Interview with the President
What is the basic concept behind your sales and marketing strategies?
What is the basic idea behind the development of a new store network and store management?
What is your position on the training of the staff who support IDC Otsuka’s consulting services?
Can you explain the impact of exchanges rate fluctuations on IDC Otsuka’s business performance?
What management challenges have you identified over the medium to long terms?
What initiatives did you pursue in the fiscal year ended December 2010, and what outcomes did you achieve?
During the fiscal year ended December 2010, we first decided to focus on improving our earnings structure as a precondition for us to take a variety of aggressive initiatives. I believe that we have generally met the goals we initially set.
We first successfully bolster sales per rent and sales per employee by rebuilding showrooms. We have also developed a structure in which we have effectively improved the selling, general and administrative expenses rate, by reallocating employees to stores that have higher sales per employee. Moreover, we have reviewed the allocation of advertising expenses. As a result, with our efforts to cut fixed costs, we have been able to significantly increase the portion of selling, general and administrative expenses that we can control in accordance with our strategies. On the marketing front, meanwhile, we have adopted new methods of managing showrooms in Ginza Showroom and other showrooms by reviewing the membership system, including the introduction of more flexible entrance procedures. We also took steps to renew our image by broadcasting new commercials on television. Through these actions, we sought to ensure that our customers truly understand the areas where we excel.
Our strategy is to determine the direction of IDC Otsuka over the next ten years by improving its earnings structure while rebuilding showrooms, and expanding sales by reviewing our overall marketing. I believe that this strategy is making solid progress.
What kind of management policies and initiatives do you expect to adopt for the fiscal year ending December 2011?
I regard the fiscal year ending December 2011 as a year in which we will see the results of the initiatives we have been taking. Based on the results we achieved through the steps we took until the last year to strengthen our management foundations, we will strive to expand income based on sales growth by focusing even more on IDC’s true competences and direction. Specific initiatives for the fiscal year ending December 2011 include the development of showrooms and advertising, taking into account the characteristics of showrooms and regions, the introduction of regular examination and other programs that benefits from the features of the membership program, and the comprehensive revamp of our website.
What is the basic concept behind your sales and marketing strategies?
IDC Otsuka regards furniture as durable goods for consumers. We therefore aim to introduce to customers the concept of using true products for a long time, by providing customers with the added value of our expertise as an interior specialist. To achieve this, it is important that we adopt sales and marketing strategies in which we transform IDC’s competences into actual products. In this way, customers will be able to understand the value of the products, which in turn will advance our own branding. We will develop robust individual strategies in 16 nationwide stores geared to their location, size and roles, and will continue to improve and strengthen the member services. We also expect to launch new businesses in areas where we excel.
What is the basic idea behind the development of a new store network and store management?
To ensure that sales and marketing strategies produce optimum results, we will develop a network of stores by carefully selecting properties that are suitable for stores open to everybody in terms of their location and building specifications. I expect that the area of new showrooms will be 20,000 ㎡ for large stores, and 10,000 ㎡ for standard stores. We made significant progress in the development of a new store network, including opening of Tachikawa Showroom in February 2011.
Moreover, we are carefully managing stores to deliver satisfaction to all customers, including those who come to the stores without reporting to reception. We will also focus on developing stores in which we make our unique proposals to as many customers as possible, to solve their concerns and problems through new initiatives. They include the introduction of the IDC Interior Styling Studio, where customers can experience for themselves the actual size, layout, and balance of colors of the interior.
What is your position on the training of the staff who support IDC Otsuka’s consulting services?
To continue to provide superior consulting services – an area in which we excel – I believe that we must develop and train employees who provide the services even more meticulously than we have before. Advisors today need to have extensive product information, broad experience, and expertise and skills in interior design, as well as sales skills that are compatible with new showroom management methods. To foster these skills, we have established the IDC Interior Professional System, an in-house qualification system that enables each employee to improve their skills and move closer their goals. We have also provided training linked to the qualification to enhance the quality of our advisors. To ensure that we retain talented advisors, we have introduced a system to re-employ people who have left the Company to raise a child or care for a family member, offering them the same conditions if they meet certain requirements.
Can you explain IDC Otsuka’s product policies in light of apparent consumer preference for low-priced products?
In product development, we emphasize a well-balanced product mix and prices that are appropriate for the value. While closely monitoring the technology and skill level of each country and exchange rate trends, we take a flexible approach in importing high-quality, price-competitive products by leveraging the strengths of each of approximately 450 factories with which we deal direct, both in Japan and overseas. In this way, we hope to procure and develop the most competitive products in terms of both quality and price. We also offer a lowest domestic price guarantee, under which IDC Otsuka matches a lower price available on the market for the same products under the same terms. As a result of these initiatives, to cater to the increasingly diversified tastes and lifestyles of customers, we offer around 48,000 kinds of products, including furniture, curtains, lighting equipment and interior accessories, in various styles ranging from regular items to models at the very high end, while achieving the highest cost performance in each price range.
Can you explain the impact of exchanges rate fluctuations on IDC Otsuka’s business performance?
The impact of fluctuations in exchange rates on IDC Otsuka’s business performance is slower to become apparent than the actual market movements of exchange rates themselves. Products imported from worldwide partner factories are stored as inventory in Japan, and every time new products are imported, we calculate a new inventory rate based on the moving average method, by adding product inventory to the purchase amount calculated based on the exchange rates used at the time of purchase. As a result, fluctuations in exchange rates at a certain time do not reflect on costs, but rather the inventory rate gradually changes in step with the purchase of products, and the rate is reflected in costs when the products are sold.
What management challenges have you identified over the medium to long terms?
I see product development, human resources development, and streamlining as our primary management challenges. To meet these challenges, we will pursue a number of medium-term initiatives, including continual development of a network of stores in line with sales strategies, and the rebranding of products and stores to obtain the appropriate degree of recognition from consumers. I also believe that it is important to develop new businesses that respond to community expectations in the areas of the environment and resources, as a potential new market.
We will use our accumulated knowledge and expertise to bolster our strength in all aspects of our business and provide satisfaction to the maximum possible number of customers. We thank you for your continued understanding and support.
President and Representative Director
Kumiko Otsuka
