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Feb. 21, 2017 – Feb. 20, 2018
2018 Integrated Report
Enriching homes around the world
NITORI Holdings Co., Ltd.Sapporo Head Office1-2-39, Shinkotoni 7-jo, Kita-ku, Sapporo, Hokkaido 001-0907
Tokyo Headquarters3-6-20, Kamiya, Kita-ku, Tokyo 115-0043
Osaka Headquarters1-1, Kamisu-cho, Toyonaka, Osaka 561-0823
www.nitorihd.co.jp/en/
Feb. 21, 2017 – Feb. 20, 2018
2018 Integrated Report
Enriching homes around the world
NITORI Holdings Co., Ltd.Sapporo Head Office1-2-39, Shinkotoni 7-jo, Kita-ku, Sapporo, Hokkaido 001-0907
Tokyo Headquarters3-6-20, Kamiya, Kita-ku, Tokyo 115-0043
Osaka Headquarters1-1, Kamisu-cho, Toyonaka, Osaka 561-0823
www.nitorihd.co.jp/en/
NITO
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Since our founding in 1967, NITORI has continued to grow while sharing our mission to enrich homes around the world with each and every employee so that it may serve as a foundation for our business activities. We have also set a goal to establish 3,000 stores and reach ¥3 trillion in sales by 2032 as our long-term vision for achieving our mission statement. As our unique business model of one-stop manufacturing, distribution, and retail sales evolves in the field of furniture and home décor and we contribute to the enrichment of people’s homes, we are expanding our endeavors across the globe.
Achieving Our Mission Statement on the World Stage
Mission Statement
To provide the foundation of prosperous home living to the global community.
Vision 2032
Net Sales trillion
Total Stores
¥3
3,000
Vision 2022
Net Sales trillion
Total Stores
¥1
1,000
Mission Statement & Vision
02 03
Contents02
04
Mission Statement & Vision
Contents & Editing Policy
PART 10506
08
10
14
18
Our Value Creation Journey
Value Creation Model
Message from the Chairman
Message from the President
Financial and Non-Financial Highlights
Strengths and Growth Strategy
PART 21920
22
24
26
28
30
32
Sales–Domestic
Sales–Overseas
Sales–O2O Project
Product Planning/Development
Manufacturing
Trade/Logistics
Expanding Business
Ever Evolving NITORI
PART 333
34
37
38
40
41
42
44
Human Resources Foundation
Developing human resources that contribute to society
Creating a comfortable workplace
Product Provision Infrastructure
Pursuit of product safety measures and quality enhancements that advance in step with the world
Balancing economic value and environmental value
Fair and honest partnerships
Working with the Community
Hand-in-hand with its customers
Management Structure
Corporate governance
Foundation for Creating Value
48 Company Stock Information/Company Information
PART 1Strengths and Growth Strategy NITORI’s greatest strength is our reverse approach to manufacturing and distribution that thinks from the perspective of the user and buyer. We leverage this strength to create value by offering the unexpected. In addition, the evolution of our unique business model that integrates manufacturing, distribution, and retail sales, is the source of NITORI’s growth rendering our immense vision.
Editing Policy
We have issued the 2018 Integrated Report to report on our activities that work toward achieving our mission to enrich homes around the world and to promote communication with society. In this report, we discuss our strategies and initiatives based on our long-term vision along with NITORI’s strength in our business model of manufacturing, distribution, and retail sales and messages from our upper management. In addition, we also report the progress of each priority project and the efforts to strengthen the operating foundations that support each project.
February 21st to February 20th of the following year
Fiscal year
We set as many domestic and foreign NITORI Group companies subject to consolidated financial statements as possible as the target of our reporting. However, depending on the item, the reporting target may differ.
Target scope
February 21, 2017 to February 20, 2018 In this report, the fiscal year ending February 20, 2018 is referred to as fiscal 2017 or FY2017.The Activity Report also includes some recent content.
Target period
This report is an aggregation of important information to help our stakeholders better understand the NITORI Group. Please see our company website for more detailed information.
The significance of this report
This report contains future plans, strategies and forecasts, and forward-looking statements regarding the business performance of NITORI Holdings and affiliated companies. These statements are not historical facts. These forward-looking statements are based on the current assumptions and beliefs of NITORI Holdings in light of currently available information. In addition, these statements contain risks and uncertainties related to economic trends, personal consumption, market demand and supply, taxation systems, and other systems. Therefore, please note that the actual business performance of NITORI Holdings and our group companies may differ from our forecasts.
Disclaimer Regarding Forward-Looking Statements
WEB
Company InformationCorporate governance,
internal controls, compliance, etc.
CSR InformationSocial and environmental initiatives, and employee engagement activities
IR InformationStrategies,financial results
information, etc.
Integrated Report
Booklet
WEB WEB
04 05
458.1
512.9
10.3 11.74.3 13.2 15.9 17.5 17.7 19.3 23.5 25.6 30.8 34.8 40.4 48.963.2
78.788.2
108.7129.4
156.7
189.1
217.2
244.0
286.1
314.2331.0
348.7
387.6
417.2
0.50.1 0.8 0.9 1.0 1.2 1.3 1.5 1.7 1.8 1.9 2.0 2.1 3.5 3.87.1
572.0 billion yen
94.8 billion yen
2010 16 18 18 21 21 24 27 29 33 37 42 5073 73 82
100116
130145
162188
217244
268
300331
373
420
1988 1989 19901982 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
471
523 stores
100 stores in 36 years
100 more stores in 6 years
100 more stores in 3 years
100 more stores in 3 years
100 more stores in 2 years
8.913.0
15.219.0
23.126.5
33.9
47.4
53.5
59.162.1 63.4
67.9
70.5
87.5
In 2008, when oil prices skyrocketed, the cost of raw materials also rose causing many companies to raise the prices of their products, but that is when NITORI made its Price Cut Declaration. The initiative was born from our desire to give back to customers precisely because the economy was experiencing a recession. A total of more than 5,000 items were cut in price by 20% on average until 2012, garnering great support from our customers.
It was once standard for a feather comforter to cost more than ¥100,000. By reevaluating raw materials, NITORI was able to cut the price to under ¥10,000 while still maintaining quality. In addition, by creating an all-season product further differentiating it by function, we triggered a reduction in feather comforter market prices. In the same way, we have contributed to lower prices for furniture, such as sofas and beds, as well as randsels (school bags).
Discovering customers’ wishes and offering enriched lifestyles tailored to the times
Our Value Creation Journey
Offering the Unexpected
Coordination
Affordability Quality andFunctionality
Providing enriched lifestyles to the people of the world by challenging accepted standards and thinking from the customers’ perspective
Value offered throughout the times
Our original goal was to bring America’s enriched lifestyles to Japan.
Achieving lower prices for expensive items with product development from the customer’s perspective.
Implementing price cuts even during recessions with affordability that has value.
Offering the value of coordination according to a variety of lifestyles.
NITORI was conceived with and maintains the desire to bring the enriched lifestyles of the U.S. to Japan. For 50 years, NITORI has created value in enriched living by offering low-priced, coordinated products that excel in both quality and functionality and meet the needs of the times and the customers of each particular country and region.
The observation tour of America in 1972 had a major influence on NITORI. There were chain stores offering luxuries for everyday life to the general populace at prices half to one-third of those in Japan, and the customer-oriented products were in lineups unified in quality, color, and style. The inspiration and determination acquired on that trip is where today’s NITORI began.
NITORI’s coordination history began with color combinations, and recently we are putting more effort into products incorporating trends. We will continue to strengthen development of coordinated products so that everyone can easily enjoy coordinating their homes achieving an enriched and comfortable lifestyle. We will also continue to aim to create product lines that harmonize naturally regardless of which products are selected.
Establishment of a new manufacturing-distribution-retail sales business model
Domestic nationwide development/Overseas expansion
Globalization and expansion of business areas
Net sales (billions of yen)
Ordinary income (billions of yen)
Number of storesNote: Numeric figures are from the financial statement announcement
Growth from FY1987 – FY2017
(Fiscal year ending in February)
Achieved growth for 31 consecutive years
2004 Entered the E-commerce market (NITORI-net)2007 Opened the first overseas store in Taiwan2008 Price Cut Declaration2011 Began the DECOHOME business/Achieved the goal of opening stores in prefecture nationwide2013 Opened the first store in the U.S.2014 Opened the first store in China2015 Opened the Printemps Ginza Store as the first store inside a department store2017 Opened the new Ba Ria-Vung Tau factory in Vietnam
1967 NITORI Furniture Store established1979 Announced new Home Furnishings business 1980 Implemented the first automated multi-level warehouse in the Japanese distribution industry1986 Direct import of overseas products started1987 Proposed the O.T.C.M. (One-house Total Coordination Merchandising) System1993 Opened the first store in Honshu in Ibaraki Prefecture 1994 Began operating an overseas factory
Number of stores increased 33-fold 16 523
Net sales increased 56-fold¥10.3B ¥572.0B
Ordinary income increased 190-fold¥0.5B ¥94.8B
Ratio of ordinany income to net sales increased 11.4%5.2% 16.6%
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The manufacturing-distribution-retail sales business model providing value that offers the unexpected
Value Creation Model
Utilizing our strong talent base and network of global partner companies, within the Group, we have built every function required for a manufacturing-distribution-retail sales business. In order to continue providing value that offers the unexpected, we will remain committed to evolving our customer-oriented business model.
Foundation for creating value
Management structure
Human resources foundationP34P34 P38P38
P44P44
Product Planning
1Product
Development
2
Sales
6Trade/
Logistics
5
Raw Material Procurement
3
Manufacturing
4
Building a production system with our own factories and collaborating companies
NITORI provides direction and control to cooperating factories for all manufacturing processes from product manufacturing through production. In addition, we have our own factories where we are enhancing our manufacturing functions. This production system is the cornerstone of NITORI’s unique ability to develop products with quality and functionality.
Building one of the largest domestic trade and distribution networks
From the import of products to their delivery to customers, we have built our own distribution network. We conduct all trade operations as well rather than outsourcing them to a trading company. In addition, by implementing the latest logistics system we have achieved further reduction of distribution costs.
Sourcing that expands across the globe
In order to achieve low prices and adequate quality, we promote vertical merchandising that extends all the way back to our raw materials. We actually visit the sites ourselves to gather information on production localities and conduct negotiations and contract with suppliers directly.
Proposing total coordination toenrich lifestyles
So that our customers can easily enjoy total coordination in line with their preferences, we develop products with unified colors, designs, and styles from scratch. We are providing society with guidance for a new lifestyle that coordinates naturally.
Product planning that creates customer satisfaction
We investigate and analyze products from the perspective of those using and purchasing them. Our Merchandising Department staff members travel to each region to study trends in addition to conducting thorough market research. Our pursuit of comfortable lifestyles for our customers leads to the development of original products.
Diverse sales channels to meet the needs of all customers
We have developed a diverse array of sales channels, including physical stores and NITORI-net, according to location conditions and regional characteristics. We aim to satisfy all customers who shop at NITORI through repeated investigation, experimentation, improvement, and reforms.
Corporate governance
Developing human resources that contribute to societyCreating a comfortable workplace
Product provision infrastructurePursuit of product safety measures and quality enhancements that advance in step with the worldBalancing economic value and environmental value Fair and honest partnerships
Offering the Unexpected
Coordination
Affordability Quality andFunctionality
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Grand aspiration discovered in America that became the source of 30 years of continuous growth
Instilling an innovative business model that challenges industry standards and established concepts
Turning our aspirations into reality with our long-term plans
The fiscal year ending in February 2018 marked 31 years of uninterrupted revenue and profit growth for NITORI. This would not have been possible without our customers purchasing our products, the shareholders, investors, and financial institutions who provide financial support, the many people who have cooperated with us in opening our stores, and of course the Group employees and stakeholders who work so hard every day to achieve our corporate mission statement and vision. I wish to express my heartfelt appreciation to all of you. We began as a roughly 100 m2 furniture store in Sapporo in 1967, but a tour of the U.S. furniture industry in 1972 was what set us on our path to major growth. Visiting major furniture stores on the West Coast, I saw furniture exceptional in both function and quality at half to one-third of the cost of furniture sold in Japan. I was 27 years old at the time and seeing the luxuriousness of life in the States and the disparity between Japan was such a huge shock for me, it changed my entire outlook on life. I became determined to make Japanese homes as luxurious as those in the U.S. by providing quality products at low prices to as many
people as possible. This eventually developed into our company mission statement of “enriching homes around the world.”
Since that time, NITORI has continued to strive toward achieving this mission statement. Doing so has been a series of challenges to the standards in the furniture industry at the time, as well as Japan’s complex distribution structure. We continue to pursue all possibilities that will allow us to offer quality products at lower prices no matter how many walls we come up against, including direct purchase from manufacturers, importing from overseas, and local overseas production. As a result of these efforts, we have established our own unique SPA business model; a one-stop manufacturing, distribution, and retail sales business where we accomplish everything ourselves from product design and material procurement to production, distribution, and sales. We are developing and offering a wide array of products with superior functionality and quality while keeping costs down contributing to the achievement of enriched lifestyles by building an overseas production system, where manufacturing costs are lower, and an efficient distribution network. For example, in the past a feather comforter was a luxury item that cost more than ¥100,000. However, at NITORI, by thoroughly cutting costs using our own manufacturing and distribution process, we were able to develop lower cost products reducing the price by 50–90%, some priced even less than ¥10,000. We successfully turned feather comforters into an everyday item. With the cooperation of materials and well-established bag manufacturers we are able to offer high-quality leather bags for schoolchildren with a 6-year warranty at unprecedented reasonable prices, bringing progressive reform to the leather schoolbag market. We are also developing one innovative product after the next to resolve the frustrations customers find in daily life, such as our N Cool series using materials that are cool to the touch and our all-season feather comforter that uses our proprietary two-layer construction. NITORI’s strength in offering coordination guidance along with price, function, and quality is a feature born from the unique SPA model we have built. Conventionally, furniture and interior décor have not been much of a priority in Japan, but from an early stage we have poured our efforts into providing completely coordinated interior décor installing lifestyle scenes and model rooms in our stores and displaying products with unified styles to meet the needs of a wide variety of customers. Our commitment to price, quality and function, and coordinated home décor is the cornerstone of how we create value in offering the unexpected.
As we pursue our business model, we have also a set up a grand vision to accomplish the aspirations set forth in our mission statement. That was the first 30-year plan aiming to open 100 stores and achieve ¥100 billion in sales by 2002, 30 years from when I made the decision to open a chain of stores in 1972. At the time the plan was formulated in 1979, the company had just 7 stores and only ¥2.9 billion in sales, so there
Continuing to provide enriched lifestyles to even more peopleAkio NitoriRepresentative Director & Chairperson
(Chief Executive Officer)NITORI Holdings Co., Ltd.
Message from the Chairman
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A wealth of elites is our strength as we pursue innovation in business
were many who doubted our ability to achieve such a goal. However, it was imperative that we develop into a large-scale chain if we were to provide as many people as possible with an enriched lifestyle. In order to do so, we set major goals for each 10-year period within the 30-year plan. The first 10 years were focused on store-building, the next 10 years on people-building, and the final 10 years on product and structure-building. As a result, we were able to achieve our goal of 100 stores and ¥100 billion in sales in 2003, only one year later than our initial goal. Currently at NITORI, we are promoting our second 30-year plan aiming for 3,000 stores and ¥3 trillion in sales by 2032. As a key point along the way, we are aiming for 1,000 stores and ¥1 trillion in sales by 2022. In order to achieve this even more tremendous vision, it goes without saying that expanding overseas is essential. As of February 28, 2018, we have 27 stores in Taiwan, 24 stores in China, and 5 stores in the U.S. In particular, we plan to focus on strengthening the Chinese market, which has a population of 1.4 billion people, as our greatest driver of growth. In China, as the average income rises, people are spending more money on furniture and interior décor. We are using our unique SPA business model to provide products that offer the unexpected to the Chinese market as well.
The biggest driving force behind achieving our vision is our human resources. From early on at NITORI, we began prioritizing training our employees. The greatest feature of NITORI’s training system is our transfer system, which we set up from a long-term perspective. Changing workplaces every two to three years gives our employees a broad range of experience, knowledge, and skills and helps them acquire a multifaceted perspective and way of thinking. NITORI’s training is based on having employees in their 20’s learn the physical aspects of the job. Then in their 30’s they explore and experiment, challenging accepted standards. In their 40’s employees are trained to become specialists who can transform and evolve the business from a managerial perspective as well as achieve numerical targets. In addition to this, we have established various opportunities for growth for motivated employees, such as training in the U.S. for younger employees and a system we call, "NITORI University" where employees can systematically acquire business knowledge and skills. We will continue to focus on nurturing excellent employees in our comprehensive NITORI style of education and accelerating the growth of our business with an organization that boasts a wealth of elite employees. An important theme for our future as we globalize our business, will be to hire and educate outstanding talent in each region and proactively assign them to meaningful roles. Approximately 70% of NITORI customers are women. Taking this into consideration, NITORI has made efforts from an early stage to create a workplace that women find easy to work at. Female employees are already taking on major roles in product development and store layout, but we want to further expand opportunities for women to take on important positions. At NITORI, we aim to create an organization where employees can fully utilize their abilities and experiences regardless of nationality or gender. As we continue to seek transformation and evolution in business without getting caught up in past successes or settling for accepted standards, we will strive to achieve our vision and make our mission statement a reality. I wish to thank all of our stakeholders for their continued support in our endeavors.
Basic policy for employee training
20’s
Age Skills and theme Achievement level
30’s (improvement generation)
40’s
50’s
Master tasks, learn the theory behind them
1 Completely capable of handling the task on one’s own
2 Can make a proposal to be implemented
1 Can create (can create a framework)
2 Can take responsibility for changes in numerical values
1 Can make decisions now about circumstances 5–10 years in the future
2 Can think in terms of companywide effects
Tackle issues (repeated investigation and experimentation)
Able to achieve positive change evident in numerical data
Can formulate measures for the future
Operation
Control
Manage
1 Can translate this to work tasks
2 Can make changes evident in numerical data
1 Can assign tasks
2 Can educate
Management
Administration
First 30-year plan
1973-1982
1983-1992
1993-2002
Store-building
People-building
Product and structure-building
Stores
2 10Sales
¥ 160M ¥ 5.4B
Stores
10 21Sales
¥ 5.4B ¥17.7B
Stores
21 82Sales
¥ 17.7B ¥88.2B
Message from the Chairman
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Ordinary incomeNet sales
Net sales/Ordinary income
387.6 63.4417.2 67.9
458.1 75.0512.9 87.5
572.0 94.8
0 0
20
40
60
80
100600
400
200
2013 2014 2015 2016 2017 (FY)
(Billions of yen)(Billions of yen)
Further, to respond appropriately to the recent growth of e-commerce (EC), and changes in customers’ purchasing behavior, we launched the O2O Project and developed a new service that transcends the barriers between stores and EC, and are aggressively introducing digital marketing. We are actively introducing advanced services with a focus on urban stores with a shared EC and customer demographic. In addition, we are focusing on digitizing member cards and optimizing online and offline advertising.
In December 2017, the NITORI Group celebrated its 50th anniversary. Based on its mission statement of “providing the foundation of prosperous home living to the global community,” the Company has challenged new business horizons unbound by customary industry practices or past successes and has achieved sustainable growth. To constantly evolve and grow as we move forward, we will pursue further corporate restructuring by exhibiting our inherited corporate culture of refusing to accept the status quo. To speed up this restructuring, NITORI holds a Medium- to Long-term Meeting where executives from each department discuss the Companywide business strategy once a month, and a Future Meeting where young employees are selected to discuss the desired future image of the Company. Through these activities, we proactively seek out the opinions and ideas of our employees and further reinforce our culture of refusing to accept the status quo, whereby each employee, unsatisfied with the
way things are, pursues restructuring from a medium- to long-term perspective. In order for NITORI to achieve sustainable growth as a truly global company, it is of course essential that we manage from an ESG perspective. NITORI has always sought to strike a balance between economic and environmental value throughout the entire supply chain including product development, production, distribution, and stores. In addition, we have set up an organization independent of production development and strive to ensure product safety through strict safety checks from the planning and development stage. Furthermore, we should be a company that walks hand-in-hand with the people of the countries and regions where we do business. Not only do we contribute through our business, we actively support cultural, educational, social welfare, and community development activities. We also share the NITORI Group Fair Trade Declaration with our suppliers around the world and are building cooperative relationships with them as equal partners. In the area of governance, we have focused on ensuring the soundness and transparency of management by listening to the opinions and comments of outside directors at Board of Directors’ meetings and other venues. The NITORI Group will continue to steadily implement its growth strategy to achieve the medium- to long-term vision and further strengthen its efforts from an ESG perspective. We will widely contribute to society by providing “the foundation of prosperous home living” to more customers. We therefore ask for our stakeholders continued understanding and support.
functionality and received the Good Design Award. Steadily producing such products each year is the result of working on system development.
In fiscal 2017, with the opening of the NITORI Shibuya Koen-dori Store, which has the largest floor space in the central Tokyo area, the opening of stores in department stores including the Tobu Ikebukuro Store, and the development of the small store NITORI EXPRESS, the number of our stores in Japan increased by 39, for a total of 467. We have actively remodeled our stores with a view to the future by expanding the floor space of the home décor item section of the stores, where sales are expected to increase. Moreover, the HOME FASHION STORE DECOHOME also performed well thanks to the expansion of original products. Meanwhile, NITORI opened two stores in Taiwan and 13 stores in China. As a result, the number of overseas stores was 27 in Taiwan, 24 in China, and five in the United States, for a total of 56. The total number of stores in Japan and overseas was 523. In product development, as a result of further improvements made to the quality of the N Cool series, which uses material that feels cool to the touch, and the N Warm series, which uses material that absorbs moisture from the body and turns it into heat, expansion of product variety, and creation of a stable system, sales greatly exceeded that of the previous fiscal year. In addition, sales of seasonal items in the coordinated products series were strong. In
furniture, our proprietary N Sleep bed mattress continued to drive brisk sales, and sales of our sofas made of the synthetic leather N-Shield, which has superior wear resistance, were also strong. In the online shopping business, we worked on redesigning the NITORI-net e-commerce website and creating a more user-friendly NITORI app by adding an online shopping feature. As a result, sales jumped 35% year on year to ¥30.5 billion. In logistics, we achieved significant productivity improvement and workload reduction at the Osaka Distribution Center and the Western Japan Online Shopping Distribution Center by operating the EL-De/VAN, a machine that assists with the loading and unloading of containers.
The NITORI Group is currently pursuing a new medium- to long-term plan to achieve 1,000 stores and ¥1 trillion in sales by 2022 and 3,000 stores and ¥3 trillion in sales by 2032. To achieve this goal, we set the following three challenges to be implemented by 2022: (1) Establish a Group growth trajectory and new challenges, (2) Provide a comfortable lifestyle via our merchandise, stores and services, and (3) Rebuild the company organization to sustain a global chain store system. By including these challenges in specific policies and measures of Group companies and departments and implementing them across the entire Company, we hope to establish a business foundation as a global company and raise corporate value over the medium to long term. In fiscal 2018, we expect net sales of ¥614 billion (up 7.3% year on year) and ordinary income of ¥100 billion (up 5.4%).
The business environment of the furniture and interior products industry is becoming increasingly harsh due to tougher sales competition and rising logistics costs across all business categories. Under these conditions, the NITORI Group has positioned the previous fiscal year (the year ending February 2018) as a year of building a framework for the future and has pursued a variety of measures with a focus on sales, store openings, and product strategies. As a result, our consolidated financial results were net sales of ¥572.0 billion, (up 11.5% year on year) and ordinary income of ¥94.8 billion (up 8.3%), marking the 31st consecutive year of income and profit growth. We have also achieved results in building a framework that supports growth from this fiscal year and beyond. With regard to store openings, the opening of stores in urban areas, which we have pursued since 2015, has reached a turning point. Since urban stores have different characteristics than suburban stores, such as fewer customers who visit by car, a relatively higher percentage of younger customers, and limited space for store inventory, we are creating sales floors and systems for operation and distribution that are unique to urban stores.
NITORI will continue to transform itself to achieve sustainable growth as a global corporate group
Toshiyuki ShiraiRepresentative Director & Chief Operating OfficerNITORI Holdings Co., Ltd.
Message from the President
As part of establishing a Group growth trajectory and new challenges, we have focused on building new brands. Specifically, in March 2018, NITORI opened the DECOHOME Tressa Yokohama Store with the aim of differentiating it from existing NITORI stores, such as by updating store design and logo. As an independent store format separate from NITORI, DECOHOME has enhanced home interior goods which target the market segment of unmarried women living alone, and developed products that are more trend and seasonally conscious. We will expand the room for opening new stores in Japan and open more stores by defining the differentiated and complimentary relationship of both brands in this way, and make them the type of businesses that can coexist within the same shopping center On the other hand, in our overseas business, we have focused on expanding business mainly in China. In fiscal 2018, we plan to open 14 new stores, but at the same time, we will establish a foundation by creating product collection and supply systems in various parts of China, building a framework for a low-cost operation, and enhancing our business management system. The China business is positioned as our greatest engine for growth essential for achieving our medium- to long-term vision. We will continue to develop new stores and help enrich the lives of local residents.
As products, stores, and services that enrich our customers’ lives, not only will we continue to offer products of superior quality and performance at a reasonable price, we will further strengthen the development of coordinated products, another of NITORI’s strengths. Even for products of different brands, we will adopt a system that enables us to develop products that are related by color and style,
increase the proportion of coordinated products to 60%, and offer the appeal of totally coordinated home design to more customers.
As we rebuild the company organization to sustain a global chain store system, we will continue to build and restructure the business foundation in response to changes in the business and external environments. Specifically, we are strengthening our production system in response to the globalization of business and the expansion of business areas, restructuring our distribution network, and building new core systems. As a part of this, in October 2018, we launched the Global Product Headquarters to oversee product development from a global perspective. NITORI has located product divisions in Japan, Taiwan, China, and the United States, which plan and develop products that meet customer needs in each market. It has held periodic product division meetings in each country and has worked to share raw materials for certain products. This time, we set up a new organization that crosses development departments globally and promote the timely sharing of information and knowhow and flexible collaboration. For example, we will pursue advantages such as greater development efficiency, lower production costs, and inventory optimization by promoting collaborative planning globally from the initial stage and sharing not only raw materials, but also parts and elements.
Moreover, we are actively promoting O2O (online to offline and offline to online) by leveraging our advantage of having a store network that covers urban and suburban areas. As for products, NITORI has created over time a system that can not only develop conventional products, but also products that deeply explore customers’ needs. In this fiscal year, four NITORI products, namely, N-CLICK BOX (colored storage boxes), Ultralightweight Clay Pot UKIGUMO, Lace Curtain ECONATURE, and CATCH CLEAN Curtains, were evaluated for their design, coordination, and
Fiscal 2018 priority issues
1 Establish a Group growth trajectory and new challenges
1. Reform the profit model of NITORI’s domestic business2. Focus investment in growth 3. Develop new markets
2 Provide a comfortable lifestyle via our merchandise, stores, and services
1. Establish coordination of NITORI (explore the richness of living)2. Reform products, product lineups, and formats3. Respond to changes in consumption behavior
3 Rebuild the company organization to sustain a global chain store system
1. Reform frameworks and systems (standardization, simplification, and differentiation)2. Strengthen human resource development and organizational capability3. Create a global product supply system4. Globalize quality control5. Create a risk management system6. Foster a corporate culture
Achieved 31 consecutive years ofgrowth, while preparing for the future
Opening new stores, launching high-performance products, and improving our e-commerce website
Addressing three key issues to achieve our medium- to long-term vision
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DECOHOME Tressa Yokohama Store Future MeetingMedium- to Long-term Meeting
Further, to respond appropriately to the recent growth of e-commerce (EC), and changes in customers’ purchasing behavior, we launched the O2O Project and developed a new service that transcends the barriers between stores and EC, and are aggressively introducing digital marketing. We are actively introducing advanced services with a focus on urban stores with a shared EC and customer demographic. In addition, we are focusing on digitizing member cards and optimizing online and offline advertising.
In December 2017, the NITORI Group celebrated its 50th anniversary. Based on its mission statement of “providing the foundation of prosperous home living to the global community,” the Company has challenged new business horizons unbound by customary industry practices or past successes and has achieved sustainable growth. To constantly evolve and grow as we move forward, we will pursue further corporate restructuring by exhibiting our inherited corporate culture of refusing to accept the status quo. To speed up this restructuring, NITORI holds a Medium- to Long-term Meeting where executives from each department discuss the Companywide business strategy once a month, and a Future Meeting where young employees are selected to discuss the desired future image of the Company. Through these activities, we proactively seek out the opinions and ideas of our employees and further reinforce our culture of refusing to accept the status quo, whereby each employee, unsatisfied with the
way things are, pursues restructuring from a medium- to long-term perspective. In order for NITORI to achieve sustainable growth as a truly global company, it is of course essential that we manage from an ESG perspective. NITORI has always sought to strike a balance between economic and environmental value throughout the entire supply chain including product development, production, distribution, and stores. In addition, we have set up an organization independent of production development and strive to ensure product safety through strict safety checks from the planning and development stage. Furthermore, we should be a company that walks hand-in-hand with the people of the countries and regions where we do business. Not only do we contribute through our business, we actively support cultural, educational, social welfare, and community development activities. We also share the NITORI Group Fair Trade Declaration with our suppliers around the world and are building cooperative relationships with them as equal partners. In the area of governance, we have focused on ensuring the soundness and transparency of management by listening to the opinions and comments of outside directors at Board of Directors’ meetings and other venues. The NITORI Group will continue to steadily implement its growth strategy to achieve the medium- to long-term vision and further strengthen its efforts from an ESG perspective. We will widely contribute to society by providing “the foundation of prosperous home living” to more customers. We therefore ask for our stakeholders continued understanding and support.
functionality and received the Good Design Award. Steadily producing such products each year is the result of working on system development.
In fiscal 2017, with the opening of the NITORI Shibuya Koen-dori Store, which has the largest floor space in the central Tokyo area, the opening of stores in department stores including the Tobu Ikebukuro Store, and the development of the small store NITORI EXPRESS, the number of our stores in Japan increased by 39, for a total of 467. We have actively remodeled our stores with a view to the future by expanding the floor space of the home décor item section of the stores, where sales are expected to increase. Moreover, the HOME FASHION STORE DECOHOME also performed well thanks to the expansion of original products. Meanwhile, NITORI opened two stores in Taiwan and 13 stores in China. As a result, the number of overseas stores was 27 in Taiwan, 24 in China, and five in the United States, for a total of 56. The total number of stores in Japan and overseas was 523. In product development, as a result of further improvements made to the quality of the N Cool series, which uses material that feels cool to the touch, and the N Warm series, which uses material that absorbs moisture from the body and turns it into heat, expansion of product variety, and creation of a stable system, sales greatly exceeded that of the previous fiscal year. In addition, sales of seasonal items in the coordinated products series were strong. In
furniture, our proprietary N Sleep bed mattress continued to drive brisk sales, and sales of our sofas made of the synthetic leather N-Shield, which has superior wear resistance, were also strong. In the online shopping business, we worked on redesigning the NITORI-net e-commerce website and creating a more user-friendly NITORI app by adding an online shopping feature. As a result, sales jumped 35% year on year to ¥30.5 billion. In logistics, we achieved significant productivity improvement and workload reduction at the Osaka Distribution Center and the Western Japan Online Shopping Distribution Center by operating the EL-De/VAN, a machine that assists with the loading and unloading of containers.
The NITORI Group is currently pursuing a new medium- to long-term plan to achieve 1,000 stores and ¥1 trillion in sales by 2022 and 3,000 stores and ¥3 trillion in sales by 2032. To achieve this goal, we set the following three challenges to be implemented by 2022: (1) Establish a Group growth trajectory and new challenges, (2) Provide a comfortable lifestyle via our merchandise, stores and services, and (3) Rebuild the company organization to sustain a global chain store system. By including these challenges in specific policies and measures of Group companies and departments and implementing them across the entire Company, we hope to establish a business foundation as a global company and raise corporate value over the medium to long term. In fiscal 2018, we expect net sales of ¥614 billion (up 7.3% year on year) and ordinary income of ¥100 billion (up 5.4%).
The business environment of the furniture and interior products industry is becoming increasingly harsh due to tougher sales competition and rising logistics costs across all business categories. Under these conditions, the NITORI Group has positioned the previous fiscal year (the year ending February 2018) as a year of building a framework for the future and has pursued a variety of measures with a focus on sales, store openings, and product strategies. As a result, our consolidated financial results were net sales of ¥572.0 billion, (up 11.5% year on year) and ordinary income of ¥94.8 billion (up 8.3%), marking the 31st consecutive year of income and profit growth. We have also achieved results in building a framework that supports growth from this fiscal year and beyond. With regard to store openings, the opening of stores in urban areas, which we have pursued since 2015, has reached a turning point. Since urban stores have different characteristics than suburban stores, such as fewer customers who visit by car, a relatively higher percentage of younger customers, and limited space for store inventory, we are creating sales floors and systems for operation and distribution that are unique to urban stores.
Message from the President
As part of establishing a Group growth trajectory and new challenges, we have focused on building new brands. Specifically, in March 2018, NITORI opened the DECOHOME Tressa Yokohama Store with the aim of differentiating it from existing NITORI stores, such as by updating store design and logo. As an independent store format separate from NITORI, DECOHOME has enhanced home interior goods which target the market segment of unmarried women living alone, and developed products that are more trend and seasonally conscious. We will expand the room for opening new stores in Japan and open more stores by defining the differentiated and complimentary relationship of both brands in this way, and make them the type of businesses that can coexist within the same shopping center On the other hand, in our overseas business, we have focused on expanding business mainly in China. In fiscal 2018, we plan to open 14 new stores, but at the same time, we will establish a foundation by creating product collection and supply systems in various parts of China, building a framework for a low-cost operation, and enhancing our business management system. The China business is positioned as our greatest engine for growth essential for achieving our medium- to long-term vision. We will continue to develop new stores and help enrich the lives of local residents.
As products, stores, and services that enrich our customers’ lives, not only will we continue to offer products of superior quality and performance at a reasonable price, we will further strengthen the development of coordinated products, another of NITORI’s strengths. Even for products of different brands, we will adopt a system that enables us to develop products that are related by color and style,
increase the proportion of coordinated products to 60%, and offer the appeal of totally coordinated home design to more customers.
As we rebuild the company organization to sustain a global chain store system, we will continue to build and restructure the business foundation in response to changes in the business and external environments. Specifically, we are strengthening our production system in response to the globalization of business and the expansion of business areas, restructuring our distribution network, and building new core systems. As a part of this, in October 2018, we launched the Global Product Headquarters to oversee product development from a global perspective. NITORI has located product divisions in Japan, Taiwan, China, and the United States, which plan and develop products that meet customer needs in each market. It has held periodic product division meetings in each country and has worked to share raw materials for certain products. This time, we set up a new organization that crosses development departments globally and promote the timely sharing of information and knowhow and flexible collaboration. For example, we will pursue advantages such as greater development efficiency, lower production costs, and inventory optimization by promoting collaborative planning globally from the initial stage and sharing not only raw materials, but also parts and elements.
Moreover, we are actively promoting O2O (online to offline and offline to online) by leveraging our advantage of having a store network that covers urban and suburban areas. As for products, NITORI has created over time a system that can not only develop conventional products, but also products that deeply explore customers’ needs. In this fiscal year, four NITORI products, namely, N-CLICK BOX (colored storage boxes), Ultralightweight Clay Pot UKIGUMO, Lace Curtain ECONATURE, and CATCH CLEAN Curtains, were evaluated for their design, coordination, and
Establishing new brands and expanding overseas business
Reinforcing initiatives from an ESGperspective and widely contribute to society
Restructuring the business foundation in response to environmental changes
Strengthening coordinated solutions
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PART 2Ever Evolving NITORITo provide value to customers around the world, NITORI has set out on a new endeavor aiming to further develop our global supply chain built upon our unique business model. Refusing to accept the status quo, NITORI continues to innovate.
Net sales
(Billions of yen)
(FY)
600
300
0
20142013 2015 2016 2017
387.6417.2
458.1512.9
572.0
Financial data
Gross profit/ Ratio of gross profit to net sales
(FY)
400
200
60.0
30.0
0 0
20142013 2015 2016 2017
201.6 218.3243.5
278.2314.7
52.0 52.3 53.2 54.2 55.0
(Billions of yen) (%)
Operating income/Ratio of operating income to net sales
(FY)
30.0
15.0
100
50
0 0
20142013 2015 2016 2017
63.0
16.3 15.9 15.9 16.7 16.3
66.373.0
85.793.3
(Billions of yen) (%)
Ordinary income/ Ratio of ordinary income to net sales
(%)
(FY)
100
50
30.0
15.0
0 0
20142013 2015 2016 2017
63.4
16.4 16.3 16.4 17.1 16.6
67.975.0
87.594.8
Gross profitRatio of gross profit to net sales
Ordinary incomeRatio of ordinary income to net sales
(Billions of yen)
Total assets/ Return on assets (ROA)
(%)
(FY)
40.0
20.0
600
300
0 0
20142013 2015 2016 2017
321.7
20.918.7 18.3 19.4 18.3
404.7 414.5
487.8
550.5
(Billions of yen)
(FY)
Equity/ Return on equity (ROE)
0
20142013 2015 2016 2017
247.0
309.4329.6
393.6440.9
0
500
250
40.0
20.0
Operating income Ratio of operating income to net sales
Total assetsReturn on assets (ROA)
EquityReturn on equity (ROE)
16.814.9 14.7
16.6 15.4
(%)(Billions of yen)
Non-Financial data
Number of stores
(FY)
600
300
0
2013 2014 2015 20172016
331373
420471
523
1927
3743
56
312 346 383 428467
Wage revision rate (total from 2009)
25.0
12.5
0
201320122009 2010 2011 2014 2015 2016 2017
2.14.0
6.08.0
10.4
12.9
16.3
19.121.3
Female employees in management positions
(FY)2013 2014 2015 20172016
114
145171
200
250
300
150
0
(%)(%)20.0
10.0
0
JapanOverseas
NITORI
Japanese Trade Union ConfederationKeidanren Japan Business Federation
Major GMS NumberRatio
7.79.1 9.8 10.5
12.3
Financial and Non-Financial Highlights
18 19
Luxury for all customers with our new store formatIn order to provide people in all areas throughout Japan with convenience, comfort, and luxury, NITORI opens stores even in areas with market populations of fewer than 100,000 people. In addition, we are proactively opening small-scale DECOHOME and NITORI EXPRESS stores in urban areas. These efforts aim to increase the frequency of customer store visits while strengthening product lineups and increasing profitability.
Focus on attractive sales floors and customer satisfactionIn order to adequately communicate the appeal of our products to customers we seek to create sales floors that make shopping easy and products easy to look at. This of course not only involves how each individual product is displayed, but also the look and layout of the overall sales floor and the width of the aisles.
NITORI’s products are characterized by integrated designs and colors and planned to make it easy for customers to coordinate. Each sales floor features a display area with fully coordinated furniture, fabrics, and lifestyle products making it easy for customers to see sample combinations of products from a variety of categories. In addition, we put effort into enhancing our ability to provide customers with guidance by holding internal interior coordination contests and other initiatives.
NITORI’s Shibuya Koen-dori Store
Ratio of DECOHOME original products (number of items)
70%
10%
40%
DECOHOME, offers a product lineup centered around frequently purchased lifestyle necessities in an effort to become the closest home furnishings store. We have opened 74 stores nationwide as of November 20, 2018 in various shopping centers throughout the country. The DECOHOME business focuses its efforts on developing original products geared toward unmarried women, its main customer demographic. At the same time, we
promote new initiatives in store design and operation. The new store format we have established for DECOHOME differs from NITORI, and we aim to build a structure that allows both formats to coexist in the same market area.
450
(FY)
400
350
100
50
0
100
75
50
25
0
(FY)
Creating easy to visit,easy to shop at stores
20162015
Number of stores in Japan
2017
Our stores are an important touchpoint for connecting NITORI with customers in the community. To ensure customers have an enjoyable shopping experience, we strive to make our sales floors visually pleasing and easy to shop at while constantly seeking to improve customer service. When opening stores based on our new store format, we take location conditions and regional characteristics into consideration. In this way, we are able to provide spaces that bring the fun of interior design to as many people as possible.
Keigo Ohnuki General Manager, Store Operations Division
NITORI DECOHOME NITORI EXPRESS
2016 2017Target2018 DECOHOME Tressa Yokohoma Store
344
0 0 9 12
78625139
377 396 415
Strengthening the original DECOHOME brand, and setting NITORI apart
Katsunari KobayashiDECOHOME Business Manager
495 stores
Japanese domestic store development
Store openings in Central Tokyo (in the vicinity of the Tokyo Yamanote Line)
NITORI DECOHOME
Shinagawa
Shimbashi
Ikebukuro Ueno
Shinjuku
Shibuya
Tokyo
Asakusa Oshiage
Kinshicho
Ginza
Venus Fort
Meguro
EbisuNakameguro
Sasazuka
As of November 20, 2018
409
74
12
Provides a broad spectrum of products for creating a comfortable and enriched lifestyle, from large furniture items to home décor and household items. NITORI focuses on offering integrated interior décor guidance with an established range of NITORI colors.
Number of stores by area
Hokkaido Area: 21
Tohoku Area: 32
Hokuriku/Koshinetsu Area: 33
Kanto Area: 159
Chubu/Tokai Area: 57
Kinki Area: 93
Chugoku/Shikoku Area: 45
Kyushu/Okinawa Area: 55
A small-scale store found mainly in the Tokyo metropolitan area based on the concept of “a store you can drop in on daily.” The product lineup includes living necessities as well as popular basic items.
A new store format with home décor items at the center of the product lineup. The store is small scale, but it also handles orders for large furniture items and custom-made curtains.
Target2018
Sales–Domestic
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33 stores
China
TaiwanUSA
30 stores
5 stores
As of November 20, 2018
Japan495 stores
Tianjin DC
Taicang DC
South China DC
Wuhan DC
Chengdu DC
Taking our comprehensive strength in home furnishings to Mainland ChinaNITORI is placing the greatest emphasis on Mainland China as our pillar of growth for overseas operations. In China, there are very few stores that sell an entire lineup of products that include furniture, home décor, and novelty items in one place. The comprehensive home furnishings business, which is NITORI’s strength, is still in its infancy in China, and therein lies a major opportunity. Since opening our first store in a shopping mall in Wuhan, China in October 2014, we have followed that pattern and primarily expanded our NITORI brand store openings in shopping malls in Mainland China. In FY2017, we opened 13 new stores in various locations, including Xujiahui, Shanghai (opened July 2017), which we have positioned as our flagship store in the Chinese market. We now have 33 stores (as of November 20, 2018) in Mainland China. The year-on-year sales comparison for FY2017 was 176% for our Chinese operations, displaying a strong performance.
In FY2018, we opened stores in new areas, such as Tianjin, Shenzhen, and Chengdu. However, as we are now seeing the challenges that come with opening stores at an accelerated pace, we are now working on enhancing our business stamina. In October 2018, we established the Taicang Distribution Center, which has an area of approximately 132,000 m2, the largest in the NITORI Group. In addition to serving the Chinese domestic market, this large-scale distribution center (DC) is also used as a distribution base connecting Japan to production and procurement factories throughout Asia building a stable product supply system and accelerating our business growth globally.
Establishing a U.S. customer base comprised of millennials and the middle class Since launching the Aki-Home brand in the U.S. in 2013, we have been opening stores in the greater Los Angeles area based on the lifestyle store format, which includes furniture and home décor. We have successfully increased our recognition locally. As in other countries and regions, our main targets are middle class millennials, and we have augmented our lineup of products in the middle to high price range. We are also concentrating on expanding our assortment of products that can be easily mixed and matched, as well as developing and procuring unique products tailored to differences in physique and lifestyle. The United States has the world’s largest and most competitive consumer market. Growing our business here will lead to the establishment of a globally accepted business model. We will continue to repeat various experiments in the same market while building a model that will evolve us into a truly global company.
• Gain a stronger foothold in Mainland China
• Strengthen product supply system
• Develop production areas in North and West China
• Review the system of organization
• Create products globally
Strategy for Chinese operations
As we mark the midway point of our second 30-year plan in 2022, our goal is to achieve 1000 stores and one trillion yen in sales. We are also focusing on overseas store expansion by utilizing NITORI’s strengths that we have cultivated in Japan to open stores in Mainland China, Taiwan, and the U.S. We are placing particular focus on strengthening our product supply system in Mainland China where we are developing production bases and establishing new distribution hubs. In addition, the NITORI Group as a whole, is working toward building training and information systems as we move toward our goal of opening a multitude of new stores.
Fumiaki MatsumotoExecutive Officer & Vice President
NITORI’s broad popularity brought it profitability in the Taiwanese marketIn 2007, NITORI opened its first overseas store in Taiwan. As a Japan-based company, we were latecomers, but we focused our attention on opening stores in Taipei and other major cities and developing and procuring unique products that meet local needs and are tailored to regional characteristics. As a result, NITORI became widely known for offering high quality at low prices. There are now 30 stores in Taiwan, and from FY2012, we have been able to achieve profitability in a single year. The use of aggressive TV commercial campaigns and online sales has resulted in solid performance in terms of store traffic and sales even in existing stores. Our goal is to increase the number of stores to 50 while gaining a better understanding of the market setting. In addition, we plan to make use our store opening strategy in Taiwan, where the population is concentrated in major cities, as we continue advancing into other countries.
Creating a global business model
Sales–Overseas
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store and have them delivered to their homes. This benefits customers by eliminating the need to carry around purchases while shopping and the quick processing of delivery. Meanwhile, the stores also reap benefits in terms of labor-saving operations as the need to stock shelves is reduced. In addition, it is easy for customers to make purchases online after visiting our stores to showroom the products. After testing the app at the Shinjuku Takashimaya Times Square Store in May 2017, the full-scale version was introduced at the Shibuya Koen-dori Store in June 2018. Since then, it has received high acclaim, not only among customers, but also across the industry earning the 3rd Retail Promotion Award. In the future, we plan to take full advantage of the merits of the internet further enhancing NITORI-net’s product lineup with measures that include offering products available only on the e-commerce website. In addition, by analyzing the detailed product ranking information and customer information we obtain from the
e-commerce website, we can create products and sales floors that more accurately reflect our customers’ needs, thereby enabling increased sales and inventory optimization in our brick-and-mortar stores. We have plans to enhance the e-commerce website functions in August 2019 to enable a more convenient and comfortable online shopping experience. For example, we will use augmented reality technology to give customers an idea of what furniture will look like when placed in their homes as part of our continuous endeavors to make innovative new services a reality.
Synergizing conventional stores and the e-commerce website As personal spending continues to be an issue of concern domestically, the e-commerce market continues to display rapid growth. In the area of furniture and home décor as well, competition is intensifying as a variety of companies, including major e-commerce companies, distribution companies, and manufacturers enter the e-commerce business. These circumstances have led NITORI to develop an e-commerce website, NITORI-net, which utilizes our strength as a one-stop product developer, manufacturer, distributor, and retailer to expand sales at a growth rate that even exceeds our brick-and-mortar stores. One of our greatest strengths is our products. NITORI-net carries an extensive lineup of original products that cannot be purchased anywhere else, including
high-performance products such as N Warm and N Cool. In addition, one of our major advantages is our ability to provide e-commerce customers with the same services found in stores by utilizing our nationwide network of stores and our distribution network. In the case of furniture in particular, delivery and installation demand careful attention. Our proven track record and reliability achieved through providing high-quality in-store service instills trust in our e-commerce website customers. Furthermore, a recent survey showed that more than half of customers who make in-store purchases look up products online beforehand and more than half of customers who make purchases from our e-commerce website go to see the products in stores beforehand. This demonstrates that many of our customers already use both NITORI stores and the e-commerce website flexibly to suit their needs. The O2O Project creates new services through highly coordinated collaboration between retail stores and the e-commerce website allowing customers to enjoy a more convenient and comfortable shopping experience. One example of this is the new function on our NITORI smartphone app, Tebura de Shopping (literally meaning empty-handed shopping). This service uses customers’ smartphones to read the barcodes of the in-store products they wish to purchase and create a wish list. The wish list is linked to the e-commerce website and allows customers to select whether they want to complete their purchases online or pay for them in the
In recent years, NITORI’s e-commerce website, NITORI-net, has been leveraging the company’s strengths, such as our cooperative network and distribution service system linking our stores nationwide and our wealth of original products, to steadily expand sales.The O2O Project aims to strengthen cooperation between NITORI brick-and-mortar stores and the e-commerce website. It also aims to implement digital marketing to improve customer satisfaction and continuously increase sales by creating new services that provide greater convenience and comfort.
150
140
130
120
0
Year-on-year comparison of mail order net sales
Tebura de Shopping app
Scan the product bar code
Order in stores
Order online
Q1 2017(May 2017)
Q2 2017(Aug 2017)
139.5%
Q3 2017(Nov 2017)
139.8%
Q4 2017(Feb 2018)
Optimizing on & offline advertising to acquire new customers and create repeat demand Another important role the O2O Project plays is the development and implementation of advertising promotion strategies that respond to the digitalization of society. With the optimal combination of online advertising, which effectively appeals to those with specific interests, and offline advertising, such as TV and newspaper ads that communicate information to a wide audience, we can achieve more cost-effective promotion strategies. In addition, promotions tailored to each individual customer’s shopping trends and lifestyle are effective for establishing new customers and increasing the repeat rate among existing customers. To that end, we are promoting the digitalization of membership cards through increased popularization of the NITORI app and issuing LINE app membership cards (in the coming future). This
will allow us to further develop one-to-one marketing according to an individual customer’s purchase history. We are also making efforts to increase our social media followers and strengthen media that enables direct communication with customers in combination with the NITORI app. Going forward, we will place focus on using our own network for effective marketing and to further enhance the customer-oriented business that characterizes the NITORI Group.
Integrating the conventional and the internet
NITORI membership card digitalization
Sales–O2O Project
Becomea member
now125.0%
136.2%
(FY)
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Composition ratio of coordinated products
Target2016 2017 2018
60%
16%
40%
Coordinated décor to meet the needs of various lifestylesNITORI seeks to achieve enriched lifestyles for our customers in which they enjoy homes that are coordinated with coherence. Even if people have various necessities in their homes, if these items are not coordinated, when they are combined the space appears disorganized and incongruent. Therefore, in order to offer guidance toward a more luxurious and comfortable lifestyle, NITORI focuses on offering the unexpected at good quality and low prices, as well as completely coordinated interior design resulting in a style of living that brings harmony throughout the home. Our lineup of diverse products featuring simple designs or interesting textures meets the needs of a broad range of customers, from those who have just begun to seek coherent interior décor for their homes to those with more experience. The NITORI Group handles
Establishing brands with different price ranges to make it easy for customers to chooseAs part of our coherent interior décor initiative, we are placing particular emphasis on the product development of our DAY Value and & Style lines, two brands with different price ranges. DAY Value, with a primarily low price base, suggests diverse home décor customers can easily enjoy while creating a base for their living space. Meanwhile, & Style is a high performance, high quality brand satisfying customers who are particular about their style. Both brands have been planned and developed to allow customers to make selections in line with their tastes from a combination of designs with five interior styles and nine basic colors.
High performance products that evolve with each seasonThe products in NITORI’s high performance series continue to evolve throughout each season with vertical merchandising that extends back to the raw materials. The improvement of quality and performance provides customers with products that offer the unexpected. For example, the raw materials used in the N Cool spring and summer bedding series, which feels cool to the touch as the part that touches the skin transfers much of the heat to the fabric, was reevaluated for the latest 2018 products and the cooling sensation was escalated. We also developed products that continue to feel cool. The autumn and winter bedding in the N Warm series is a
all functions from market research to product planning, manufacturing, and sales, and we use this strength to offer these products. We will continue to enhance our development of coordinated products contributing to the achievement of enriched lives for our customers and making efforts to provide lifestyle guidance in our stores and through a variety of media.
Both brands are comprised of original products developed based on thorough market research involving Merchandising Division staff members taking trips to observe trends in the U.S. and Europe. We will continue to further expand our range of products in order to offer guidance toward more colorful lifestyles.
Strengthening planning and development for children & baby-oriented products NITORI’s products for children and babies are unified in calm hues of mainly pale tones and can be easily coordinated with not only children’s bedrooms, but also with living rooms or other rooms.
In July 2018, a new children’s website, KodoMONO was established based on the concept of a fun, comfortable space for life with children. The site introduces items and ideas ranging from baby products to kids’ products for creating an enriched daily life with children. In
addition, it provides suggestions for techniques on how to use items to create a space for “playing well, learning well.”
N WarmN Cool
product that achieves warm, smooth comfort by absorbing the moisture released by the body and turning it into heat with moisture absorbing exothermal material. By increasing the volume of moisture absorbing exothermal padding in the 2018 products, we were able to enhance performance without raising the price. NITORI’s high performance products bringing customers further enriched lifestyles are widely acclaimed. In October 2018, four products received the Good Design Award. This is the 6th consecutive year our products have received this award. We will continue to develop high performance products and offer them at lower prices to resolve the inconveniences in customers’ lives.
Strengthening design coherenceand product lineup
Product Planning/Development
Quantity
Competitive Brand
Value PriceBrand
QualityBrand
Price
Relationship between price and the brand
At NITORI, we strive to develop a variety of products to enrich people’s lifestyles. By focusing on completely coordinated interior décor, we are changing from the conventional NITORI that offers the unexpected to a NITORI that guides customers’ lifestyles. In addition, we are aiming to broaden our customer demographic by developing brands with different price ranges and strengthening our product lineup.
Hiromi AbikoSenior Executive Officer, Global Merchandising Headquarters, Global Coordinate Product Planning and Merchandising Division Coordinated Product Planning Manager
(FY)
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30
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10
0
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The ability to offer the unexpected withthorough cost awareness In order to provide customers with a stable supply of low-cost products while maintaining quality, NITORI is building its own system of procurement and manufacturing.
When procuring raw materials, we calculate backwards from customers’ desired price and thoroughly investigate whether it meets quality and performance conditions, in addition to cost conditions. We do our own negotiating with overseas manufacturers to procure raw materials from around the world. The raw materials are then sent directly to factories that meet NITORI’s quality standards, turned into products, and 90% of those
products are then imported to Japan from overseas.In terms of product development, we create one
new product after another through repeated trials and innovation. We use out-of-the-box thinking to review all of our parts and materials and repeat scientific verification from scratch. In addition, we opened branch offices throughout Asia as we aim to improve quality control and productivity in products produced overseas and provide local support for production factories in areas such as process management, quality inspection, and loss rate management. This product quality framework and stable production system in combination with thorough cost awareness makes it possible to offer the unexpected, and at the same time leads to increased customer support.
New manufacturing hubs withan eye on global store Aiming to strengthen manufacturing performance within the NITORI Group, the Hanoi Factory in Vietnam manufactures mostly kitchen cabinets, sofas, mattresses, and other products for NITORI STUDIO, which serves as our core floor for furniture sales.
Additionally, the factory built in Ba Ria-Vung Tau, Vietnam began operations in December 2017 with an eye on global store expansion. The factory, with a floorspace (400,000 m2) 2.5 times that of the Hanoi Factory, has a daily output of approximately 400 bed mattresses. Since 2018, it has also been producing dining sets. There are also plans to produce fabric for use in curtains and sofas here. In the area of carpets, product development at THAI NEGORO CO., LTD., one of our group companies, concentrates on carpets made from recycled plastic PET bottles.
Strengthening our product development system from a global perspectiveNITORI’s craftmanship continues to expand past the borders of countries and regions in order to bring customer better products, and strengthening our product development system is an effective means of utilizing this global production system even more effectively and efficiently.
Currently, we plan and develop products tailored to customer needs in each market where stores are opened. In the future, we will proceed with product development from an even more global perspective. To that end, we have launched a global merchandising headquarters to oversee the planning and development of products in each country. The headquarters will work closely with the product planning and development divisions in each country, sharing information and promoting the collective procurement of raw materials and the standardization of parts and materials to improve product development efficiency, reduce production costs, and optimize inventory.
Strengthening our global production system
Manufacturing
During our second 30-year plan, which finishes in 2032, we are making efforts to strengthen our system of production. In addition to establishing a system to boost production at the Hanoi Factory and the new factory in Ba Ria-Vung Tau, we are also placing emphasis on employee education. Furthermore, we are engaging in vertical merchandising extending to raw materials as we achieve reduced manufacturing costs while maintaining quality.
Masanori Takeda Managing Director, Global Merchandising Headquarters Director & General Manager, Merchandising Division
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Overall distribution concept
Domesticmanufacturer
Distribution center Customer
Overseas factoryPort (container yard) Stores
Shipping/Delivery center
NITORI
Developing a proprietary distribution system Since we introduced the industry’s first automated high-rise warehouse in 1980, NITORI has actively introduced the latest technologies and equipment at all our distribution centers in an effort to achieve a more efficient and people-friendly working environment.
In 2016, we introduced AutoStore in our mail order shipping center in Kawasaki City. AutoStore is a high-density storage, high-speed loading/unloading
automatic warehouse-type picking system. Since then, we continue to introduce cutting edge equipment, such as the devanning assistance machine EL/DeVAN and BOX ON DEMAND SYSTEM, a machine able to assemble cardboard boxes on-site in accordance with product size.
Through capital expenditures such as these, we are further improving work efficiency and reducing costs, building a mechanism to optimize the flow of product from a global perspective, and improving the work environment.
Building one of the largest distribution networks in Japan NITORI imports more than 175,000 20-foot containers of products annually from more than 50 overseas ports, which as a single corporate entity, is one of the largest in Japan. In order to efficiently transport the vast number of products and raw materials gathered from around the world, NITORI has overseas distribution centers in two locations, China (Taicang) and Vietnam (Ho Chi Minh), consolidating all trade procedures, such as quality control and inventory management, internally rather than outsourcing the work to a trading company. By separating products by store at overseas hubs before importing them to Japan, products can be swiftly supplied to nationwide stores without wasting any resources.
In addition, there are 11 distribution centers, 78 delivery centers (sales offices), and 7 shipping centers covering major cities across Japan. We are building a network capable of delivering products anywhere in the country.
Our own customs clearance system for smooth supply At NITORI, where we stock everyday items from almost every market sector, 90% of our products are imported. They are manufactured in a number of countries, and in order to comply with the customs regulations that vary between countries, there are a vast amount of trade tasks, such as import applications, permissions, approvals, and agreements that must be undertaken. These tasks are quite specific, outsourcing them to a specialized firm would involve a major cost increase. Therefore, we have built our own customs clearance system. We handle all of the tasks ourselves, which reduces costs, and at the same time establishes a smoother product supply system to domestic distribution centers.
In addition, as we are able to negotiate with domestic and overseas shipping companies, we are able to transport products from the port where they enter the country to the distribution center via the shortest route. We are also taking initiatives to reduce logistics loss and time lag from production locations to sales bases.
Logistics is one of the crucial elements of NITORI’s unique business model, and we have been proactive in our establishment of our own distribution center and the implementation of an advanced distribution system. Doing so has helped us achieve thorough cost reductions and an effective and stable product delivery service. We will continue to optimize the product flow process through the evolution of our know-how in both hard and soft aspects.
Delivery business that goes the extra mile With the opening of stores throughout the country, we have built one of Japan’s largest distribution networks for the domestic delivery of products covering all 47 prefectures and 100% of the population*.
From small items to large furniture pieces, such as sofas and beds, we undertake more than 8.1 million deliveries annually. As such, our delivery centers throughout the country use the latest traffic control systems employing GPS for more efficient product delivery.
In addition, we not only deliver furniture to
customers’ doorsteps, we assemble the furniture, place it in position as specified by the customer, and remove all of the packaging materials after delivery.
This series of tasks is carried out by skilled salesmen who possess a wealth of experience. We conduct education and training together with partner companies to help our salesmen, who are our touchpoint with customers, acquire delivery techniques as well as communication skills and specialized knowledge in a variety of topics as we strive to improve the quality of service.
A distribution network that achieves cost reduction and work efficiency
Trade/Logistics
Akio IgarashiSenior Executive Officer, Representative Director and President of Home Logistics Co., Ltd.
*Excluding some remote islands.
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In April 2017, NITORI signed a capital and business tie-up agreement with KATITAS Co., Ltd, a pioneer in the business of revitalizing second-hand homes. The purpose of this collaboration is to share and capitalize on the know-how and management resources both companies have in the housing business.
In February 2018, we began jointly offering and selling furnished older homes. The two companies will continue to share their philosophy and seek better relationships for all parties, including customers and business partners.
KATITAS and NITORI share the philosophy of providing enriched lifestyles and propose an unprecedented way of living
About KATITASCorporate philosophyEnriching people’s lifestyles by providing quality at low cost
Business modelOffering clean and comfortable renovated properties at a reasonable price with the renovation planning ability only our practiced eye for resale housing can provide.
Customer demographicFamilies considering moving from a rented residence to a house
Corporate businessUsing our product development ability to achieve 20% growth every yearUtilizing our product development ability cultivated through our family-oriented products and our ability to offer integrated interior décor guidance, we are putting effort into developing and supplying corporate-oriented products. Our corporate business is divided into five business categories: offices, commercial and educational facilities, medical and welfare facilities, accommodation facilities, living environments, and model rooms. Sales in all categories are showing steady growth. Moving forward, in addition to the area of furniture, we will also strengthen our product development in the area of whiteboards, houseplants, and other items needed in offices and facilities, further expanding sales.
Renovation businessFurther market development through cooperation with partnersWe have begun a renovation business that has evolved from developing products for coherent interior design in homes, stores, and facilities, to a business that creates a
completely transformed space. We offer a total renovation service revolving around integrated kitchen systems, bathroom vanities, and other internally developed products, engaging in everything from proposing changes to installation. In addition to replacing equipment, we are working to provide unique value as only NITORI can with our wealth of furniture and accessories to coordinate entire spaces. Moving forward, we will strive to further increase awareness of NITORI’s renovation business, and at the same time, expand our services into new areas, such as exterior painting, which will lead to the growth of our business.
Using the strengths we have cultivated in our furniture and home décor business, we are expanding into new markets. We are growing our corporate renovation business to offer unexpected value to even more customers.
Scale of renovation market areas
Large-scale renovations
Conventional areas
Kitchen
Furniture/Home décor
Bathroom
Toilet
Bathroom vanity
Solar panels
Exterior paint
Total renovationmarket
6.2 trillion yen
Other
Expansion into new areas
Diversifying our offer of the unexpected
Expanding Business
Nobuyuki TomiiCorporate Division General Manager & Renovation Business Division Manager
NITORI is putting effort into strengthening the talent that drives value creation in order to achieve sustainable growth. We are enhancing our educational system and creating better working environments throughout the Group. In addition, we are continuously striving to improve our product supply base and management structure.
PART 3Foundation for Creating Value
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Global trainee Global leader
Content of the Global Human Resources Development Program
To flexibly respond to future social, economic, and market changes and promote global business, a growth driver, our goal is to find, secure, and develop specialists who are active in Japan and overseas, and achieve the mission statement and vision of the NITORI Group.
Employees with experience in the NITORI Group’s overseas business: (1) Will define their future career ideas and plans(2) Will uncover challenges (skills/experiences) necessary to achieve them
Employees who have worked at the company for at least two years
With “overseas work experience” an essential requirement, employees will acquire the necessary linguistic ability, skills, and experience over the mid to long term with a transfer to headquarters planned.
Employees who have passed internal exams
Able to speak English or Chinese, or both, conversationally at work
Not considered at time of application. However, employees must reach a conversational level useful in daily life in English or Chinese during the period they are transferred to headquarters.
Language requirements
Goals
Eligibility
Career development roadmap (skill attainment levels)Grow into human resource capable of
contributing to society
50s Administration
40s Management
30s Control / Manage
20s Operation
Master a range of tasks and learn the underlying theories
Take on, learn from and experience challenges in line with management policy
Develop the ability to steer figures in a positive direction, including sales, profit and efficiency
Develop the ability to look ahead to the future and devise medium- to long-term measures
NITORI University —the NITORI Group’s education systemNITORI University is the general term we use for in-house education implemented throughout the NITORI Group. Our goal is to develop specialists by offering a wide range of educational opportunities designed to equip them with the skills they need to make a difference on a global scale.
All of our employees draw up a career plan twice a year and set themselves life goals outlining the sort of
person they’d like to be by the time they reach the age of 80. This gives them the opportunity to reflect on what it takes to achieve the goals and take the next step.
Leveraging this system, we want our employees to experience a wide range of work within the company so that they can find their own purpose in life. We train human resources who give back to society based on the experience and knowledge they have acquired in order to contribute to a richer life for all.
Three education systems to develop genuine specialistsTo develop true specialists, we have set up three education systems, namely knowledge-based education,
transfer-based education, and self-development with a focus on developing human resources for the future.
Educational system and organization Providing career support through training and seminars
Position-specific training
Pre-assignment training
Seminars in the United States
Position-specific trainingWe provide introductory training for new employees, training for employees at every level (store manager training, etc.), and selective training mainly for managers (middle management training, etc.).
Seminars in the United StatesWe hold seminars in the United States where the distribution industry is advancing, and many companies are pursuing trailblazing policies and measures. After training in theory, they tour the local community and the chain stores that support it. The training results are announced on site.
The curriculum is prepared for each training stage, from introductory to advanced courses, and more than 1,000 people have attended each year. Through these seminars, participants reaffirm NITORI’s mission statement
and vision and utilize them in business restructuring in each department.
Global Human Resources Development ProgramTo achieve NITORI’s vision, we have developed the Global Trainee Course and Global Leader Course to develop world-class human resources. These systems are publicly offered and the selected participants will further define their future careers through experience gained working at headquarters and overseas.
Developing human resources that contribute to societyUnder NITORI University, a unique education system, the Group has focused on expanding its employee training system and supporting independent learning with the aim of developing genuine specialists who contribute to the company and society.
NITORI has developed a wide range of businesses. Employees are transferred between these businesses every two to three years and experience a wide range of workplaces and types of work, which enables them to identify the fields where they can provide the greatest value.
NITORI has built a training system that covers everyone from entry-level to executive. We conduct a variety of career-based programs, from learning basic knowledge including chain store theory and business skills, to training to develop management skills.
Transfer-based education
Supporting career advancement by providing opportunities to gain broad experience
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ITIT
Trading companies
Trading companies
Business planningBusiness planning
AdvertisingAdvertising
Operating storesOperating stores
ManufacturersManufacturers
EducationEducation
LogisticsLogisticsOnline sales
Online sales
NITORI
Knowledge-based education
Established a career-based training system
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We offer a wide range of tools for self-development to meet the aspirations of individual employees, including e-learning and correspondence courses.(See “Self-development support systems” on page 36)
Self-development
Offering self-development tools to meet employees’ aspirations
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Human Resources Foundation
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Self-development support systemsWe have a range of support systems in place to help employees further their careers in line with their individual aspirations.
Recruitment of diverse human resourcesAt NITORI, diverse human resources actively participate regardless of nationality, age, or gender. In recent years, we have actively hired foreign nationals with the aim of achieving 3,000 stores by 2032 under our second 30-year plan.
To continuously secure excellent human resources, NITORI also operates a job return system that is a re-employment system for retirees. Employees who retire for reasons including marriage, childbirth and childcare, to care for elderly parents, as well as to change jobs or study abroad can return and use this system again as long as it is within 15 years after retirement.
System enhanced to support the balancing of childcare and workNITORI is enhancing its support systems so that employees can choose their workstyle according to their lifestyle.
On April 1, 2016, we issued a Health Management Declaration. In line with this declaration, NITORI is working to maintain and improve the health of Group employees and their families together with the labor union and the NITORI health insurance society. The NITORI health insurance society conducts a wide range of activities including regular health checks and surveys.
In-house tools
Promotion of diversity Health management
Transfer-based education https://www.nitorihd.co.jp/en/csr/employee/education.htmlHuman resource development system https://www.nitorihd.co.jp/en/csr/employee/education.htmlWebsite references
E-learningWe provide online self-development tools and have set up numerous courses designed to help employees with their duties. Employees are able to take courses covering the knowledge and theories they need to improve their skills anywhere, anytime, and at their own pace.
NITORI Color Coordination School (NCCS)
NCCS is a course that teaches knowledge in interior coordination essential to NITORI’s business. Employees can study at four different levels in line with their skills. Levels range from the beginner course, where students learn the basics of interior design and sizing up spaces and colors to the expert course, which consists of talks from selected speakers and field work.
NITORI World Circle (NWC)
NWC activities encourage employees to use simple statistical tools and work with their colleagues to solve problems and challenges in the workplace through teamwork. Activities are open to anyone who wishes to participate. Teams that are selected at the regional level go on to give a presentation to management. The best ideas are then tested, refined and rolled out throughout the company.
Creating a comfortable workplace
We are promoting diversity and health management to create an environment where diverse human resources can exercise their capabilities and work with enthusiasm.
Primary initiatives• Dental checkups and flu vaccinations
• Toothbrushing campaign and assistance with treatment fees to give up smoking
• Sending out books about childbirth and childcare
• Health classes (measurement of body composition, back pain prevention improvement seminar, class to help give up smoking, measurement of lung age)
• Mental health training by position
• Women’s health education
• Walking tournament (Kanto and Kansai)
• Campaign to count number of steps walked
Primary support systems• A reduced-hours system that can be used after pregnancy
is confirmed
• A system that subsidizes daycare services used on Sundays and national holidays
• A childcare leave support system wherein a portion of paid vacation days to be granted in the future can be used as special paid holidays, depending on the number of years of service.
Health Management Declaration
We believe that employee health is a crucial management resource for the NITORI Group. We will work with our labor union and health insurance society to help all of our employees and their families stay healthy so that we can achieve our Group mission and vision and ensure that all employees fulfill their potential.
Language classes Employees can take courses at a discounted rate at external language schools that are affiliated with the company. We have also set up an online course, as well as school-based courses.
External correspondence courses
We have introduced a system to enable employees to take external correspondence courses at a discounted rate to assist with self-development and help employees advance in their careers.
One-off payment system for educational qualifications
We provide one-off payments to cover qualifications or exams specified by the company (Interior Coordinator, Customs Officer, Registered Architect, etc.)
Education mileage systemWe have introduced a system whereby “education miles” are awarded to employees who have shown particular dedication to self-development and achieved results. By earning more miles, employees can secure additional investment in their education.
External tools
Overseas initiativesThe NITORI Group has established the same education and training systems at its overseas bases as it has in Japan. We have focused on developing specialists in transfer-based education and also conducted overseas training such as U.S. seminars for outstanding employees. We also conducted training at our Japan headquarters and shared the Group’s values and business approach.
Internal qualification systemsWe have various internal qualification systems to help employees acquire expertise required for business.
Main internal qualification systems• Quality examiner
• Repair technician
• System kitchen coordinator
• Total renovation coordinator
• Tailored curtain advisor
Received the 3rd White Company Award
The NITORI Group received the 3rd Annual White Company Award in the Philosophy Sharing Category. This award has been presented since 2016 with the aim of getting the world to recognize outstanding companies that you would even recommend your family to work at, and organizations that will serve as models of companies that we should pass on to the next generation. Initiatives such as the sharing of our mission statement were evaluated as having established a business plan and personnel system based on a global long-term plan and thoroughly conducted specific operations.
Human Resources Foundation
* A system whereby the Director of the Prefectural Labour Bureau certifies companies that are taking specific measures as companies that support child rearing under an action plan based on the Act on Advancement of Measures to Support Raising Next-Generation Children.
Accredited in the 2018 Certified Health and Productivity Management Organization Recognition Program (White 500)
In February 2018, the NITORI Group was accredited in the 2018 Certified Health and Productivity Management Organization Program* (White 500) by the Ministry of Economy, Trade and Industry and Nippon Kenko Kaigi. This marks the second consecutive year NITORI has been accredited.* Based on the Certified Health and Productivity Management Organization Program, which rewards corporations that practice exceptionally good health management with health promotion initiatives promoted by Nippon Kenko Kaigi and initiatives adapted to local health issues.
Obtained Kurumin certification for the first time
NITORI’s earnest efforts to support employees’ childbirth and childcare were recognized with its receipt in March 2018 of Kurumin certification* as a company that supports child rearing based on the Act on Advancement of Measures to Support Raising Next-Generation Children.
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Pursuit of product safety measures and quality enhancements that advance in step with the world
In product safety, product liability and seller’s responsibility cannot be separated, must not be separated nor left to others. This is our policy under which NITORI delivers products that can be used with greater peace of mind and at a lower price thanks to the United Collaboration System with our business partners.
NITORI has been building a global quality assurance system across the Group since fiscal 2018. The center of activities for this effort is the Quality Control Headquarters in Japan, which is responsible for decisions, audits, and education on related rules and regulations. Actual work including technical evaluation and inspection is conducted by the quality department of the country or region in charge of production and sales. This makes for an even more efficient and stricter quality assurance system.
Globalization of quality assurance system
NITORI Holdings Co., Ltd. received the Minister of Economy, Trade and Industry Award in the large retailer category at the 12th Awards for Best Contributors to Product Safety (FY2018), marking the second consecutive time it has received this award since fiscal 2016. This award program seeks to entrench a product safety culture in companies and create a safe and secure society. NITORI’s various product safety and quality improvement initiatives have been highly rated.
NITORI Received the Minister of Economy, Trade and Industry Award for the Second Consecutive Year
Reasons NITORI won the award
Technical evaluation meetings, which had been conducted mainly in Japan, are also conducted at overseas bases (Shanghai and Ho Chi Minh City) and direct instruction and support are provided from Japan using case studies of past problems via an overseas video teleconferencing system. NITORI can efficiently evaluate the safety of an actual product by conducting the evaluation at a base closer to the production site. Further, NITORI has set up a system that can accurately and quickly communicate the points that require corrective measures to the manufacturing site.
2 It developed a safety evaluation by conducting technical evaluation meetings at overseas bases
NITORI expanded guidance to apply the quality assurance manual, which in the past was only required for primary manufacturers, to even secondary manufacturers and parts manufacturers. As a result, NITORI has prevented changes in quality during the production of parts that make up products and ensured product safety. *The alteration of materials by suppliers without the manufacturer’s awareness or consent.
1 It expanded the application range of the quality assurance manual to prevent silent change*
Award ceremony
NITORI has overcome corporate barriers to provide technical and management guidance to overseas subcontractors, and even companies that do business with companies other than NITORI. In training managers, NITORI’s aim is to get them to directly experience the work environment and their social responsibility.
3 It expanded technical, management, and quality improvement guidance to overseas suppliers
Awards received
Silver Prize Winner: Large Retailer Category2008
Received this award two consecutive times
2011 Director-General for Commerce, Distribution and Industrial Safety Policy Award: Large Retailer Category
2013 Director-General for Commerce, Distribution and Industrial Safety Policy Award: Large Retailer Category
2014 Director-General for Commerce, Distribution and Industrial Safety Policy Award: Manufacturer and Importer Category
2016 Minister of Economy, Trade and Industry Award: Large Retailer Category
2018 Minister of Economy, Trade and Industry Award: Large Retailer Category
Quality standards2 Development technology
evaluation meetings3 Pre-shipment inspection/Incoming inspection4 Quality improvement
meetings5 Continuous plant audits6New plant
survey1
Quality assurance flow
Pre-shipment inspection
Quality control
New plant surveyWe conduct new plant surveys of new suppliers before starting business with them. We audit and evaluate 13 items including the quality assurance system and the onsite parts and process management systems from an ISO perspective.
Pre-shipment inspection/Incoming inspection
Pre-shipment inspections are conducted at overseas plants. Random inspections prevent defective products from leaving our plants. In addition, distribution centers in Japan conduct incoming inspections when they receive new products and perform strict checks of product appearance and display.
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Development technology evaluation meetings
Development Technology Evaluation Meetings are held to prevent product-related quality problems (accidents, defects, and risk due to misuse). We evaluate products based on the Failure, Mode, Effect, Analysis (FMEA) method with the aim of preventing problems before they occur.
3
Continuous plant audits We conduct Continuous Plant Audits with the goal of reducing defective and non-conforming products. We check whether the supplier’s quality assurance system meets NITORI’s requirements based on the Sangen Principle of visiting the actual site, observing the actual part, product or item, determining the actual situation, and then proposing improvements as necessary.
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4
Quality standardsTo comply with laws, prevent accidents and the reoccurrence of defective and non-conforming products, as well as establish a baseline for quality, we have established quality standards based on Japanese Industrial Standards (JIS).
2
Quality improvement meetingsAt Quality Improvement Meetings, we analyze damaged and defective products, determine their cause and countermeasures, and ask suppliers to make production plant improvements. In addition, we check the effectiveness of the improvement measures and turn the PDCA cycle.
5
Quality Control Headquarters in Japan
Production sites(outside Japan)
Sales outlets(worldwide)
Determines rules related to quality for the entire Group.Supervises, takes corrective action, and educates.
Product Provision Infrastructure
Note: Since companies that win this award cannot apply for the award the following year, NITORI’s receipt of this award in 2018 was the second consecutive time it has won this award since 2016.
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Balancing economic value and environmental value Fair and honest partnerships
We are simultaneously working to raise economic and environmental value by constantly raising productivity and pursuing greater efficiency.
NITORI not only conducts fair, honest, and transparent trade with suppliers, it provides technical guidance and management policy briefings, and strives to create new value together.
NITORI offers furniture and home fashion products necessary for people’s everyday lives and it therefore pursues product development by leveraging new technologies to respond to people’s changing and increasing environmental awareness with its products. For example, in bedding goods, we contribute to reducing air conditioning usage by providing products that use materials that feel cool to the skin in summer with our N Cool series of products, and warm to the skin in the winter with our N Warm series. In addition, the increasing use of fabric with a heat-shielding effect in curtains, drapes and lace causes people to compensate by adjusting the temperature settings of their air conditioners.
Initiatives in product development Initiatives in manufacturing
Initiatives in logistics
We promote efficiency in product transportation and shorten travel distances. Although we used to deliver ordered goods to customers via an in-house distribution center, we are now creating a mechanism that enables us to deliver goods directly from the manufacturer to the customer by eliminating relay points.
In addition, we have reduced our environmental impact in the distribution process by improving packing compression technology for bed mattresses, kotatsu futon, and futon bedding, and improving container transportation efficiency by increasing the component ratio of assembled furniture. We have also replaced foam polystyrene, which had been used as a package cushioning material mainly for furniture products, with recycled paper moldings (pulp mold) that have a low environmental impact.
NITORI actively works with suppliers, even at their manufacturing plants, to build strong collaborative systems to create better products together.
At trainings for managers of suppliers, we explain the importance of fulfilling their social responsibilities including the work environment and share NITORI’s ideas and policies through various meetings in order to create a culture of product safety.
We also hold a study group session called Open House for suppliers at their plants, which serve as models for improvement, and work to improve the technology of the entire manufacturing site.
Guidance on plant management/ Open HouseThe NITORI Group’s Business Partner Charter (extract)
Together with our business partners:
1. We aim to provide the foundation for prosperous home living to the global community.
2. We strive to be the best in the world.
3. We aim for a true partnership to become the best in the world.
4. We will establish a true partnership that will realize a competitive spirit seeking ongoing improvements in every related field.
5. We will establish a true partnership, eliminating injustice, unfairness, or uncertainty.
* Materials handling equipment: Machinery used to enhance the efficiency of logistics operations.
NITORI Group’s logistics is supported by delivery companies as well as numerous partner companies. Since fiscal 2015, Home Logistics Co., Ltd. began holding a Management Policy Meeting for Suppliers to explain anticipated future management and partnership developments. NITORI has adopted a proactive approach towards working together with suppliers to implement training related to furniture handling and delivery, and to jointly organize initiatives to further enhance service quality.
In the future, we will continue working with partner companies to pursue measures such as the installation of rest facilities for salespeople involved in delivery work, as well as the introduction of materials handling equipment* and tools that can be used by all workers, regardless of age or gender. These efforts will alleviate issues in the logistics industry such as the shortage of workers and will also help to address issues related to changes in society, such as the aging population and the promotion of women’s active participation in the workforce.
Logistics partnerships
Training in handling furniture
Open House at supplier’s plant
Product Provision Infrastructure
NITORI develops and manufactures products that minimize the use of natural wood. For example, we minimize the use of natural wood by increasing the ratio of fiberboard (particle board and MDF), which makes extensive use of branches and leftover wood material. This also helps us provide stable quality products at low cost.
At the NITORI plant in Vietnam, we use leftover wood material from the manufacturing stage as a reinforcing material for furniture. Further, small wood chips are used as fuel for boilers used in the drying process and are incinerated at a high temperature of 1,000 to 1,500° C to prevent smoke. Paint remaining after furniture production is reused as a solvent to clean machinery.
In addition, the plant of THAI NEGORO CO., LTD. in Thailand manufactures carpet using polyester cotton derived from plastic bottles and directly mixes raw plastic with a colorant. It has also adopted an environmentally friendly coloring method that does not generate sewage.
Compression packing of bed mattressesCompression of packing size
103 cm
28 cm28 cm
97 cm
197 cm
Primary communication with suppliers• NITORI Supplier Management Debriefing: Conducted annually for domestic and overseas suppliers
Report on previous fiscal year’s performance and evaluation, and NITORI’s annual goals and policies
• NITORI Product Safety and Quality Competition: Held bi-annually for suppliers in China and the ASEAN region
NITORI explains its quality performance and progress and presents supplier awards
• Product safety and quality meetings in various countries: Conducts monthly meetings attended by the suppliers’ administrative personnel
Comparison of lighting performance between a common curtain that blocks vision into the room (top photo) and ECONATURE (bottom photo)
Example of product development – The ECONATURE™ Curtain
Since 2012, NITORI has been conducting a new Performance Products development project with the Teijin Group. We have built a partnership in the areas of product planning, development, and sales with a focus on providing products that are high performance, low cost and have a low environmental impact. In May 2018, we launched the premium lace curtain ECONATURE™ as a new product. Leveraging the product development capabilities of NITORI and the technologies of TEIJIN FRONTIER CO., LTD., we created a curtain that enables light to pass through it while cutting heat and ultraviolet light and blocking vision into the room. Just like a regular heat shielding curtain, it is environmentally friendly as it can reduce the use of air conditioning with its high heat-shielding capability.
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Hand-in-hand with its customers
The existence of NITORI makes daily life in the community convenient and enriched.We believe this is the meaning of our existence and our social responsibility as a corporation. NITORI will continue to work on initiatives toward an indispensable existence while cherishing our partnerships with the many people who support us.
NITORI provides emergency relief supplies at the request of local municipalities when natural disasters such as earthquakes and heavy rainfall strike in various locations.
Most of NITORI’s products are essential for everyday life. We have a strong desire to quickly deliver whatever disaster-stricken customers need. Maintaining store operation, or if operation is difficult, restarting operation as soon as possible, are the most important ways to support the stricken areas.
NITORI was founded in 1967 in Sapporo where it has its headquarters. In 2005, NITORI established the Hokkaido Aid Fund to contribute to the development of the area where it has conducted business for many years.
In collaboration with the NITORI Culture Foundation established in 2011, it supports a wide range of activities aimed at revitalizing Hokkaido.
In fiscal 2016, NITORI began to assist in the development of Yubari City with the first corporate version of the hometown tax and is continuing this assistance in fiscal 2018.
Contributing to Hokkaido
In September 2017, we established the OTARU ART BASE which is housed in four historical structures in the heart of Otaru City, Hokkaido. Here, the early architecture of the mid 19th to early 20th centuries is preserved, managed, and researched, and works of art and artifacts owned by NITORI are displayed. In November 2018, we held the grand opening of the Louis C. Tiffany Stained Glass Gallery on the first floor of the NITORI Museum of Art. NITORI will continue to hold various events including rotating exhibits and summer festivals, disseminate this wonderful culture and art to the world, and contribute to the further development of local industries, as well as tourism.
NITORI is also focused on holding sporting events with the aim of revitalizing local communities and promoting sports.
In August 2018, the 9th NITORI Ladies Golf Tournament was held over a four-day period. The tournament site in Otaru City, Hokkaido was crowded with over 10,000 spectators.
Grand opening of OTARU ART BASE in Otaru City, Hokkaido
NITORI International Scholarship Foundation
NITORI Culture FoundationDonations and support activities in FY2017
NITORI Ladies Golf Tournament
Presentation of winner’s trophy (August 2017)
Donations
• Keidanren Nature Conservation Fund• Japan Diabetes Foundation• NPO SUSU• Seijo Gakuen 100th Anniversary/Future Fund• Yubari City - Corporate version of hometown tax, etc.
Support activities
• Tokyu Bunkamura• 2nd Meguro City Run• 26th YOSAKOI SORAN FESTIVAL• Healthy MARATHON IN BIEI 2017• Ishikari City Fireworks Show 2017• OKOPPE SUMMER FESTIVAL• Yubari Summer Festival, etc.
To communicate the basic principles of logistics and service centered on chain store management to young people who will lead the next generation, NITORI holds endowed courses at universities featuring those who work on the front lines at companies as lecturers. In addition, in response to requests from various companies/organizations, NITORI proactively provides lecturers outside of the company.
Helping to develop the next generation
Endowed course at Tokyo University
Universities where NITORI’s endowed courses were provided
• Hokkai-Gakuen University: From 2005 to 2010
• Waseda University: From 2010 to 2014
• University of Tokyo: From 2015 to 2019 (scheduled)
Support for disaster-stricken areas
Since 2013, NITORI has been operating Tokujinkai to support education in China. Tokujinkai help conduct education projects in poor areas with the goal of supporting poor families, as well as the schoolwork of orphaned children and children of single parent families.
In addition, we have conducted educational support activities for 10 years since 2008 for the St. Vincent Free Elementary School.
Children living in Tokujinen Children of the St. Vincent Free Elementary School
Establishment of Tokujinen (free student dormitories)
• Jiangxi Province: Gongqingcheng Tokujinen (Headquarters), Fenyi county Tokujinen, Shanggao county Tokujinen
• Anhui Province: Feidong county Tokujinen
Overseas education supportSince the foundation was established in 2005, NITORI has provided scholarships to students who study in Japan not only from Asia, where it has many business bases, but also from around the world, and to Japanese college and high school students, as well as local college students overseas. The foundation provided scholarships which do not need to be paid back to 2,000 college students (40 countries and regions) as of November 2018.
Graduation ceremony for scholarship recipients (March 2018)
Former Mitsui Bank Otaru Branch NITORI Museum of Art (Former Hokkaido Takushoku Bank, Otaru Branch)
Stained Glass Museum (former Takahashi Warehouse)
Louis C. Tiffany Stained Glass Gallery (NITORI Museum of Art, 1st floor)
NITORI established the NITORI Culture Foundation to provide support for the growth and inheritance of culture, art and tradition, and to build a bridge to the formation of new culture in April 2011. The foundation provides grants for activities with a high public profile and public interest that can be expected to contribute to the community. We provided grants to 88 organizations in fiscal 2017. Of these, grants were provided to the Furusato Hokkaido 10-Million-Tree Planting Project for the planting of about four million trees over the course of 11 years from 2007.
Tree-planting ceremony in Biei-cho(September 2017)
Working with the Community
Most recent major disaster assistance
• July 2017 – Assistance for damage caused by heavy rainfall in northern Kyushu
• July 2018 – Assistance for damage caused by heavy rainfall in western Japan
• September 2018 – Assistance for earthquake in eastern Iburi, Hokkaido
42 43
Corporate governance system
Name Reason for appointment
Mr. Ando has held prominent positions, including Commissioner General of the National Police Agency, and has a wealth of experience and extensive knowledge. Based on his professional experience and knowledge, Mr. Ando has been monitoring the Company’s overall management and has been giving appropriate advice as an Outside Director. Although he has no direct corporate management experience, he will be able to continue to properly fulfill his duties as an outside director based on the above-mentioned experience and knowledge. Number of years served as an outside director: 5 (as of the conclusion of the 46th Ordinary General Meeting of Shareholders)
Takaharu Ando
Mr. Takeshima has held prominent positions, including Chairman of the Japan Fair Trade Commission, and has a wealth of experience and extensive knowledge. Based on his professional experience and knowledge, Mr. Takeshima has been monitoring the Company’s overall management appropriately and has been giving appropriate advice as an Outside Director. Although he has no direct corporate management experience, he will be able to continue to properly fulfill his duties as an outside director based on the above-mentioned experience and knowledge. Number of years served as an outside director: 5; Number of years served as a director who is an Audit and Supervisory Committee member: 2 (as of the conclusion of the 46th Ordinary General Meeting of Shareholders)
Kazuhiko Takeshima
Mr. Suzuki is a legal professional who has held prominent positions, including Superintendent Prosecutor of the Fukuoka High Public Prosecutors Office. He has made use of his extensive experience and expertise by sharing his opinions about the Company’s management as an Outside Auditor. Although he has no direct corporate management experience, he will be able to continue to properly fulfill his duties as an outside director based on the above-mentioned reasons. Number of years served as an outside director: 2; Number of years served as a director who is an Audit and Supervisory Committee member: 2 (as of the conclusion of the 46th Ordinary General Meeting of Shareholders)
Kazuhiro Suzuki
Mr. Tatsuoka has assumed many prominent positions, including Vice-Minister of Economy, Trade and Industry. He makes the most of his wealth of experience and professional insight to strengthen the Company’s corporate governance and compliance systems as an Outside Director appropriately. Although he has no direct corporate management experience, he will be able to continue to properly fulfill his duties as an outside director based on the above-mentioned reasons. Number of years served as an outside director: 2; Number of years served as a director who is an Audit and Supervisory Committee member: 2 (as of the conclusion of the 46th Ordinary General Meeting of Shareholders)
Tsuneyoshi Tatsuoka
Shareholders’ Meeting
Auditing, Monitoring
Electing, Monitoring Reports, Proposals
Instructions, Reports
Instructions, Reports
Election/Dismissal
Electing, Monitoring
Election/Dismissal
Collaboration
Accounting Audit
Election/Dismissal
Board of Directors Audit and Supervisory Committee
Directors who are Audit and Supervisory Committee Members
Representative Directors
Risk Control Conference
Risk Management Committee
Risk Management Division
Internal Board of Directors
Corporate Risk Control Division
Audit and Supervisory Committee Office
Deliberation Division
Each division and Group company in Japan and abroad
Operation Audit
Electing, Monitoring
Electing, Monitoring
Electing, Monitoring
Instructions, Reports
Collaboration Auditing in the Internal Control SystemAuditing in the Internal Control System
Collaboration
Collaboration
Collaboration
Financial Auditor (audit corporation)
Nom
inating and Com
pensation Com
mittee
(optional advisory organ)
Website references Corporate governance basic policy https://www.nitorihd.co.jp/en/ir/governance/policy.htmlCriteria for Judging Independence https://www.nitorihd.co.jp/en/ir/governance/criteria.html
NITORI Holdings Co., Ltd. (“the Company”) places top priority on sustainable growth and the medium- to long-term improvement of corporate value in its management. The Company believes that enhancing its corporate governance system is necessary for achieving these goals.
To enhance corporate governance, the Company aims
to build an organizational structure to respond promptly to any changes in the business environment, practice fair and transparent management as a listed company, and disclose accurate information to all stakeholders in a timely manner. Meanwhile, the Company will develop an internal system to establish its corporate social responsibility and corporate ethics.
Basic approach
The Company has appointed all outside directors as independent executives as stipulated by the Tokyo Stock
Exchange and has notified said stock exchange of these appointments.
Outside directors and independent executives
Directors
Directors who are auditors
Executive officers
Akio Nitori
Representative Director and ChairpersonChief Executive Officer
Representative Director & Chairperson of NITORI Co., Ltd.Representative Director and President of Deco Home Co., Ltd.Director & Senior Advisor of Home Logistics Co., Ltd. Representative Director and Chairperson of NITORI Facility Co., Ltd.Director & Senior Advisor of NITORI Public Co., Ltd. Director of NITORI Furniture Co., Ltd.Director or NITORI FURNITURE VIETNAM EPE
Masanori IkedaDirector & Vice President
Fumihiro SudoDirector & Vice President
Masanori TakedaManaging Director
Takaharu AndoDirector
Toshiyuki Shirai
Takao KuboDirector (Audit and Supervisory Committee member (full-time))
Kazuhiko TakeshimaDirector (Audit and Supervisory Committee member)
Kazuhiro SuzukiDirector (Audit and Supervisory Committee member)
Tsuneyoshi TatsuokaDirector (Audit and Supervisory Committee member)
Fumiaki MatsumotoExecutive Officer & Vice President:
Independent Outside Director
Independent Outside DirectorIndependent Outside DirectorIndependent Outside Director
Managing executive officer
Yuichi Kazeharu
Senior executive officers
Hiromi Abiko Yoshitaka Toi Akio Igarashi Megumi SaitoKei Taoka
Executive officers
Hidetoshi Kobayashi Tadashi Kudo Soichi Oda Kazuyoshi Tayano Naoshi Takei Shunichi Osawa Eri Ablet Hiroki MurabayashiManabu Nakamura Ken Ueda Kenji Sawae Hiroshi Nagai
Representative Director and Chief Operating Officer
Representative Director & President of NITORI Co., Ltd. Representative Director & Chairperson of Home Logistics Co., Ltd.Chairperson of NITORI (CHINA) HOLDINGS Co., Ltd. Chairperson of NITORI (Taicang) Trading & Logistics Co., Ltd. Representative Director and President of NITORI Facility Co., Ltd.Representative Director & Chairperson of NITORI Public Co., Ltd.Representative Director & Chairperson of HOME DECO CO., LTD. Outside Director of KATITAS Co., Ltd.
Corporate governanceNITORI seeks to sustain growth and raise the corporate value of the entire Group through stronger corporate governance, compliance, and risk management.
PAR
T 1PA
RT 2
PAR
T 3
Management Structure
44 45
PAR
T 1PA
RT 2
PAR
T 3
For constructive, frank, and efficient discussion at Board of Director meetings, the Company sets the number of directors at 15 or less. For an effective monitoring system, a third or more of the directors shall be independent outside directors.
The Company currently has 10 directors, of whom four are independent outside directors. The Company aims to develop and strengthen the Board of Directors’ function of monitoring and checking management and the execution of business.
The Company established an Internal Board of Officers to discuss important items related to the execution of business in advance of discussion at board meetings. The Company has introduced an executive officer system for prompt decision-making and business execution to respond promptly and appropriately to changes in the business environment.
The Company has established a Nominating and Compensation Committee as an optional advisory organ for the Board of Directors. The committee ensures objectivity and transparency when the Board of Directors determines policies and procedures related to the nomination of director candidates and compensation, and also further improves the corporate governance system.
The Company stipulates that the majority of the Nominating and Compensation Committee members shall be independent outside directors. The committee consists of five members, three independent outside directors and two representative directors.
The Company has introduced a performance-based stock compensation plan to provide an incentive to directors who are responsible for the execution of duties to sustainably improve the Company’s corporate value and to further promote the sharing of profits with shareholders.
Compensation for executive directors consists of performance-based compensation, in which the amount paid fluctuates based on a fixed basic compensation and Company performance. In addition, performance-based compensation is composed of bonuses (short-term incentive) linked to performance for each fiscal year, and stock-based compensation (medium- and long-term incentive) that establishes numerical targets in advance for Company performance during the target period every two fiscal years and pays for the Company’s common stock after the applicable period, depending on the achievement of said numerical targets.
In addition, the composition of directors’ compensation, the evaluation of the appropriateness of the performance-based compensation plan’s design, the establishment of targets, and the evaluation of performance are reported to the board of directors after being discussed at the Nomination and Compensation Committee and then decided.
From the viewpoint of sharing profits with shareholders over the medium to long term, these directors (including directors who retire after receiving shares granted based on this plan) will continue to hold shares that have been granted for a certain period of time based on this plan pursuant to shareholding guidelines established by the Company’s Board of Directors. The shares granted and received for the applicable period based on this plan will have restrictions imposed on their transfer for three years after delivery in said shareholding guidelines.
The Company’s Board of Directors analyzed and evaluated the effectiveness of the Board of Directors based on the corporate governance basic policy established by the Company.
An analysis conducted by the Company’s Board of Directors confirmed that the Board of Directors is well balanced with people of diverse knowledge and experience, that lively and free discussion by all attending directors including outside directors occurs, and that the frequency of meetings is reasonable, and the Board’s proceedings are properly managed. The effectiveness of the Board’s decision-making and its oversight of directors’ execution of their duties was judged as properly maintained in line with the corporate governance basic policy.
On the other hand, as a result of verifying the status of improvements and progress of issues that were clarified by the effectiveness evaluation of fiscal 2016, it was judged that there are still issues to be resolved in terms of the improvement of monitoring functions and further reinforcement of the corporate governance system, although steady improvement is being made on delegating decision-making authority concerning appropriate business execution and enhancement of the Board’s agenda materials.
Based on each of the issues recognized by the Board of Directors’ effectiveness evaluation and the candid opinion of each director who freely responded to the questionnaire, the Company’s Board of Directors has continued its efforts in fiscal 2017 and has tried to improve the following issues on a priority basis.(1) More constructive discussion that contributes to
raising medium- and long-term corporate value(2) Further strengthening of the monitoring function(3) More constructive discussion that contributes to a
stronger risk management system for the entire Group(4) Reflection of stakeholders’ opinions in decision-making(5) Promote delegation of authority concerning business
execution(6) I mprove supply of information needed for deliberation
The Company will continue to discuss how to raise corporate value as well as how to enhance the effectiveness and improve the evaluation of the Board of Directors to achieve the NITORI Group’s vision.
To enhance the soundness of management by monitoring the board of directors’ performance of duties, the Company sets the number of Audit and Supervisory Committee members at five or less. The Audit and Supervisory Committee monitors management from a fair and independent perspective in accordance with the audit policy and audit plan for the current period.
The Audit and Supervisory Committee currently has four directors, of whom three are independent outside directors. The three outside directors audit and monitor the execution of business by the directors by participating in Board of Directors meetings and using the internal control system. The director who is a full-time Audit and Supervisory Committee member audits and monitors the execution of business by the directors by attending in Board of Directors and Internal Board of Officers meetings, reading documents regarding important decisions, reporting on the Internal Audit Division, and interviewing the relevant people.
The Audit and Supervisory Committee cooperates with the financial auditor, communicating about the financial auditor’s audit policy, audit plans and audit reports as needed.
The Company has established an Audit and Supervisory Committee Office as a department to assist the Audit and Supervisory Committee.
Board of Directors Nominating and Compensation Committee Performance-based stock compensation plan
Evaluation of the Board of Directors’ effectiveness
Audit and Supervisory Committee
To minimize losses or disadvantages that our Group suffers, the Company formulated risk management regulations and a Business Continuity Plan (BCP) and established a risk management system initiated by the Risk Management Committee. In accordance with the BCP, the Company carries out various training along with monthly Risk Control Conferences that review risks and implement countermeasures against new challenges to strengthen the Group’s risk management system.
In order to implement the NITORI Group’s corporate philosophy and basic policies on corporate governance, as well as appropriately and efficiently execute its corporate duties, the Company has established “basic policies on internal control systems” related to the development of a system for the following execution of duties by the directors and employees of the Company and Group companies: risk management and compliance systems to help with the execution of said duties, and a system for ensuring effective auditing.
In principle, the basic policies on internal control systems apply to all of the Group’s entities. The purpose of the basic policies is for the Group as a whole to enhance its enterprise value and to achieve management transparency and efficiency.
Risk Management Committee
Internal control systems
First year Target period based on this planSecond year
Granting of shares
Third yearTransfer restriction period(Provisions in the Shareholding Guidelines)
Fourth year
Fifth year
Management Structure
Outline of the performance-based compensation plan
46 47
Outline of shares
Total number of authorized shares: 288,000,000
Total number of issued shares: 114,443,496
Number of shareholders: 18,353 people
Listing market: First Section of the Tokyo Stock Exchangeand the Sapporo Securities Exchange
Securities code: 9843
Fiscal year: February 21st of every year to February 20th ofthe following year
Ordinary General Meeting of Shareholders: May
Administrator of shareholder registry: Sumitomo Mitsui TrustBank, Limited.
Company Information (As of February 20,2018)Company Stock Information (As of February 20, 2018)
NITORI Group List (As of February 20,2018)
Company name
Representatives
Establishment
Incorporated
Revenues (Consolidated)
Ordinary income (Consolidated)
Capital stock
NITORI Holdings Co., Ltd.
Established December 1967
March 1972
¥572,060 million
¥94,860 million
¥13,370 million
Full-time: 10,366 Part-time: 14,450
Akio Nitori, Representative Director & Chairperson (Chief Executive Officer)
Toshiyuki Shirai, Representative Director & Chief Operating Officer
Tokyo Headquarters: 3-6-20, Kamiya, Kita-ku, Tokyo 115-0043; Tel: +81-3-6741-1235
Sapporo Head Office: 1-2-39 Shinkotoni 7-jo, Kita-ku, Sapporo, Hokkaido 001-0907; Tel: +81-11-330-6200
Number of employees(Consolidated)
Address
Distribution of share by type of shareholder
Securities companies 0.94%
Treasury stock2.03%
12.37%
Other corporations in Japan 23.43%
Financial institutions 24.57%
Foreign corporations, etc.36.66%
Individualshareholders, others
Import Agent CompaniesNITORI (CHINA) CO., LTD.NITORI (Taicang) Trading & Logistics Co., Ltd.NITORI (Vietnam) Trading Co., Ltd.NITORI (MALAYSIA) SDN. BHD. Nitori Trading (Thailand) Co., Ltd.NITORI India Private Ltd.
Logistics CompanyHome Logistics Co., Ltd.
Advertising AgencyNITORI Public Co., Ltd.
Facility ManagementInsurance Agent BusinessNITORI Facility Co., Ltd.
Store Management CompaniesNITORI Co., Ltd.HOME FURNISHING STOREHOME FASHION STORENITORI MALLDECOHOMEOnline Shopping BusinessRenovation BusinessCorporate Sales Business, etc.
Overseas Sales CompaniesNITORI Taiwan Co., Ltd.NITORI (CHINA) HOLDINGS Co., Ltd.Deco Home China Co., Ltd.NITORI (SHANGHAI) HOME FURNISHING CO., LTD.NITORI (SHANGHAI) HOME FURNISHINGS SALES Co., Ltd.NITORI USA, Inc.
Curtain Manufacturing FactoryHOME DECO CO., LTD.
Overseas Manufacturing CompaniesNITORI FURNITURE VIETNAM EPENITORI FURNITURE Ba Ria-Vung Tau Co., Ltd.
Trading, Planning & Development, and Logistics Functions
Sales Activities
ManufacturingFunctions
Advertising and Publicity Functions
Facility Management Functions
NITORIHoldings Co., Ltd.
Major shareholders
18.554.033.813.573.443.403.042.751.831.79
20,7994,5154,2774,0003,8603,8123,4093,0782,0562,007
NITORI Trading, Ltd.Japan Trustee Services Bank, Ltd. (Trust account) JP Morgan Chase Bank 380055NITORI International Scholarship FoundationNorth Pacific Bank, Ltd.The Master Trust Bank of Japan, Ltd. (Trust account)Akio NitoriMomoyo NitoriNippon Life Insurance CompanyNational Mutual Insurance Federation of Agricultural Cooperatives
NameNumber of shares owned
(thousands)Ratio to the total number of
issued shares (%)
(As of February 20, 2018)
Notes: 1. The numbers presented in “Number of shares held” above are calculated based on the list of shareholders. 2. The Company’s 2,322,256 shares of treasury stock are excluded from the above list of major shareholders. 3. Calculations of equity positions exclude holdings of treasury stock. 4. The number of shares owned by Japan Trustee Services Bank, Ltd. and The Master Trust Bank of Japan, Ltd. are shares held in securities investment trusts and retirement benefit trusts.
0
3,000
6,000
9,000
12,000
2015/3 2015/6 2015/9 2015/12 2016/3 2016/6 2016/9 2016/12 2017/3 2017/6 2017/9 2017/12 2018/2
Turnover (Thousand shares)
Stock price (yen)
6,000
8,000
10,000
12,000
14,000
16,000
20,000
18,000
Stock price and turnover
48 49
Company Stock Information/Company Information
