Amid the widespread changes in the global environment such as the growing frequency and severity of natural disasters due to global warming, together with the continuing rise in international tensions, it is becoming increasingly difficult to predict the future. Furthermore, with the prolonged effects of the COVID-19 pandemic, we have had to accept new rules and new ways of living.
Creating value for enriching people’s lives has been and will always be the mission of the Isetan Mitsukoshi Group. Viewing this time of great changes in customers’ lifestyles and values as an opportunity for our growth, we will transition to new business models that can truly meet customers’ needs.
Toward the realization of a prosperous future and sustainable society, the Group must respond sincerely through its business to environmental issues such as climate change and plastic waste and social issues such as human rights problems. Regarding climate change in particular, at the 26th UN Climate Change Conference of the Parties (COP26), it was agreed that the world would strive to limit the average global temperature rise to 1.5 degrees Celsius compared to pre-industrial levels. In 2021, the Group announced its endorsement of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and is increasingly aware that proactive initiatives are essential.
In 2021, we defined as our long-term vision “to be a ‘special’ department store-centered retail group that enriches the lives of its customers.” We will establish the “Isetan Mitsukoshi Urban Development” model over the long term in order to become a “special” presence that can gain the utmost support in “high sensitivity, fine quality” consumption, with the pride of Japan and the ability to convey this around the world. This means providing not only service contents centering on department stores but also the functions and infrastructure that make up each community. To achieve this, we will implement the following three key strategies set forth in the Medium-term Plan in order to build a system for continuously connecting with customers at all points of contact.
The first is the “High Sensitivity, Fine Quality” strategy. Even with the changes in the social environment or values, our customers’ desire to live the good life or a better life remains the same. When customers seek “high-sensitivity, fine-quality consumption,” we will serve each and every one of them faithfully and gain their admiration and trust. It may be thought that, by using the words “fine quality,” we are only concerned with wealthy customers, but that is certainly not the case.
The second is the “CRM Strategy Connecting with Individual Customers.” Through this strategy, we aim to connect with more customers at a deeper level. By realizing “individual marketing” through providing apps and digital IDs not only to customers who use the MICARD credit cards issued by the Group but also to those who use cash or ordinary credit cards, we are building a system through which we can provide services that meet the individual needs of each customer.
The third is the “Intra-Group Coordination” strategy. The Isetan Mitsukoshi Group includes a wide variety of companies that operate finance, IT systems, logistics, design and construction, staffing and other businesses. We are the only department store group that embraces such diverse companies. In order to provide value more deeply in society and our customers’ lives in the future, it will be very important to adopt a multi-faceted and integrated approach harnessing the Group’s collective strength.
The “‘special’ department store” described in our vision, which is mentioned earlier, connotes these three strategies. It means the number one, one-of-a-kind department store that can communicate to the world. Being number one means providing the best products and services with confidence. Being one of a kind means making our customers only satisfied with products and services available at Mitsukoshi or Isetan. By clearly grasping each customer’s needs through shift from mass to individual marketing and by promoting collaboration between the Group’s human resources of diverse skills and experience, we will impressively resolve customers’ worries and problems and make innovative proposals to address each of their concerns.
In our response to environmental and social issues, too, we will continue to take up challenges together with our business partners and stakeholders.
Throughout its history of about 350 years, our Group has pursued innovation, achieving a balance between social and economic value in every era.
Nurtured through our business over the centuries is the unchanging fundamental spirit represented by the words “the spirit of cordiality,” “coexistence and co-prosperity,” and “taking up new challenges,” which we have inherited and must pass on to future generations.
Through our fundamental spirit, we have linked the tangible and intangible value springing from the feelings of various people from manufacturers/producers to customers and the backgrounds of the communities where products were created. By enriching people’s sensibilities and minds, we have contributed to the transmission of culture and development of their lives. At the same time, we have pursued what the times demand and pioneered innovation for the next generation. This is also true of our current business activities and sustainability activities.
One example of this is the “think good” initiatives we are pursuing centering on department stores. With “think good” as our slogan, based on the Group Policy on Sustainability, we are promoting sustainability through our main business activities with the three pillars of (1) product lineups taking into account the global environment including ecosystems, the people involved, and society; (2) promoting the 4Rs (Refuse, Reduce, Reuse and Recycle); and (3) disseminating culture, technology, and sensibility.
In 2020, we launched the “i’m green” campaign to take up the challenge of resource recycling, in which we purchase products which customers no longer use based on the relationship of trust department stores have with them. In the Isetan Mitsukoshi Hometown Tax scheme, too, we apply our refined sensibility to discover outstanding local products and, leveraging our unique strengths such as coordination with local offices, customer bases and travel businesses within the Group, we aim to create economic value while contributing to regional vitalization.
We have set out the following three materialities (priority initiatives) to promote the Group’s sustainability.
(1) Connecting people and local communities
(2) Connecting a sustainable society and the times
(3) Improving the satisfaction of employees
The ideas and strategies in the Medium-term Plan announced in 2021 have now entered the implementation stage in close coordination with these initiatives. Based on the three materialities, all Group companies and stores are working together to contribute to the resolution of larger issues by putting the ideas and strategies into practice. We cannot achieve the targets of sustainability priority initiatives and Medium-term Plan unless they are steadily implemented by the whole Group. We consider it important that every employee thinks about how he/she should tackle them and puts them into practice in the course of his/her daily business.
In view of the above, human resource development is also an important issue that we are promoting. In particular, we convey to all our employees that we want them to possess a business mind.
To that end, we have been holding “dialogues between management and employees” since last year. Top management have already held roundtable discussions about 240 times with around 5,800 employees. I am also participating in this and have so far set aside time for 26 dialogues with 1,660 people. All of this comes from my conviction that only when people understand and fully grasp our Group’s aims will they be able to take up new challenges and create value in their everyday work. They should not be afraid to fail. I believe that if we foster a culture of challenge, our employees will be increasingly refined.
As president, I have also been making efforts to foster management human resources. Regarding the future training of executive officers, I present my approach to them and explain how the performance of all executive officers can be improved. At the same time, we hold small meetings like “cram school” classes and through the discussions I try to understand the essential nature of each individual. In addition to this training of executive officers, the diversity of the Board of Directors is also an important issue relating to the enhancement of corporate value. Like many other companies, we have until now only recruited female human resources from outside the company, but in 2022 we appointed a female director from within the company for the first time.
It is still necessary to further enhance training for management human resources, and we recognize that increasing the ratio of women in management positions is also an urgent task.
Finally, I believe that taking up the challenge of sustainability will itself nurture human resources and our businesses.
I think that striving to create value and bringing about innovation from a medium- and long-term perspective, as well as from the viewpoint not only of customers and the Group but also of local communities, business partners and all our other stakeholders, is in itself the promotion of sustainability. We expect every individual employee of the Group to achieve growth as CSV leaders who contribute to the realization of a sustainable society.
In May 2022, we brought together the chief officers of each department of the Group companies and held a meeting of the Sustainability Promotion Committee. We requested the participants to make efforts to ensure the penetration of awareness of the need to promote sustainability both inside and outside the company, and to do so in a way that was “enjoyable.” The aim of the sustainability initiatives of the Isetan Mitsukoshi Group is not only to fulfill our social responsibility but also to create new value that leads to the good life for everybody.
Looking into the future, with changes in work styles and life values as well as digitalization and the penetration of remote environments, we can expect an increase in choices regarding where to live such as moving to livable places in accordance with people’s individual values. As a result, it seems likely that concentration of population in a single city is reduced as each area is developed while maintaining links between cities and local economic areas, and that we will see a transformation to lifestyles that seek a new “spiritual richness.”
Urban development initiatives through area redevelopment will also be viewed from the perspective of providing social value that contributes to a prosperous future. In particular, in places like Shinjuku and Nihombashi, we envision this not merely as development of a department store business but also as development of the whole area, which leads to the enhancement of the value of the area and the profitability of the Group. For instance, we are considering projects that include development of offices, residences, hotels and other facilities not normally handled by department stores. Our image is a new kind of area where people can enjoy shopping, work and also stay the night. Since this is a very large concept viewed over a long time span, we were not able to talk about the details until now, but toward the future we began discussing it within the company in 2021.
In the future we envision, the presence of the Isetan Mitsukoshi Group will be one that returns to our origins. That means responding to each customer with sincerity, offering them new and fulfilling lifestyles, and resolving their problems. That is the raison d’etre and the mission of our Group. Our department stores will work together with the community to become its centripetal force, always striving to improve its attractiveness and convenience of movement by making full use of its unique characteristics. In the urban development of the future, it will be essential to take full account of the environment and create communities where diverse people gather. In this endeavor, there is surely a role we should play beyond the framework of the department store.
The Group’s offices are located both throughout Japan and overseas. If we can expand our connections with customers centering on department stores, and if Group companies operating finance and credit card, IT systems, design and construction and other businesses can provide people in the communities with a sense of affluence and comfort in their lives by working closely with local businesses and governments, these communities will be transformed into places where people and information gather. Going forward, while fully leveraging the reputations Mitsukoshi, Isetan, Iwataya, and Marui Imai have cultivated over the course of their long histories and through initiatives that link our offices with communities, we will contribute to the vitalization of city centers by disseminating their attractions and continue to create places that people can visit and enjoy.
I think our sustainability initiatives are still only at the start line. Initiatives concerning the environment and human rights are difficult challenges that need to be addressed across our entire supply chain and together with our stakeholders. Furthermore, the situation surrounding these social issues is changing every day.
The Isetan Mitsukoshi Group will make clear what we should offer to society as part of our business management through dialogue with our stakeholders and promote initiatives toward a sustainable future while enhancing their effectiveness.
In its Policy on Sustainability, the Isetan Mitsukoshi Group sets out its objective of contributing to the solution of various social issues through business activities and realizing a prosperous future for people and a sustainable society, in order to fulfill corporate social responsibility.
In 2018 we determined the three materialities (priority initiatives) of (1) connecting people and local communities, (2) connecting a sustainable society and the times, and (3) improving the satisfaction of employees, with Group Governance and Communication as their foundation. Also, aiming to connect these initiatives to corporate and social sustainable growth, we operate the Sustainability Promotion Committee and the Sustainability Promotion Section Meeting, promoting a proactive response toward the solution of more complex and interlinked environmental and social issues.
First I will report on the progress of each of these initiatives up to FY2021.
Through the priority initiative (1), “connecting people and local communities,” in addition to creating places where people can share their thoughts and feelings, we have been implementing initiatives aimed at realizing our customers’ fulfilling lifestyles, such as promotion of culture and traditions in cooperation with local governments and industries, projects rooted in local communities, and fostering of the next generation who will lead the future of the communities.
The Isetan Mitsukoshi Hometown Tax scheme launched in 2019 is one of these initiatives. Leveraging the Group’s strengths of merchandising capabilities and networks, this scheme promotes regional revitalization. While expanding new initiatives with local governments, we achieved about a 230% increase in the volume of goods and services handled in FY2021 compared to the previous year. In addition, Group companies are utilizing their respective strengths to promote initiatives for the sustainable vitalization of communities and a prosperous future. For example, One Day Work, a company that provides a Web-based service that matches workers and employers, is implementing a new initiative in the Tohoku region which is struggling with the issue of a declining workforce.
Through the priority initiative (2), “connecting a sustainable society and the times,” we are promoting initiatives for the provision of safe and secure products and services. We also try to reduce environmental impacts such as decarbonization and resource conservation.
As part of these initiatives, in FY2018 we drew up the Isetan Mitsukoshi Group Medium-term Environmental Targets for 2030, which set a target of a 50% reduction of the Group’s CO2 emissions from FY2013 level by FY2030 (Scope 1 and 2). In FY2019, we set the Isetan Mitsukoshi Group Long-term Environmental Targets for 2050.
The Group’s CO2 emissions in FY2021 were 42.9% lower than in FY2013. As a result of the large energy consumption reduction in FY2020 due to closures, etc. in response to the declaration of a state of emergency concerning COVID-19, CO2 emissions increased year-on-year. However, we are promoting further reductions through energy saving initiatives such as a pilot test of an AI smart air conditioning system at the Isetan Shinjuku Main Store with the aim of reducing energy consumption for air conditioning by 50%.
Furthermore, we conducted a climate change scenario analysis and appropriate information disclosure based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and are striving to respond proactively to climate change, including the above-mentioned initiatives.
In addition, regarding themes such as biodiversity and water resources, there is growing social interest in the role companies ought to play and their information disclosure. Paying close attention to these trends, our Group is considering the matters we should address toward the realization of a sustainable society.
In order to respond to increasingly diverse and complex environmental and social issues and to ensure stable and responsible procurement, the Group has declared in its procurement policy a commitment to realizing an ethical supply chain that takes into account the environment, society, and human rights, as well as ensuring stable quality and supply. In 2021, we conducted a questionnaire survey of our main business partners on sustainable procurement and received responses from about 300 companies. In FY2022, based on the responses to this questionnaire survey, we will identify the issues of the whole supply chain, engage in dialogue to find solutions, and implement a PDCA cycle for sustainable procurement in cooperation with our business partners.
Through the priority initiative (3), “improving the satisfaction of employees,” we are promoting the creation of a work environment where all of our employees, who are the greatest asset of the Group, can demonstrate their diverse abilities, feel motivation and value in their work, and feel that they are contributing to society.
In our promotion of diversity and inclusion, we are conducting initiatives to promote the active participation of women, the active participation of the disabled, and respect for LGBTQ+ people. In FY2021, the ratio of women in management positions was 31.0%, and we are further promoting the appointment and reassignment of women to expand opportunities for them to play an active role toward achieving our target of 33.0% in FY2024. Regarding our target for FY2024 of a 3.0% employment ratio of people with disabilities, we have been proceeding according to plan with a ratio of 2.83% in FY2021. Aiming to realize an organization where everyone can be active, we are not only enhancing our systems that support diverse workstyles but also promoting various initiatives including the transformation of employees’ awareness.
In FY2021, among 23 Group companies surveyed, 39.1% achieved total actual annual working hours per employee at the 1,700 hours level, which is a KPI for realizing life-work balance. In order to increase this proportion to 80.0% by FY2024, we are promoting the improvement of productivity through business reforms, dialogue with superiors toward the development of an open work environment, and utilization of the Group’s scheme to ensure sufficient vacation time.
In addition to these initiatives, we place importance on everyday communication in all kinds of work relationships in order to improve employees’ engagement. In FY2022 we are holding company-wide dialogue meetings in which employees exchange opinions on the theme of our corporate philosophy. Building a corporate culture in which employees think for themselves, exchange opinions freely and respect each other’s values will lead to the sustainable growth of the company as a whole.
By further enhancing the effectiveness of governance and transparency of management and implementing thorough compliance, we are aiming to be a corporate group that is trusted by all our stakeholders. As part of these efforts, we transitioned to a company with a nominating committee, etc. in June 2020 and are striving to accelerate management decision-making, strengthen supervisory functions, and expand and improve internal control systems. Two years have passed since this transition, and the quality of discussions between the Board of Executive Officers and Board of Directors has improved and in-depth discussions are being held regarding the compliance and risk management systems.
Through continuous dialogue with our stakeholders, we will build broad relationships of trust. As an opportunity for new dialogue, we held our first sustainability briefing for investors, analysts and the media in December 2021, and in FY2022 we held a business strategy briefing with the aim of further improving understanding of the Group’s strategy. By enhancing information disclosure regarding management strategy and its progress, we will strengthen engagement with our stakeholders.
We understand that the severity of environmental and social issues poses great risks for companies. We also recognize that it will not be easy to achieve the target of net zero emissions of greenhouse gases by 2050 and that it is necessary to respond swiftly to human rights issues. Now that not only short-term profits but also long-term value creation is required, we want to think about how we should contribute to society in order to solve various social issues and conduct ongoing dialogue with our stakeholders. By constantly responding to environmental and social issues through our main business, we aim to optimize the value we provide toward the good life and enhance our own corporate value.