factories
The four E-rated factories indicated that they
had not formulated policies prohibiting childlabor, and that factory employees had to bear
the cost of medical examinations. We haveagreed on improvement plans for all of thesefactories and are confirming the completionof improvements.
Material and raw material manufacturers
We plan to conduct audits of major material
manufacturers from the fiscal year ending
August 31, 2023.
(We have already conducted some due
diligence. No significant violations of law
or Ryohin Keikaku’s Code of Conduct
were found.)List of major suppliers,
traced back to raw
materials

100%
disclosure

List of major suppliers

We are preparing to disclose the list of major
suppliers.

We plan to disclose the list of factories that
supply core products during the fiscal year
ending August 31, 2023.

Reduce GroupGHG emissions(Scope 1 and 2)

50%
reduction

Scope 1 and 2 total (t-CO2e)
Baseline: 2021/82

Total in Japan: 30,839 t-CO2e3

Total in Japan: 34,874 t-CO2e
13.1% increase compared with baseline year
We plan to disclose Group GHG emissions in
the fiscal year ending August 31, 2023.

Installed at Hatoyama Distribution Center

Installed in some stores
CO2 emissions were reduced by 394 t throughthe introduction of renewable energy. Now
planning to begin using renewable energy witha focus on roadside stores

Ensure stores use
renewable energy

100%

Number of stores and distribution
centers that use renewable energy(including headquarters and campsites)

Equip stores(independent store
buildings) with rooftop
solar panels

100%

Number of stores and distribution
centers with solar panels(excluding stores that cannot install solar
panels such as those in shopping malls)

Already installed when the Hatoyama
Distribution Center started operation

Installed and in operation at multiple storesfrom the fiscal year ending August 2023

(1) Average age (full-time employees)(2) Ratio of female managers, including
store managers (full-time employees)(3) Ratio of female employees (full-time
employees)(4) Ratio of non-Japanese employees(full-time employees)(5) Ratio of employees with disabilities(including temporary employees)(1) 37.9 (Female: 36.6; Male: 39.6)(2) 35.0%(3) 55.3%(4) 1.2%(5) 3.41%(1) 38.3 (Female: 36.9; Male: 40.0)(2) 39.1%(3) 55.6%(4) 1.3%(5) 3.69%
Initiatives: Diversity Committee established

Demonstrate commitment to diversity
and inclusion by disclosing workforce
composition by age, gender and race

1. W
 e only use feathers that have been procured in a manner that meets the Five Freedoms of Animal Welfare defined by the Farm Animal Welfare Council and that have been reviewed
and certified as being such. This means we do not use feathers from animals that have been force fed or had their feathers taken while still alive. The Five Freedoms are: (1) freedom
from hunger and thirst; (2) freedom from discomfort; (3) freedom from pain, injury and disease; (4) freedom to express normal and natural behavior; and (5) freedom from fear anddistress. (Ministry of Agriculture, Forestry and Fisheries, “Livestock breeding management with consideration of animal welfare”)
 e changed the baseline year to the fiscal year ended August 31, 2021 because we expanded the scope of GHG emission calculation to the entire Group (as of December 8, 2022).
2. W
3. W
 e recalculated emissions for the fiscal year ended August 31, 2021 pursuant to a review of the facilities and types of energy subject to calculation (as of December 8, 2022).

91 MUJI REPORT 2022

ESG Data

Scope: Ryohin Keikaku Co., Ltd.

Categories

Unit

Energy used

Environment

Renewable energy

Greenhouse gas emissions1

Water

Waste generated

4,217

5,026

LP gas

MWh

296

249

Kerosene

MWh

253

355

Diesel fuel

MWh

21

19

Gasoline

MWh

53

55

Hot water and cold waterMWh15,89919,023

Electricity

MWh66,16574,939Total

MWh86,904

99,667

Amount used

MWh

2,099

3,008

Ratio of renewable energy to energy
used

%

3.17

4.01

Scope 1

t-CO2e918

1,128

Scope 2 (Market based)

t-CO2e29,921

33,746

Scope 3t-CO2e859,771984,013

Total

t-CO2e890,610

1,018,887

Hydrofluorocarbon (HFCs)

t-CO2e15

64

Water usage volumem3

143,779

146,008

Wastewater volumem3

140,887

144,414

General wastet

10,043

12,259Industrial waste

t

1,050

1,103

Average age(full-time employees)

1,295 (55.3)

1,404 (55.6)

Male

(%)

1,048 (44.7)

1,123 (44.4)

2,343

2,527

7,035

7,433

Female(%)

221 (35.0)

282 (39.1)

Male

(%)

410 (65.0)440 (60.9)

Total

631

722

Female

36.6

36.9

Male

39.6

40.0

Total

37.9

38.3

Female

(%)

7.4

7.8

Male

(%)

9.4

9.4

8.3

8.5

5,658

5,930

Number of new university graduate hires

32

103

Mid-career hires

43

105

Average length of service(full-time employees)

Total
ThousandJPY

Average annual salary(full-time employees)

Ratio of mid-career hires to total new hires

%

57.3

50.5

Voluntary turnover rate
(headquarter employees)

%

7.12

8.25

Ratio of employees with disabilities

Directors2

%

3.41

3.69

Female(%)

1 (11.1)

3 (37.5)

Male

(%)

8 (88.9)5 (62.5)

Total
Average number of years in office

Governance8

7 years, 5 months

6 years, 7 months

3

5

33.3

62.5

Times

16

16

%

98

99

Ryohin Keikaku Group Helpline consultations

98

148

Number of employees participating inharassment training

130

206

Board of Directors

Number of outside directors

9%Outside directors2

Compliance

9,960

(%)

Temporary employees(standardized to 8 hours)Society

9,378
FemaleTotal

Managers(store managers and above)

2022/8MWh

Number of employees

Full-time employees

2021/8City gas

Percentage of outside directors
Number of meetings
Average attendance rate

1. We recalculated emissions for the fiscal year ended August 31, 2021 pursuant to a review of the facilities and types of energy subject to calculation (as of December 8, 2022).
2. Figures for the fiscal years ended August 31, 2021 and 2022 are calculated based on the composition of officers after the annual shareholders’ meetings held on November 26, 2021
and November 23, 2022, respectively.

MUJI REPORT 2022

92

Basic Information

11-Year Summary
2012/2

2013/2

2014/2

2015/2

2016/2

178,186

188,350

220,620

260,254

307,532(Domestic)——

171,923

182,701

198,449(Overseas)——

48,472

77,546109,080

Operating gross profit

81,59687,376

101,665

122,831

150,451

Selling, general and administrative expenses

66,15869,02480,74998,984116,012

Operating profit

15,43818,351

20,916

23,84634,439

8.7

9.7

9.5

9.2

11.2

Ordinary profit

16,135

19,76023,047

26,60232,700Net income attributable to owners of parent

8,850

10,97017,096

16,623

21,718Cash flows from operating activities

9,729

13,17615,117

14,61926,133

Cash flows from investment activities(4,747)(4,945)(17,842)(22,193)(8,647)

Cash flows from financing activities(3,120)(2,540)(5,385)

11,377(6,520)Depreciation

3,201

3,186

4,179

4,887

6,816

Total assets

102,293

119,360

140,229

186,947

200,919

Net assets

83,52896,050111,015

128,670

143,173Return on equity (ROE) (%)

11.1

12.5

17.0

14.3

16.4

Equity ratio (%)

80.0

78.3

76.9

67.0

69.4

Return on assets (ROA) (%)

16.2

17.8

17.8

16.3

16.9

Turnover of merchandise

—

—

3.73

3.10

2.89

Earnings per share (EPS) (JPY)

33.04

40.95

64.46

62.75

81.84

Net assets per share (BPS) (JPY)305.56348.80407.19472.37524.79Dividends per share (JPY)

11.0

11.0

15.5

19.0

24.6

Dividend payout ratio (%)

33.3

26.9

24.0

30.3

30.1

Number of MUJI stores in Japan1

372

379

385

401

414

Number of MUJI stores overseas1

163

206

255

301

344

263,177

265,037

270,250

282,083

289,899

Number of employees

2,734

3,069

4,101

4,795

5,653

Number of temporary employees3

4,721

5,307

6,934

7,242

7,877

Downloads of MUJI passport app(thousand people)4

—

—

1,407

3,367

8,850

Profit and Loss (Consolidated)
Operating revenue

Operating profit ratio (%)

Financial Position (Consolidated)

Key Performance Indicators (Included inconsolidated key financial indicators)

Per-share Data

Other Data

Total sales floor space in Japan (m2)2

1. Excluding Café&Meal MUJI and IDÉE
2. Total sales floor space of directly managed stores, licensed stores and Seiyu Co., Ltd.
3. Average number of employees per year based on an eight-hour workday calculation method
4. Registered members of external social media sites and various communication apps in Japan have been included from the fiscal year ended
February 2019 and from the fiscal year ended February 2020 for mainland China.
5. 2020/8 was a six-month period from March 1 to August 31, 2020 due to a change in the fiscal year.

93 MUJI REPORT 2022

(Million JPY)
2017/2

2018/2

2019/2

2020/2

2020/8 52021/82022/8333,281379,551

409,697438,713

179,392

453,689

496,171

215,716

234,791

246,269

267,864

122,428

296,998

308,114

117,563

144,758

163,425

170,846

56,961

156,691

188,057

165,861

191,819

211,380

217,628

83,694

222,334

234,356

127,583

146,532

166,636

181,248

82,821

179,887

201,582

38,27845,28644,74336,380872

42,447

32,773

11.5

11.9

10.9

8.3

0.5

9.4

6.6

38,582

45,98545,86136,377563

45,36937,21425,831

30,11333,84523,253(16,917)33,90324,55819,742

46,982

23,68024,452(1,758)61,44723,350(9,856)(14,290)(5,492)(31,435)(4,239)(13,538)(16,683)(14,361)(21,759)(9,505)(11,467)

63,722(15,162)(58,647)

7,543

8,644

9,867

17,622

10,35818,96922,018214,705

238,313260,075

306,512

343,918

393,357

399,324

157,018

174,426

195,189

208,492

182,992

214,871244,852

17.7

18.6

18.8

11.8

(8.8)

17.3

10.8

71.3

71.3

73.8

66.6

52.4

53.9

60.5

18.6

20.3

18.4

12.8

0.2

12.3

9.4

2.55

2.55

2.44

2.28

1.87

2.19

2.22

97.50

114.70128.9288.47(64.32)128.9093.24

579.18647.68725.83775.77684.94806.75915.93

29.3

34.5

38.7

36.4

5.0

40.0

40.0

30.1

30.1

30.0

41.1

—

31.8

42.9

418

419

420

437

438

456

493

403

457

497

533

527

546

579

297,001

306,316

319,698

359,141

375,446

417,057

494,871

6,992

8,128

9,137

9,615

9,046

8,882

9,203

9,254

10,233

10,825

8,050

9,281

9,175
9,834

12,28916,29520,44542,741

49,38059,297

69,780

MUJI REPORT 2022

94

Basic Information

Consolidated Financial Statements
Consolidated Balance Sheets(Million JPY)
As of August 31, 2022

As of August 31, 2021

262,206

269,047

Cash and deposits

90,162

135,752

Notes and accounts receivable – trade

10,268

8,742

Merchandise

129,202106,164Work in process

297

204

Supplies

59

91

Accounts receivable – other

15,82911,836

Others

16,405

6,267

(20)

(11)

137,118

124,310

Property, plant and equipment

73,082

67,060

Buildings and structures

29,23028,044

Machinery, equipment and vehicles

1,500

1,591

Tools, furniture and fixtures

8,227

8,730

Land

1,558

1,537

41

49

Right-of-use assets

30,97826,432

Construction in progress

1,545

673

Intangible assets

29,62729,479Goodwill

1,767

2,439

Software25,68624,885

Others

2,173

2,154

Investments and other assets

34,407

27,770Investment securities

4,573

4,730

Deferred tax assets

2,884

2,634

Leasehold and guarantee deposits

21,442

19,595

Others

5,604

920

(98)

(110)

399,324

393,357

AssetsCurrent assets

Allowance for doubtful accounts
Non-current assets

Leased assets

Allowance for doubtful accounts
Total assets

95 MUJI REPORT 2022

(Million JPY)
As of August 31, 2022

As of August 31, 2021

Liabilities
Current liabilities

78,923

141,716

Accounts payable – trade36,46225,541

Short-term loans payable

3,902

4,630

Current portion of long-term loans payable

2,232

67,081

Accounts payable – other

11,475

9,966

Accrued expenses

6,725

6,196

Income taxes payable

1,447

12,702

Provision for bonuses

1,336

1,193

Lease liabilities

10,003

8,357

Provision for bonuses for directors (and other officers)

78

66

Provision for point card certificates

—

105

5,259

5,874

OthersNon-current liabilities

75,54836,770Long-term loans payable

31,906

5,000

Deferred tax liabilities

6,379

820

Provision for retirement benefits for directors (and other officers)

29

74

Provision for share awards

545—

Lease liabilities

28,406

24,772Others

8,281

6,103

154,472

178,486

224,805

209,709

6,766

6,766

Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus

29,58627,922Retained earnings

219,534

205,995

Treasury shares(31,082)(30,973)

16,7502,487

Valuation difference on available-for-sale securities

2,309

2,325

Deferred gains or losses on hedges

7,577

485

Foreign currency translation adjustment

6,863

(324)

Accumulated other comprehensive income

Share acquisition rights

664

605

Non-controlling interests

2,632

2,068

Total net assets

244,852

214,871

Total liabilities and net assets

399,324

393,357

MUJI REPORT 202296Consolidated Statement of Income(Million JPY)
Fiscal year ended
August 31, 2022 (September
1, 2021 to August 31, 2022)

Fiscal year ended
August 31, 2021 (September
1, 2020 to August 31, 2021)

Operating revenue

496,171453,689

Operating costs

261,814231,355

Operating gross profit

234,356

222,334

Selling, general and administrative expenses

201,582

179,887

Operating profit

32,77342,447

Non-operating income

6,067

4,420

Interest income

187

258

Dividend income

134

103

Sponsorship money income

134

99

1,030

526

—

106

Subsidy income
Rental income
Foreign exchange gains

3,912

2,714

Reversal of allowance for doubtful accounts

4

34

Share of profit of entities accounted for using equity method

—

7

Other

663

569

Non-operating expenses

1,626

1,498

1,352

1,395

—

3

Interest expenses
Loss on cancellation of contracts
OthersOrdinary profit
Extraordinary income
Gain on sales of investment securities

274

99

37,21445,369

224

4,922

25

118

Gain on sales of non-current assets

2721

Gain on step acquisitions—

260

Gain on forgiveness of lease cancellation liabilities

—

3,135

Gain on reversal of share acquisition rights—

677

Gain on changes in lease terms

196

9

4,234

1,702

Impairment losses

2,240

1,168

Loss on retirement of non-current assets

1,990

278

Loss on cancellation of rental contracts—

250

Others3

5

Net income before income taxes

33,204

48,589

Income taxes-current

5,664

16,450

Income taxes-deferred

2,761(1,531)

Profit24,77833,670

Profit (loss) attributable to non-controlling interests

220

(232)

Net income attributable to owners of parent

24,55833,903Extraordinary losses

97 MUJI REPORT 2022

Consolidated Financial Statements

Consolidated Statement of Cash Flows(Million JPY)
Fiscal year ended
August 31, 2022 (September
1, 2021 to August 31, 2022)

Cash flows from operating activities
Net income before income taxes
Depreciation
Amortization of software investment, etc.
Amortization of goodwill
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for bonuses for directors(and other officers)
Increase (decrease) in provision for retirement benefits for directors(and other officers)
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)
Loss (gain) on sale of investment securities
Share of loss (profit) of entities accounted for using equity method
Loss on retirement of non-current assets
Impairment losses
Loss (gain) on step acquisitions
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in other assets
Increase (decrease) in other liabilities
Share acquisition rights
Gain on reversal of share acquisition rights
OthersSubtotalInterest and dividends received
Interest paid
Income taxes paid
Cash flows from operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Payments of leasehold interests in land of stores and leasehold deposits
Proceeds from collection of store leasehold deposits
Purchase of intangible assets
Proceeds from sale of investment securities
Proceeds from purchase of shares of subsidiaries resulting inchange in scope of consolidation
Proceeds from sale of investment property
OthersCash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable
Proceeds from long-term borrowings
Repayments of long-term loans payable
Repayments of lease liabilities
Proceeds from share issuance to non-controlling shareholders
Proceeds from sale of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Cash flows from financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Net increase (decrease) in cash and cash equivalents due to the change in the business year
Cash and cash equivalents at end of period

Fiscal year ended
August 31, 2021 (September
1, 2020 to August 31, 2021)

33,204
17,596
4,738
952
(2)

48,58915,561
3,714
847
(35)

11

62

(44)
(321)
1,352
(3,318)
(25)
—
1,990
2,240
—
(837)
(14,253)
6,708(3,469)(1,067)61—(903)
44,613321(1,350)(20,233)
23,350

27
(361)
1,395
(912)
(118)
(7)
278
1,168
(260)
1,345
(4,357)
4,541(1,034)(1,876)
353
(677)
(323)
67,920349(1,408)(5,414)61,447—795(8,030)(1,796)498(7,853)158(3)
20(8,487)(1,584)831(8,852)
218

—
—
(455)
(16,683)

414
3,104
799
(13,538)(1,103)27,551(65,644)(9,593)99
1,072(11,029)—(58,647)
7,192(44,787)
135,019—
90,23145—(388)(8,289)199—(6,589)(140)(15,162)2,246
34,99391,5998,426
135,019

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Basic Information

Stock Information (As of August 31, 2022)
Stock Overview

Distribution of Shareholders andNumber of Shares Held

Total number of authorized shares:
1,123,120,000
280,780,000
Total number of issued shares:
Number of shareholders:
156,420
Tokyo Stock Exchange
Stock exchange listing:
August 31
Accounts settlement date:Ordinary General Meeting of Shareholders:
Held in November each year
Sumitomo Mitusi Trust Bank, Limited
Administrator of the shareholder register:Financial institutions:

101,263,007

Securities companies:

23,106,224

Other corporations in Japan:

23,598,746

280,780,000
sharesCorporations and individuals outside Japan: 58,205,486
Individuals and others:

69,887,397

Treasury stock:

4,719,140

Major Shareholders (Top 10)
Shares Held(Thousands)

Shareholder

Shareholding
Ratio (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

52,441

18.99

Custody Bank of Japan, Ltd. (Trust Account)

21,564

7.81

Custody Bank of Japan, Ltd. (Trust Account E)

11,2294.06

Mitsubishi Corporation

10,783

3.90

Credit Saison Co., Ltd.

6,318

2.28

SMBC Nikko Securities Inc.

5,558

2.01

Japan Securities Finance Co., Ltd.

4,633

1.67

JP Morgan Securities Japan Co., Ltd.

4,022

1.45

Credit Suisse Securities (Japan) Limited

3,280

1.18

MSCO CUSTOMER SECURITIES (Standing proxy: Morgan Stanley MUFG Securities Co., Ltd.)

3,211

1.16

Notes:
1.	The Company holds 4,719,140 shares of treasury stock, which are excluded from the list of major shareholders above. The 4,719,140 shares of treasury stock do
not include 11,571,907 shares held by Mizuho Trust & Banking Co., Ltd. for a stock benefit trust (J-ESOP) and 762,800 shares held by Nomura Trust & Banking Co.,
Ltd. for an employee shareholding incentive plan (E-SHIP).
2. The 11,229,407 shares held by the Custody Bank of Japan, Ltd. (Trust Account E) are for the purpose of a stock benefit trust (J-ESOP).
3. The shareholding ratio is calculated after deducting the 4,719,140 shares of treasury stock.

Dividend Payout Ratio
2016/2

Consolidated dividend
payout ratio

2017/2

30.1%

30.1%

2018/2

30.1%

2019/230.0%

2020/241.1%

2020/82021/8—31.8%2022/842.9%

Stock Price and Volume
(JPY)

5,000

Stock price (Left scale)(Thousand shares)

Volume (Right scale)

250,000

4,000

200,000

3,000

150,000

2,000

100,000

1,000

50,0000
2012/2

2013/2

2014/2

2015/2

2016/2

2017/2

2018/2

2019/2

2020/2 2020/8

2021/82022/8

Note: The Company conducted a 10-for-1 share split of its common shares on September 1, 2019. The stock price and trading volume are calculated assumingthat the share split was conducted at the beginning of the fiscal year ended February 2011.

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Corporate Information (As of August 31, 2022)
Company Name
Address

Ryohin Keikaku Co., Ltd.
4-26-3 Higashi-Ikebukuro, Toshima-ku, Tokyo, 170-8424

Establishment
Capital
Number of Employees

June 1989 (registration: May 1979)
JPY 6,766,250,000
19,009 (including 9,834 temporary workers and others; Ryohin Keikaku Group)

For more information, please refer to the Ryohin Keikaku website.

WebsiteIR Information

Sustainability Information

https://ryohin-keikaku.jp/eng/

https://ryohin-keikaku.jp/eng/ir/

https://ryohin-keikaku.jp/eng/sustainability/

External Evaluations

In June 2021, Ryohin Keikaku was selected for the first time for inclusion as a constituent of the FTSE4Good IndexSeries and the FTSE Blossom Japan Index, which are leading ESG investment indexes.
The FTSE4Good Index Series comprises companies selected by FTSE Russell of the U.K. For inclusion in theindex, companies must demonstrate strong performance and meet various evaluation criteria in terms of ESG
practices. These criteria are made based on international standards including the United Nations Sustainable
Development Goals (SDGs). The FTSE Blossom Japan Index is a specialized ESG index focused on companies
listed in Japan.
These indices have become benchmarks for investors who place importance on corporate social responsibility
and sustainability. Japan’s Government Pension Investment Fund (GPIF), the world’s largest public pension fund,has also adopted the FTSE Blossom Japan Index as a benchmark for its ESG investment management.

Recognition from Society

Ryohin Keikaku Ranks First Overall in the Japan Sustainable Brands Index 2022
Ryohin Keikaku ranked second in 2020 and 2021 and reached number one overall for the first time in the Japan
Sustainable Brands Index 2022, a brand survey conducted by Sustainable Brands Japan in response to the SDGs.
The results were announced at the International Conference on Sustainable Brands 2023 Tokyo-Marunouchi event
organized by Hakuten Corporation. The aim of the survey is to review corporate sustainability efforts from a consumer
perspective and to examine how consumers’ perceptions of companies influence their consumption andrecommendation patterns.
Ryohin Keikaku will continue to contribute to the communities where it operates and remain useful to its customers.

Participation in International
Organizations

United Nations Global Compact
Since September 2013, Ryohin Keikaku has participated in the United Nations Global
Compact, a worldwide initiative by the international community to achieve sustainablegrowth. In accordance with the Global Compact’s ten principles in the areas of humanrights, labor, the environment and anti-corruption, we will continue to fulfill our corporate
purpose of “contributing to the creation of a truthful and sustainable life for all throughour products, services, stores and business activities; believing human society rich inheart, with balanced relationship between human, nature and artifacts.”

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