Three Key Sources of Satisfaction for Customers

A feature that defines UNITED ARROWS LTD. is the direction that initiates all activities related to product development. Direction, which is based on a detailed analysis of trends in fashion colors and materials, overseas collection information, and shifts in social tastes, allows us to put in place a common theme across all businesses on a seasonal basis. In addition, marketing divisions consistently undertake research into the latest fashion trends providing this information across the Group. Each business then draws on this information to establish specific themes that incorporate particular attributes. Buyers, who travel all over the world, and designers responsible for private label brands regularly exchange information. This serves as the wellspring for differentiating our products and consistently delivering a fresh and unique appeal.

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Collaboration between product and sales division is the driving force behind product planning that accurately captures customer needs. Sales divisions meet regularly with head office personnel to report on the comments received from customers at stores. At the same time, sales divisions participate in every stage of the product planning process from design through sample manufacture to finished product. In the fiscal year ending March 2012, we will take steps to further enhance collaboration between product and sales divisions. In an effort to address priority issues, we will incorporate the promotion function within product and sales division collaboration with the aim of placing increased emphasis on increasing the number of store customers.

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The Company’s sales activities are the culmination of a comprehensive product planning, procurement, production, and inventory reduction process that involves the ongoing validation and modification of plans on a trial and error basis. Tentative plans for the sale of products at stores are put in place after dividing the year into 52 weeks and undertaking a detailed analysis of past sales performance as well as market needs and trends.

Product procurement, production, product launch, and inventory reduction activities are conducted in accordance with the Group’s product platform, which is in turn composed of its merchandising and production platforms.

The merchandising platform provides the mechanism for determining the current status of merchandise flows and the basis for making decisions. Utilizing the progress management tables and indices consistent across all businesses, UNITED ARROWS LTD. has established a swift and easy-to-implement decision-making process that allows the Group to promote the additional production of top-selling items while reducing production and inventories of slow-selling items. As a result, UNITED ARROWS LTD. has witnessed increases in the rates of inventory reduction as well as final sales. This is in turn leading to improvements in gross profit, inventories, and cash flows.

The production platform works to formulate the product procurement and production strategies that take us from merchandising planning through to realization. While manufacturing is outsourced, the choice of external plant or factory for each item is based on a Group-wide consolidation of the raw materials procured by each business as well as manufacturing plant information. Accordingly, this has led to positive adjustments in procurement costs relating to purchases and production as well as lead times in a way that satisfies the five key criteria.

Product flow

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Product management including price tagging conducted at warehouses and concentrated inventory control at the direction of the Company’s head office are consistent throughout each of the Group’s four nationwide distribution centers. Every effort is made to ensure that the right products are stored in the right quantities at the right time. This not only leads to optimal product quality control, but also significantly alleviates the operating and administrative burden. More importantly, this allows us to maximize the time spent in direct contact with and service to customers.

UNITED ARROWS LTD. has installed a point of sale (POS) system to facilitate coordination between nationwide stores and distribution centers. Products sold are promptly replenished in a prearranged period according to each region. This process is designed to ensure that top-selling products remain available at all times minimizing sales opportunity loss.

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UNITED ARROWS LTD. recognizes the importance of clarifying to whom its products are directed, with whom, and what it is competing, and what unique benefits it seeks to provide when promoting a consistent brand image. These considerations form a major component of efforts to put in place a statement for each brand. Moreover, to avoid duplication and any potential for direct internal competition, the Company takes stock of its Company-wide brand portfolio and engages in sales activities after clarifying the role and position of each brand.

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The UNITED ARROWS rule that “our stores are for our customers” provides the platform for its sales activities. The UNITED ARROWS University, which is an internal training program, has put in place a corporate philosophy curriculum aimed at fostering a deeper understanding and awareness of this rule and the customer service mindset.

In addition, the University provides the opportunity for employees to learn UNITED ARROWS LTD.’s basic sales and product policies and customer service techniques such as measuring, interpretation of quality labeling, and consumer motivation. Combining practical on-the-job training with opportunities to gain theoretical and systematic sales knowledge helps sales personnel enhance their customer service skills.

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In order to maintain and increase the knowledge and motivation of sales personnel, UNITED ARROWS LTD. recognizes the need for a human resource rating system that evaluates the level of achievement against established quantitative goals that focus not only on sales performance but the initiative and actions of each employee. In this context, and among a host of initiatives, a representative selected from each Group brand participates in the UNITED ARROWS Grand Prix, a role-playing sales contest. The Sales Master system is also an initiative created to reward sales personnel who specialize and excel at their work. Furthermore, the Sales Master system provides a goal to which all sales personnel can aspire, thereby bringing a greater sense of Group-wide unity.

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Store operations in the retail apparel industry are characterized by the substantial use of part-time employees. Against this backdrop, UNITED ARROWS LTD. maintains an employment policy of, in principle, recruiting only full-time, permanent employees. In this context, the Company maintains a robust employee support and backup system that allows each employee to pursue an optimal balance between work and home life. In addition to support programs that assist employees in gaining qualifications, UNITED ARROWS LTD. makes it a point to nurture a workplace environment that is conducive to lifelong employment.

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UNITED ARROWS LTD. has introduced a House Card initiative for use by customers at all stores. This initiative allows the Company to maintain a record of each customer’s purchases, which is shared Group-wide, and to maintain and analyze an invaluable pool of customer information. Rather than manage and handle this data at a head office level, individual stores manage each individual’s information to ensure an appropriate and flexible response. Data encompassing purchasing frequency, type, and amount provide the basis for decisions made by each store. Drawing on this information, stores can then select the most appropriate medium to promote products, such as via telephone, direct mail, or e-mail magazines.

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