Shiseido to invest over $75 million in brand equity and employee training

At the company’s first-half earnings conference on August 10, Shiseido Chairman and CEO Masahiko Uotani spoke about the tough decisions the company made amid the turmoil caused by COVID-19.

Some of the decisions included the sale of its personal care division, as well as several brands such as Laura Mercier and bareMinerals.

“We seriously embarked on a transformation on a global scale that required tough decisions and a thorough examination of poor and unprofitable businesses. At the same time, to defend and secure earnings for each fiscal year as sales were on a downward trend, we implemented agile cost management, including reductions in online marketing costs with the decline Sales “, Uotani said.

However, he said the company needed to change its stance and push itself to adopt a more “offensive”approach to ensure future growth.

“However, after three years of this situation, the continuation of this approach, I believe, will lead to a downward trend. I strongly feel a sense of crisis. Therefore, I believe it is necessary to stop this trend. and to transform our management to be offensive by increasing strategic investments.

Strengthen a brand and its employees

Uotani said it was imperative for the company to build brand equity, therefore the company is expected to invest an additional 5 billion yen ($37.8 million) this year to do so.

“Our strategy’s top priority…is to build brand equity, which serves as the foundation for our connection to consumers and continued consumer purchases of our products,”Uotani said.

He explained that the company would leverage its strengths in research and development, which are becoming increasingly important to the post-pandemic consumer.

“After experiencing COVID-19, consumers around the world are increasingly aware of health and immunity, the efficacy and functions of cosmetics, science and formulation technologies to support the product development. We will proactively communicate information such as benefits and brand value through advertising, etc., as important factors supporting the credibility of brand value. »

The company will also backtrack on price-driven promotions, which can dilute brand equity.

“We need to redirect our investments to build brand value and stop overemphasizing promotions,”Uotani said.

Another 5 billion yen ($37.8 million) will be invested in its staff, Shiseido “biggest assets”,Uotani said.

“There is a sense of stagnation in society and also a sense of confinement among our people due to the COVID-19 pandemic as the industry has been very seriously affected. To overcome this situation, strengthening investment in human capital and improving employee engagement are very important strategies. »

This would involve its digital academy, which retrains and reskills its employees to adapt to today’s digital landscape. Additionally, the company plans to build a global training center in Tokyo.

The initial investment of JYP 10 billion ($75.5 million) will not be one-time, Uotani assured, and will continue beyond 2022.

“We will make company-wide efforts and review our business in response to changes in the market environment to achieve COGS and SG&A ratio reduction targets, aiming to achieve an operating profit margin of 15 %.”

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