‘From defence to offence’: Shiseido will make ‘proactive investments’ for revenue growth from 2023 – CEO
Speaking during the firm’s 2022 annual earnings conference, chairman and CEO, Masahiko Uotani said: “From 2023, we will shift from defence to offence, making proactive investment for top line growth. We will make strategic investments in three focus areas which are brands, innovations, and people.”
Shiseido is the maker of several global heavyweights, including Shiseido, Clé de Peau Beauté, NARS, and Drunk Elephant, as well as regional favourites such as Anessa and Elixir.
The company will continue to expand these brands while fostering new ones.
In recent years, the company has developed new brands to meet the diverse needs of consumers. This included brands such as sustainable beauty brand Baum and Ulé, which was developed by its team in Europe.
“The era of mega brands is said to be over. Consumers are diversifying and we are also seeing localisation. Paying attention to such aspects, we have Baum from Japan, a sustainability-orientated brand, and Ulé from Europe that was developed locally,” said Uotani.
He also highlighted opportunities in the men’s beauty and personal care market. The company relaunched its Shiseido Men’s line-up in 2021 and debuted Sidekick, a skin care brand for Gen Zs last year.
“We will target the men's market in a multifaceted approach in anticipation of a huge potential growth and develop men's skin care and makeup markets.”
Uotani said the company would invest an additional USD755m to marketing over the next three years to help drive the growth of its brands.
“To enhance equity of these brands and achieve organic growth, we will make additional marketing investment exceeding 100 billion yen cumulatively over the next three years.”
He added that the firm was open to acquiring new brands.
“In areas where we cannot fill with our own development or when we need speed, we will explore M&A opportunities selectively like what we had done with Gallinée last year based on the conditions that they fit with our strategy and return on investment can be expected.”
Shiseido also announced this week that it would be launching NARS Cosmetics in India to accelerate its growth in Asia.
Innovation, productivity and people
Uotani said the company would continuously invest 3% of annual sales – roughly JPY30bn (USD226m) a year – into R&D investments.
“To fully leverage our development capabilities in the world, basic research is enhanced at Global Innovation Centre of Japan headquarters, and at the same time development centres of each regional headquarter will be expanded to further strengthen the R&D global network.”
Furthermore, the company will enhance its production facilities.
According to the firm, the application of smart technology such as the Internet of Things (IoT) at Shiseido’s new state-of-the-art Fukuoka Kurume factory had improved productivity of its production lines by 300%.
Moving forward, Shiseido will roll the same technology to its other factories, said Uotani.
Lastly, the company would continue to actively invest in talent development.
“We will fully pursue people-first management philosophy globally and further strengthen our efforts for global competitive advantage,” said Uotani.
In line with this, the company is set to unveil the Shiseido Future University in Ginza, Tokyo, to develop future leaders.
Uotani will serve as the university’s first president when it opens its doors this autumn.