Global Business Frontline Report: Achieving our Mission Statement on the World Stage

In order to “provide the foundation
of prosperous home living to
the global community,” we develop ways
to manufacture our products throughout the world,
and also sell them around the world.

Global Business Frontline Report: Achieving our Mission Statement on the World Stage

Vietnam Taiwan China USA

Outline/Strategy

Speeding up global expansion on two aspects,
overseas manufacturing & procurement,
as well as overseas market.

To turn our mission statement of “to provide the foundation of prosperous home living to the global community” into a reality, overseas businesses have two aspects. One aspect is the overseas manufacturing & procurement that enables us to provide “reliable quality” at “reasonable prices.” We currently have procurement facilities in countries such as China, Malaysia and Thailand. Including our manufacturing facilities in Indonesia and Vietnam, we currently procure and manufacture most of our products overseas, particularly in Asia.
The other aspect is the overseas market, such as the U.S., Taiwan and China, in which we are actively opening stores in order to become a globally known brand. While we offer Japanese-developed products on one hand, we are also working to raise our brand awareness by developing products that meet the local’s demand.
We intend to accelerate the speed of opening store overseas, to reach our goal of having 3,000 stores worldwide by the year 2032 in order to provide comfort and luxury to people all over the world. To accomplish this, we are focusing on building an organization that enables the development of new store openings as quickly as possible while targeting to cultivate a new region for store openings such as in Latin America and Southeast Asia.

Outline/StrategyMission Statement To provide the foundation of prosperous home living to the global community.

Outline

Optimizing logistics from global perspectives and
organizing facilities for procurement and
logistics all over the world.

We began sourcing items overseas in 1989 when NITORI first branched out into Singapore. Following the establishment of new facilities through mergers and closures, we have been actively cultivating suppliers in an efficient way from all over the world in countries such as China, Malaysia and Thailand. Rather than relying on trading companies, we utilize our own facilities to gather local information from production sites worldwide , and negotiating directly with overseas manufacturers to procure raw materials with high quality at lower prices. We expect the volume to be increased according to the increment of the number of procurement origin.
To efficiently transport materials and products procured from all over the world, we have also established logistic facilities overseas in countries such as China and Vietnam. Thus, quality control, inventory management and trading procedures are centralized, and the entire logistics process is optimized from global viewpoint.
As we continue to accelerate the speed of opening new stores in the near future, we are moving forward with the supply chain secured at each region prepare product development based on local demand.

OutlineOptimizing logistics from global perspectives and organizing facilities for procurement and logistics all over the world.

Outline

Expanding high-quality, efficient manufacturing driven
by 500 subcontracting factories and
group production facilities on a global scale.

Approximately 90% of NITORI products are procured overseas. We have around 500 subcontracting factories handling manufacturing processes throughout the world, particularly in Asia. Instead of outsourcing the entire manufacturing processes, we assign NITORI employees on a permanent basis who supervise and manage quality control, and also provide them with the technical advice on how to improve their manufacturing processes.
We established our own manufacturing facilities in Indonesia in 1994 and in Vietnam in 2004 to enable us to handle production activities among our own group. In 2015 we reached the decision to construct a new production plant in Vietnam to cope with an increased number of stores in China. We continue to expand the scale of these facilities, which chiefly manufacture furniture, so that we can constantly satisfy increasingly demand.
As well as introducing Japanese-style improvement (kaizen) activities at subcontracting factories and manufacturing facilities, we aim to share the NITORI philosophy and the joys of craftsmanship with local members of staff so that we can create products that guarantee customer satisfaction.

OutlineExpanding high-quality, efficient manufacturing driven by 500 subcontracting factories and group production facilities on a global scale.

Outline

Accelerating store openings with the aim of achieving 3,000 stores, providing the foundation of prosperous home living to the global community.

We continue to actively open stores overseas, in an effort to establish a universal worldwide brand and achieve our mission statement of “To providethe foundation of prosperous home living to the global community.”
Having opened our first store overseas in 2007 in Kaohsiung, Taiwan, in 2013, we opened a store in the outskirts of Los Angeles, home of the chain store and the world’s biggest battleground for sales. In 2014, we began opening stores in the rapidly growing Chinese market, as we set about expanding our network globally, including other parts of Asia.
We are in the process of accelerating store openings, particularly in China, with the aim of reaching 3,000 stores worldwide by the year 2030. We are also planning to accelerate store openings overseas in areas such as Latin America and Southeast Asia.
As we open stores overseas, we are focusing particularly on home fashion offerings, which we have not previously exported, and are working to develop products in line with local demand, taking into account cultural differences in each country.

OutlineAccelerating store openings with the aim of achieving 3,000 stores, bringing comfortable, luxurious home living to people all over the world.

Global Business Frontline Report: Achieving our Mission Statement on the World Stage

USA Challenging the world’s toughest, most competitive market

USA Challenging the world’s toughest, most competitive marketUSA Challenging the world’s toughest, most competitive market

More

Business outline

Raising brand awareness through concentrated store openings in Los Angeles

When Chairman, Akio Nitori first laid eyes on chain stores in the U.S. around 40 years ago, he felt amazed and inspired to see that furniture and interior products were on an entirely different level in terms of price, range and quality compared to those in Japan. The U.S. is the starting point of NITORI and we opened our first store in October 2013 under the brand name “AKI-HOME.” Since then, we have been strategically working to improve brand recognition by opening more stores, particularly in Los Angeles on the west coast.
As well as showcasing the appeal of high quality products at reasonable prices along similar lines as Japan, we are also focused on developing and procuring unique products to suit different physiques and lifestyles to those in Japan. Furthermore, we are working on store development that meets the local demand by tailoring our assortment of merchandise based on the constantly changing seasonal display, as well as arranging the sales area so that the most cost-competitive types of furniture become the main feature of the store.

Business outline

Future strategy

Building a structure to prevail the tough competition

Besides having the world’s largest consumers, the U.S. also has the toughest, most competitive market in the world. Our stores are opened in the primary area of Southern California, which has the highest population of consumers on the West Coast. We believe that prevailing in such a competitive market will help us establish a universal business model. In order to promote our domestic and overseas horizontal expansion, along with building zero-base structures for product development, procurement and store operations, we are providing headquarters with feedback on local sales and display methods, as well as information on products aimed for the U.S. market.
We consider the U.S. project as a “second founding” of NITORI, and we are building a structure that lets us grow into a true global company. At the same time, we are eager to open more stores and are building another structure that allows us to achieve store expansion in the U.S.

Building a structure to prevail the tough competition

China A strategic area for global expansion

China A strategic area for global expansionChina A strategic area for global expansion

More

Business outline

Showcasing home fashion as a new offering in China

In October 2014, we opened NITORI Wuhan Star City Store in Hubei province as our first store in China. We are rolling out NITORI brand to stores in China and are speeding up expansion by focusing particularly on tenanted stores in shopping malls, which are rapidly increasing in number.
Although China has a booming consumer market, there are relatively few stores selling furniture, interior items and miscellaneous goods under one roof. This means that the “home fashion” business, which is our specialty, is ripe for development, and has led to us receiving requests for store openings from countless commercial facilities. Along with affordable pricing, we intend to tap into demand based on the characteristics of each area by suggesting different home and interior coordination ideas through store displays.

Showcasing home fashion as a new offering in China

Future strategy

Speeding up store openings,
including in the less competitive inland areas

Not only does the size of China’s population make it an attractive market, but also the fact that income levels are rising in line with economic growth. For this reason, we are looking to actively expand stores in China. We are currently focusing on market research and human resource development, whilst paving the way to store expansion, with the aim of speeding up openings at the rate of 10-20 stores per year and achieving 100 stores by 2022.
While our competitors are focusing on opening stores in major cities in coastal areas, we are expanding our network of stores to include regional cities in inland areas, where markets are growing at a considerable pace but there is still relatively little competition, in an effort to target middle-income earners.

Strengthening our product supply structure

As we continue store expansion in China, we will need to strengthen our supply structure to include imports from other countries, as well as expanding manufacturing within China. It was with that in mind that we announced the establishment of NITORI (China) Co. Ltd. in Shanghai and Nitori Taicang Trading & Logistics Co. Ltd. in Taicang (Jiangsu province) as wholly owned subsidiaries in December 2015, to handle sales and product supplies respectively.
NITORI Taicang Trading & Logistics is scheduled to commence operations at a large-scale distribution center in May 2018, as part of a plan to establish it as a logistics facility linking production and procurement factories around Asia with those in Japan, as well as functioning as a supply facility for China.
We are aiming to enhance our presence in the Chinese market across a wide range of channels, including an online strategy reflecting the scale of the online shopping market in China.

Strengthening our product supply structure

Taiwan Our first step towards overseas expansion

Taiwan Our first step towards overseas expansionTaiwan Our first step towards overseas expansion

More

Business outline

Improving brand recognition and increasing sales volume

Opened in May 2007 on the back of incentives offered by Kaohsiung City Government, our Kaohsiung Dream Mall store (now closed) was the first NITORI store opened overseas and in Taiwan. We started out selling products for the Japanese market straight to Taiwan, because it was felt that Japan and Taiwan’s market were very similar. However, it was discovered that there are a lot of differences between the two markets, such as Japan using American and European sizes for bedding. This difference prompted us to focus on product development and procurement in line with customers and regional characteristics. Today, standard products account for roughly 70%, with the remaining 30% consisting of products unique to Taiwan.
Opening stores in Taipei and other major cities enabled us to improve recognition and establish NITORI as a provider of quality at affordable prices. We are currently opening stores on a large scale, and we have achieved profitability on an annual basis thanks to economies of scale.

Future strategy

Concentrating areas for store expansion,
incorporating compact and
urban store strategies from Japan

Taiwan is relatively small with a large part of its population concentrated in certain cities. As a result, our strategy is to continue multiplying stores by concentrating on the opening in Taipei at its center, and other major cities such as Taichung and Tainan. In Taiwan, it is necessary to open stores in various different formats, including the compact or urban store strategy. We believe that our store policy in Taiwan will serve as a template for other countries, including those in Southeast Asia that have similar geographical conditions.
We are also working to increase sales volumes through initiatives such as actively developing products to local specifications, and showcasing the appeal of “N COOL” and other hit products from Japan.

Future strategy
Future strategy

Vietnam The manufacturing facility sustaining global products supplies

Vietnam The manufacturing facility sustaining global products suppliesVietnam The manufacturing facility sustaining global products supplies

More

Business outline

Sharing the pride and joy of working
for NITORI with local employees

Located in the Quang Minh Industrial Zone in Me Linh district, less than an hour from the capital Hanoi by car, our factory in Vietnam has been efficiently manufacturing high quality products under the management of NITORI FURNITURE since it was first established in February 2004. The factory covers a vast site measuring over 158,000 square meters and has a local workforce of more than 3,500 employees, who have a young average age, specifically in their early twenties. In fact, women around the age of twenty account for roughly 90% of all employees. We have created a pleasant working environment, complete with employee accommodation for Japanese staff in Hanoi.
As part of factory operations on the ground, we place an emphasis on “localization”. Japanese and local managers work together as they focus on training and recruiting local staff. As part of NITORI group, we share our philosophy with employees, which is the joy of manufacturing and making customers happy; as well as introducing the Japanese style manufacturing practice, including the 5S principles and “visualization” concept. We also give local staff the chance to study in Japan, so that they can learn about subjects such as organizational management.

Sharing the pride and joy of working for NITORI with local employees
Sharing the pride and joy of working for NITORI with local employees

Future initiatives

Building a new, large-scale factory
to cope with growing demand

As we continue to expand our stores overseas, not least in the Chinese market, in July 2015, we decided to establish a new manufacturing subsidiary in the southern Vietnamese province of Ba Ria-Vung Tau in order to strengthen our group-wide product supply capabilities. As a core factory manufacturing large items of furniture, including beds, mattresses and sofas, we have secured a site even larger than our factory in Hanoi. Being the largest facility in all NITORI group, the new factory will help support our global expansion plans.

Future initiatives