SHIFT 2025 and Beyond
Our Vision for 2030
Shiseido aims to “Be a Global Winner with Our Heritage,” and our vision for 2030 and beyond is to become a “Personal Beauty Wellness Company.”
Shiseido envisions “a sustainable world where everyone can enjoy lifetime of happiness through the power of beauty.” This is a society rich in diversity, where every individual is respected and everyone can play an active role—, and in order to realize this, we need a global environment in which people can enjoy beauty in a sustainable manner. To this end, Shiseido aims to become a company which integrates skin beauty and wellness for each individual consumer, and to become the most trusted beauty company by promoting sustainability activities.
In terms of consumer values, we expect to see a growing interest in health and personal beauty, and an increased awareness of “skin health,” which is closely related to these values. Therefore, Shiseido will focus on skincare and sun care backed by science, as well as new concepts including clean, natural, and derma beauty. At the same time, we will leverage our knowledge and R&D capabilities in skincare to expand the value of our makeup, fragrance, beauty devices, and other products while also pioneering areas such as inner beauty, ingestible, and wellness in order to deliver new value of health beauty.
In order to provide these values to each consumer as beauty experiences tailored to preferences of each customer, we will accelerate the building of digital platforms incorporating a variety of data and content, and data-driven business activities.
Background of Strategy Formulation
To achieve our vision, Shiseido has been promoting our medium-term strategy WIN 2023 since 2021. We have progressed brand selection and concentration in the skin beauty category, implemented structural reforms with a business scale of ¥200 billion, and turned around profitability of Americas and EMEA businesses, our long-standing concern. We also reinforced DX, innovation, production, and supply network.
However, the Japan business, which accounts for a large proportion of both sales and profits, struggled due to COVID-19. In addition to a significant delay in market recovery, a fundamental review of the business structure was necessary to revitalize the business. The China business was also significantly affected by the impact of economic slowdown due to the pandemic.
It is also important to respond to rapidly growing global risks, such as rising global inflation, increasing raw material costs, and geopolitical risks.
Against this backdrop, in 2023, Shiseido formulated its new medium-term strategy, “SHIFT 2025 and Beyond.”
Outline of Our Medium-Term Strategy
Based on the past achievements and challenges, under the theme of “SHIFT from Defense to Offense for New Growth,” we will aggressively make investments and drive sales growth, thereby re-targeting an operating profit margin of 15% by 2027, as set forth in WIN 2023.
We believe that 15% core operating profit margin is an essential profitability level to compete globally, and in order to achieve this level by 2027, we aim to achieve a core operating profit margin of 12% by 2025. In the three years through 2025, we will sharpen our globally recognized intangible assets of brands, innovation, and service, to further strengthen our unparalleled unique value. At the same time, we will establish a value-added management model which delivers a high gross margin business structure and premium pricing, by maintaining high quality and safety.
Our focused areas of investment is brands, innovations, and people; by investing aggressively in these areas, we aim to achieve continuous, stable growth and shift to a highly profitable structure.
In the Japan business, our most important market, we will invest aggressively in skin beauty category, and accelerate the establishment of loyal user base and cost structural reforms that we have undertaken to date, and aim to achieve core operating profit over 50 billion yen and to establish a sound business structure. In terms of SG&A ratio, our target is to achieve low 60% by 2025.
In the China business, in order to steadily win in the increasingly fierce competition, we need to build a foundation for sustainable growth through marketing reforms that emphasize quality over quantity, while expanding our brand portfolio and developing new business domains. In 2025, we aim to improve our core operating profit margin by five percentage points relative to 2022 through better brand mix, DX enhancement, office and store optimization, etc.
In the Asia Pacific business, which we see as a promising market for the future, we will establish a business foundation through strengthening our prestige brands, etc. In the Americas business, which is the world’s largest beauty market and we position as our next growth pillar, we will continue to strengthen NARS, SHISEIDO, and Drunk Elephant as our core brands, while promoting local innovation and establishing unique growth foundations. In the EMEA business, where profitability has improved through structural reforms, we will enhance our skincare portfolio and promote the fragrance business to contribute to profits. Additionally, we will capture consumer interest in sustainability and actively investing in Ulé and Gallinée, with the aim of developing them into global brands in the future. In the Travel Retail business, we will capture the recovery in the number of international travelers and strengthen our investment in Hainan Island and in prestige brands, to promote the unique value for travelers.
At the same time, we will work to develop new markets for the future, including inner beauty and ingestible.
Key strategies
Continuous DX Acceleration
We are continuing to accelerate DX to realize our digital vision of becoming the “Global No.1 Data-Driven Personal Skin Beauty & Wellness Company.” We aim at the e-commerce sales ratio of 40% and digital media ratio of 90%, as well as at the improvement of digital capabilities of our employees.
We will aim to expand our consumer data, maximize life-time value and promote personalization through CRM, and at the same time, in terms of innovation, we will provide skin diagnosis using AI, and beauty tech experience both online and offline. In terms of people, who will be the driver of such activities, in addition to the improvement of their digital literacy, we will have them establish and acquire special knowledge of digital data specific to the region, and support them with marketing and brand building using the latest technologies.
In terms of FOCUS, our business transformation project through building and implementing integrated core system, we have already implemented the system in the Americas, Asia, and China. By the first half of 2024, we plan to complete implementation in all regions and standardize data, processes, and systems globally. In the second phase of the project, we plan to implement FOCUS at all our factories and R&D bases by the end of 2025 and to improve process efficiency through data standardization.
In pursuing these initiatives, we are also reforming our organizational structure; we plan to build a Global One IT organization in 2024 and to enhance our in-house development capabilities.
To Be the Most Trusted Beauty Company
Shiseido aims to become the world’s most trusted beauty company, and focus on sustainability activities through “beauty”.
At present, regarding environmental initiatives, we are making steady progress in reducing CO₂ emissions and water use, and we will enhance our efforts for the achievement of the 2030 targets of Scopes 1, 2, and 3. Additionally, we aim to achieve 100% sustainable packaging by 2025.
An example that symbolizes such efforts is the expansion of refillable and replaceable packaging, an initiative unique to Japan. In the case of ELIXIR lotion where the efforts are progressing in particular, we have calculated that conversion to refillable / replaceable packaging will lead to an 85% reduction in plastic use and more than a 50% reduction in CO₂ emissions. In Japan, we have achieved great success with ELIXIR, where the use of “refill” packaging exceeds 50%, and we hope to expand this custom and culture worldwide.
In terms of diversity and inclusion (D&I), Shiseido will become the leading company, further evolve our own initiatives, and focus on the supporting activities of women’s advancement. As an internal initiative, we aim for a gender ratio of 50:50, a symbol of equal opportunity, at all levels of the organization by 2030. And at the D&I Lab, we aim to verify the process in which different values and ways of thinking generate new innovations by diverse people resources exercising their potential, to demonstrate the causal relationship to the corporate growth. The findings obtained in these researches will be disclosed not only within the Company but also outside the Company, in order to contribute to the promotion of the growth of the Japanese economy through achieving D&I.
