Shiseido builds 'prestige first' central strategy, puts focus on 4 more brands

Shiseido Company's new three-year plan beginning this year will see the company implementing new strategies to accelerate growth and be among the top three companies in the global prestige cosmetics market, while maintaining its presence in Asia Pacific and Japan.

The three year-plan is the second phase of its six-year medium-to-long term strategy titled "VISION 2020" developed in 2014.

The first three years of VISION 2020 were dedicated to rebuilding the business foundation and thoroughly resolving structural issues of the business in Japan and overseas.

As a result, the company surpassed 1 trillion JPY in sales, a target originally set for 2020. Currently, Shiseido intends to proceed with digital acceleration, new business development and new value creation through innovation, while increasing active marketing investment. It will also prioritise and actively invest in its employees' development as Shiseido believes they are the source of new value creation and of the company's growth.

As part of the new plan, Shiseido will carry out further "selection and concentration" of its businesses while maintaining a "prestige first" central strategy. This will be done by accelerating the growth of its cosmetics and personal care brand business in Asia Pacific, committing a combined sum of 120 billion JPY in annual increments for marketing over the next three years.

Customers will be offered more brand experience opportunities through ways such as the optimisation of digital communication via social media, expansion of brand shops and upgrades in visual merchandising. Shiseido will also expand on its cross-border marketing, focusing mainly on the Chinese consumers before expanding worldwide.

As for Shiseido's travel retail business, it will expand its investments actively mainly in Asia Pacific.

It will be specifically focusing on marketing activities to address the unique needs of travellers and development of products exclusively available through travel retail channels. This is while increasing the number of counters at airports around the world and enhancing advertising and promotions. Shiseido expects sales to reach 74 billion JPY, an increase of 15% yoy on local currency basis.

In addition to focusing on its prestige brands such as SHISEIDO, NARS, Dolce&Gabbana and bareMinerals , the company also aims to promote four more brands currently marketed mainly in Japan - ELIXIR, ANESSA, SENKA, and INTEGRATE. These will be promoted in China and other Asian markets. In a bid to capture consumers' needs in various markets and enhance its brand power, Shiseido plans to expand on research and development (R&D), develop products that bring high added value, and collaborate with retailers. It expects sales to reach 64 billion JPY, a 9% year-on-year (yoy) increase on local currency basis.

In the e-commerce space, Shiseido will strengthen cooperation with major e-commerce websites worldwide, integrate in-store customer data at the shop front, and promote customer relationship management. It will also invest approximately 27 billion JPY over the next three years to seamlessly integrate business processes between the main and regional headquarters, as well as build an integrated IT platform and centralise the management of data.

The company also plans to increase the number of R&D personnel to 1,500 and aim for a 3% R&D investment-to-sales ratio by 2020. Talent is also crucial to the company and it plans to invest about 14 billion JPY total to open training facilities at all regional headquarters and enhance leadership training programs, among others. Lastly, to leverage the respective knowledge and experience acquired in each region for the benefit of each brand and global marketing, one of the initiatives Shiseido will undertake is establishing a “Technology Innovation Center” in Boston.

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