As we pursue our basic business strategy, we continue to aim to be an innovative retailer offering its customers a high-value-added service in the multiple businesses we operate.
Expanding our Market through the Diversification Strategy
UNITED ARROWS will expand new businesses laterally in order to enhance market coverage. New businesses are piloted at our experimental stores known as UA Labs in order to examine the market potential. Businesses judged to have high market potential will be strategically invested in from the beginning. By doing so, we will be able to achieve optimum resource allocation.
We will increase the coverage of our business as we consider the broader operating environment and the current competitive climate. We will regularly make adjustments to our business portfolio through multifaceted analysis of profitability, growth, and brand image. Investment will be made according to which of these new businesses take priority. While maintaining and expanding brand loyalty, we will grow by diversifying our business based on both economic rationality and fashion sensitivity.
Creating New Businesses via UA Labs
New businesses are piloted in UA Lab test-marketing stores in order to examine their market potential.
Businesses with growth potential are examined by its product policies and store opening strategies, and are actively developed into new business units based on business priority. UA Labs with products that are either following short-term trends or that are difficult to follow successful business plans are terminated accordingly.
This type of test marketing allows us to diversify our business with a high rate of success and few failures.
Developing SBUs as Future Core Businesses
UA Labs initiatives are promoted to Small Business Units (SBUs) after the initial piloting phase. These SBUs will actively expand the number of stores and increase the range of products in order to become a key business within the UNITED ARROWS Group.
When it is determined that the SBU can generate stable popularity among our customers and also realize an identified level of profitability, it will be promoted to an independent business unit.
If a new store-brand is judged to have a strong market potential and a high possibility of short-term expansion with benefits that accrue to the Company, it starts directly as a SBU without being a UA Lab.
Maintaining High Store Loyalty by Identifying Optimum Number of Stores and Continuing to Operate High-Value-Added Businesses
An optimum number of stores will be identified for each business. We will calculate this number by making qualitative and quantitative analysis of the potential target market and the environmental characteristics of candidate areas in which to open stores. The optimum number of stores will be revised periodically according to changes in business conditions. As we carry out such an analysis, we will gain both wider market coverage and improved store loyalty.
Carrying Out One-to-One Marketing to Maximize Customer Lifetime Value
At the same time as we actively acquire new customers, introducing the House Card (membership card) used throughout the UNITED ARROWS Group enables us to carry out one-to-one marketing. We believe that the data collected from card usage, including individual customer characteristics and buying habits, will enable us to provide them with a more-personalized service and consequently maximize their lifetime value. We aim to enhance customer satisfaction by expanding our business as appropriate, including increasing store numbers and expanding our product lineup. We are determined to increase customer loyalty to enable us to maintain consistently high sales levels that are resilient to changes to the external environment such as unseasonable weather, economic downturns, and population declines.