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Isetan Mitsukoshi Holdings Report 2024

* Issued on September 30, 2024

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Isetan Mitsukoshi Group
In order to realize our vision,
We will transform our business model from "Store business" to" Individual customer business".

Using urbanization as a means to accelerate these four transformations,
We aim to further evolve our Individual customer business business model.

Until now, our business model has been a mass-oriented business model centered on "Store," attracting customers to the "Store" and having them buy something to take home.
From now on, we will transform to Individual customer business, which aims to maximize wallet sharing and lifetime value by attracting and connecting with more customers from all over the world, deeply understanding these individual customers, and deepening the connection by being useful at various points of contact.

Message from the President and CEO

CEO Hosoya tells us about the revitalization of department stores and the transformation to "Individual customer business" that he aims to achieve beyond.

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A Conversation between the CFO and an Analyst

Overseas institutional investors were invited to the event to exchange views with CFO Makino about the progress of the strategy, future goals, and the way it ought to be about financial strategy and market dialogue.

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Business environment awareness

Mitsukoshi Isetan Group Surrounding Environment	[Increased opportunities to go out and increased consumer confidence] COVID-19 infection transitions to Category 5 infectious disease and inbound tourism increases [Personal consumption showing signs of recovery] The Bank of Japan lifts its negative interest rate policy → interest rates are raised Creating an environment for sustained price and wage increases, and wealth effects from rising stock prices [Real wages continue to decline] Rising energy costs and raw material prices due to global situations and fluctuations in exchange rates [Concerns over growing polarization of consumption] Uncertain future due to volatile stock prices and the yen's exchange rate has led some to be cautious about spending
Issues to be addressed	Rapid advances in digital technology Intensifying natural disasters due to climate change The impact of sudden exchange rate fluctuations and geopolitical risks on economic trends Increasing the world's population and the increase in the number of foreign visitors to Japan Increase in financial assets leads to an expansion of the wealthy

Mitsukoshi Isetan Group
Surrounding Environment

[Increased opportunities to go out and increased consumer confidence]
COVID-19 infection transitions to Category 5 infectious disease and inbound tourism increases
[Personal consumption showing signs of recovery]
The Bank of Japan lifts its negative interest rate policy → interest rates are raised
Creating an environment for sustained price and wage increases, and wealth effects from rising stock prices
[Real wages continue to decline]
Rising energy costs and raw material prices due to global situations and fluctuations in exchange rates
[Concerns over growing polarization of consumption]
Uncertain future due to volatile stock prices and the yen's exchange rate has led some to be cautious about spending

Issues to be addressed

Rapid advances in digital technology
Intensifying natural disasters due to climate change
The impact of sudden exchange rate fluctuations and geopolitical risks on economic trends
Increasing the world's population and the increase in the number of foreign visitors to Japan
Increase in financial assets leads to an expansion of the wealthy

Urban and global population continue to grow

Japan's population is approximately 124 million, peaked in 2008 and is expected to decline to 100 million in 30 years. Meanwhile, the population in urban areas is expanding, with Tokyo's population rising towards its peak in 2040. The world's population is said to be around 8 billion, and is steadily increasing towards 10 billion.

Number of foreign visitors to Japan expected to continue to increase

The number of foreign visitors to Japan peaked in July 2019 before the COVID-19 pandemic. It then plummeted due to the impact of COVID-19, but has continued to grow since border control measures were relaxed in October 2022, with the goal of reaching 60 million by 2030.

The number of wealthy households and their assets are on the rise in Japan

It is said that the number of wealthy people in Japan has expanded significantly in the past 10 years. The amount of assets has increased by about 30% in the past 10 years, and the number of households has increased by 20%. *Wealthy people = those with financial assets of 100 million yen or more

Sales at department stores nationwide fell to about half of what they were in 1991

Over the past 50 years or so, while the scale of overall domestic consumption has remained the same, various competitors (convenience stores, shopping centers, outlets, e-commerce, etc.) have entered the market. Department store sales, which were approximately 10 trillion yen in 1991, have fallen by about half to just over 5 trillion yen.

In this increasingly complex business environment, we will identify the risks and opportunities for the Isetan Mitsukoshi Group, respond to changes in society and the business environment, anticipate customer needs, and make innovative proposals.

Individual customer business business model

To realize the vision the group aspires to, it is inevitable that we will have to transform our existing business model and shift from mass to "individual." We have therefore decided to leverage our strengths and evolve into an "individual" business that is in line with the times.

Expand value provided to identified "individual customers"

We will identify the customers we attract at our department stores and, while making use of the "linear" connections we have built with each individual customer at our department stores, we will expand our relationships with each individual customer from a "linear" connection to a "surface" connection.
Going beyond the boundaries of a traditional department store, we aim to enrich all aspects of our customers' lives by providing diverse value from an individual customer perspective, including leveraging group resources.

Relationship between three key strategies and business processes for Individual customer business

In the Individual customer business, we aim to build lifelong relationships with customers by enriching their overall lives. We attract all customers who seek high-quality and high-sensitive consumption through the charm of the store, and once they are identified through MITSUKOSHI ISETAN App and MICARD, we analyze and understand the needs and insights of each individual customer.
Furthermore, with department stores at the core of our "intra-group coordination urbanization" strategy, we will propose and provide content that goes beyond traditional value provision, tailored to each individual customer, inspiring them and encouraging them to use the Isetan Mitsukoshi Group throughout their lives.

How to provide value on Individual customer business

We will also transform the way we work in order to meet the personal needs and insights of customers who are identified and connected to us from all over the world. We will focus on each individual customer and make proposals to enrich their lives through "human-driven experiences" and "digital means such as MITSUKOSHI ISETAN App." Furthermore, by providing diverse individual value through the combination of intra-group coordination activities of our consolidated subsidiaries, we will increase the profitability of each business and achieve our long-term vision.