Shiseido
Japan
www.shiseido.co.jp
Beauty sales: $5.9 billion
Key Personnel:
Shinzo Maeda, representative director, president and CEO; Seiji Nishimori, representative director, vice president; Toshimitsu Kobayashi, director, corporate senior executive officer; Yasuhiko Harada, director, corporate executive officer; Kimie Iwata, director, corporate executive officer; Masaaki Komatsu, director, corporate executive officer; Kiyoshi Kawasaki, director, corporate officer; Shoichiro Iwata, external director; Tatsuo Uemura, external director; Carsten Fischer, chief officer international business division; Toshihide Ikeda, technical planning; Tamio Inaba, business strategy and marketing, domestic cosmetics business; Kiyoshi Nakamura, technical affairs; Kazutoshi Satake, domestic non-Shiseido brand business and boutique business; Tatsuomi Takimori, chief officer of China business division.
Products/Brands:
Cosmetics, skin care, sun care, fragrances, hair care and toiletries sold under the Shiseido, brands, Cle de Peau, Benefiance, Benefique, Maquillage and Uno and non-Shiseido brands such as Jean Paul Gaultier, Tsubaki, d’Ici La & Co., Issey Miyake and IPSA.
New Products:
Elixir Superieur, a new skin care line; Integrate, a new makeup line; White Lucency, a luxury skin care line; Benefiance Full-Correction Lip Treatment; Shiseido Body Creator Aromatic Energizing Spray; Sun Protection Eye Cream; Daily Bronze Moisturizing Emulsion; Shiseido Men.
Comments:
Shiseido, which began in 1872, is in the midst of a three-year plan (April 2005 to March 2008) aimed at maximizing growth potential and improving annual profitability by at least 8%. The plan focuses on three key strategies: reforming domestic marketing activities, accelerating business expansion in China and fundamental restructuring. According to Shinzo Maeda, president and CEO, the company “increased both sales and earnings by aggressively investing management resources and promoting fundamental restructuring.”
In the fiscal year ended March 2007, the second year of the three-year plan, both consolidated net sales and operating income reached record levels. Net sales were up 3.5%. Overseas sales rose 14% year-on-year; the overseas sales ratio was 32% for the full year, exceeding 30% for the first time ever. Sales in China—which is behind this growth—have nearly doubled over the two-year period from April 2004 to March 2006. Shiseido’s domestic cosmetics business accounted for 64.4% of total net sales.
Shiseido sold Zirh brand back to the original owner.
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China remains Shiseido’s key market, with continued focus on customer service at sales counters, a key point. This includes enhanced training for local beauty consultants, customer satisfaction questionnaires and a consumer information center in China to improve service and capture customer feedback. Major expenditures were made to increase sales and marketing and to enhance sales counters for the company’s exclusive China brand, Aupres, and Shiseido’s global lines, leading to significant increases in both brands. The company focused on brand strategy and promoted a “mega line” strategy aimed at achieving No. 1 positions in each category. Maquillage, Uno, Aqua Label and Tsubaki all acquired top market share in their respective categories. Sales of core lines also showed steady growth. At the same time, individually owned cosmetics specialty stores handling Shiseido products grew to 1,700 locations.
As far as fundamental restructuring, the company reformed cost structure to improve profitability. In particular, in the toiletries business, management resources were concentrated and expenses were deployed in the three cleansing areas: shampoo/conditioners, body soap and facial cleansers. In addition, domestic production was reorganized into four factories and brands and lines that contributed little to earnings, such as feminine sanitary products, were withdrawn.
For the final year of the three-year plan, the fiscal year ending in March 2008, Shiseido has set an operating profitability target of 8%. In the first year of the plan, company execs say they exceeded plans for both net sales and income from operations set at the beginning of the year, and achieved profitability of 5.8%, exceeding their original target of 4.9%. In the coming year, Shiseido also has plans to aggressively go after promising growth markets such as health and beauty care and e-commerce.
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