Completing the In-House SPA Model and Establishing Three Systems

「重点商品の開発・販売強化によるプロパー販売比率の向上及び在庫水準の適正化を進め」

「We will expand full-price sales by improving the accuracy of product development through revisions to the rules for product review and more efficient review using AI image processing.」

「On the sales side, we promoted restraint in discounting and the careful use of carryover products at events and through e-commerce. On the product side, while taking measures to address foreign-exchange risk, we sought to reduce procurement costs by expanding sourcing from China and the ASEAN region. The gross profit margin improved by 5.1 percentage points, while inventories of merchandise at fiscal year-end decreased by ¥350 million from the same period of the previous year.」

「On the product front, the Company continued from the previous consolidated fiscal year to restrain discount sales and carefully utilize carryover products through events, e-commerce and other channels. As a result, the gross profit margin improved by 5.7 percentage points, while ending product inventory was reduced by ¥279 million from the same period a year earlier.」

「In response to declining sales caused by the spread of COVID-19, the Company revised its procurement plans as needed, reduced inventory and increased the proportion of full-price sales. As a result, the gross profit margin improved by 8.9 percentage points.」

「From market analysis through production, we revised the planning and development process based on AIMD's quantitatively visualized trend forecasts, an AI-based solution, and directly reflected market trends and customer needs in products. We also reviewed the balance between planned production and quick-response production in product development, production and procurement, improving the full-price sell-through rate by 6.4 percentage points compared with the previous autumn/winter season.」

「During the nine-month consolidated period, the company reviewed its product decision-making process and changed to an integrated product-development approach combining merchandising and sales. As a result of reviewing the mix of long-lead-time production and quick-response production, the gross profit margin improved by 4.1 percentage points from the previous year.」

「During the six-month consolidated period, the company reviewed its product decision-making process and changed to an integrated product-development approach combining merchandising and sales. As a result, the gross profit margin improved by 4.6 percentage points from the previous year.」

「During the cumulative consolidated first-quarter period, we introduced new technologies for market analysis and product planning, established a system to analyze qualitative information previously judged based on intuition and experience using AI and visualize it quantitatively, and created a mechanism for directly reflecting customer feedback in products. The system will be rolled out with autumn products launched from the second quarter onward.」

「To improve the full-price sell-through rate, we changed the product decision-making process, reduced the total number of product numbers to 60% of the previous year's level and worked to clarify priority products. Sales of men's bottoms, which received increased sales support, grew to 109.6% of the previous year's level, but other products fell below plan because they were unable to respond to unstable weather changes. From the fourth quarter onward, in addition to clarifying priority products and strengthening sales capabilities, we will seek further improvement through technology, including the introduction of an AI-based trend forecasting system.」

「To improve the full-price sell-through rate, we will transform our organizational structure and review the merchandising process. By adopting a headquarters-based structure, we will promote the SPA model while leveraging economies of scale. We will also appoint brand directors and transform the organization so that cross-functional decisions can be made from a brand perspective. In addition, we will improve the full-price sell-through rate by reducing the number of product numbers and clarifying priority products.」

「The company fully launched the automatic stock-transfer system by expanding the functionality of its merchandise-planning support system. In particular, expanding coverage to priority products across all categories of “ikka” increased the proportion of sales made at full price for the covered product codes.」

「The company expanded the number of product codes covered by the automatic stock-transfer system and put it into operation, confirming an increase in the proportion of sales made at full price for the covered products. To accommodate the increased frequency of transfers between stores resulting from the system's operation, the company switched shipments between its distribution centers and stores from cardboard boxes to reusable “Eco Biz Boxes” in February 2018 and introduced RFID tags to manage the boxes.」

「By automatically reallocating products after a certain period following the start of sales, based on sell-through conditions at each store, the company has increased the proportion of sales made at full price.」

「Regarding improvements in inventory sell-through management, the Company aims to rebuild a system-based inventory control structure and began testing an automated transfer system at ikka in September.」

「In fiscal 2017, the first year of the new 3-year medium-term plan aimed at advancing SPA reform, achieving lower prices and fresher products, and establishing stable profitability, we are strengthening regular-price sales through product development that enhances freshness and price competitiveness, which produced results in the previous fiscal year, and improving inventory efficiency. We are also pursuing 3 initiatives: promoting SPA reform, improving the accuracy of product sell-through management, and shifting to renewed growth.」

「Under the medium-term plan, we will build 3 systems and pursue the completion of our own SPA model as a key reform initiative.」