NOVARESE INVESTOR RELATIONS SITE
Management Strategies
Management Strategies: Current Situation and Future Outlook
To conduct corporate management with the aim of securing continuous stable revenue, the Group has adopted an “expanding equilibrium” policy, to expand revenue while maintaining a balance between capital investment for new store openings and improvement of management efficiency by increasing the number of stores. In terms of future outlook, competition in the industry is expected to intensify further in the future, with hotels and specialized ceremony halls renovating their existing facilities and entering the guest house wedding market, and new competitors from other industry sectors entering the bridal market. To differentiate itself from other companies in the industry, the Group has set (1) new store opening strategy, and (2) human resource strategy as its mid to long-term business strategies. We aim to open unique wedding & banquet facilities that meet the characteristics of each region, manage efficiently through economies of scale by opening a large number of stores, and maintain and improve our services for weddings and receptions through human resource development.
New store opening strategy
To balance the opening of many stores with the maintenance and improvement of added-value services, we will open new wedding & banquet facilities and dress shops under the following policy, with consideration for both the hiring and training of talented staff and financing to secure cash flow.
● Wedding & banquet facilities
For areas with market area of around 250,000 people, we select candidate locations based on comprehensive consideration of regional characteristics, location, management and profitability conditions for store opening. As a basic rule, wedding & banquet facilities will be rented out as a single venue per banquet (wedding / reception / banquet venue), and priority will be given to opening Monolith and Amandan type venues.
● Dress shops
Based on the characteristics of the Company’s two brands, NOVARESE will be limited to major cities, while Ecruspose shops will be actively expanded nationwide.
Human resource strategy
In order to improve customer service, we will aggressively hire and train talented human resources. In particular, we will implement various measures to provide high added-value services, such as planned hiring in relation to new store openings, revitalizing our organization through job rotations, and motivating staff by setting and achieving targets.
Business Environment and Business and Financial Issues to Be Addressed as a Priority
In the short term, the current business environment has been affected by the impact of the COVID-19 pandemic, especially the decrease in the number of guests. By reviewing our operations in catering to weddings and banquets with small numbers of people, we have built a system that can cater to various needs. In the medium to long term, according to future population estimates, the number of people in our target age zone (late 20s to 30s) is going to decline year by year, while the unmarried rate of the same segment is expected to rise. There are concerns that the overall bridal market—in which the Group operates—will shrink. However, the “guest house wedding,” a wedding style where people can demonstrate their individuality, is gaining widespread support thanks to the rise in general customer awareness towards wedding information magazines, the increase and enhancement of web-based wedding information sites, and the diversification of consumer lifestyles. On the other hand, competition, including price competition, in the industry is intensifying, with hotels and specialized ceremony halls renovating their existing facilities and entering the guest house wedding market, and with the wedding style advocating low prices expanding its market. To gain customer support under these conditions, we have identified the following as our key focus areas, and are working on measures to achieve these goals.
i) Strategic expansion of our store network
ii) Promotion strategies to raise awareness
iii) Diversifying our business operations
iv) Securing and developing human resources
v) Hygiene management
vi) Risk management and compliance
vii) Strengthening the financial base
Measures for each focus area
i) Strategic expansion of our store network
In deciding new store locations, we comprehensively consider location-related conditions such as size of market area, regional characteristics and location, as well as store profitability. Of these criteria, we place the greatest emphasis on location, since it impacts the revenues and profits of the store. We will strategically expand our store network by expanding our sources of information for land acquisition opportunities and responding quickly as necessary. We will also continue to engage in projects to revitalize historical buildings into wedding & banquet facilities, which we have been working on for some time.
ii) Promotion strategies to raise awareness
We believe promotion strategies are important in raising awareness, and thereby improving the utilization rate of our wedding facilities. In order to address this area, we will pursue various promotion strategies, including using mass media such as bridal and dining information magazines, TV commercials focusing on specific regions, and promotional activities through web-based bridal and dining information sites. We will also hold an event for the general public entitled “Pure White Forest Night Museum,” with the aim of discovering customers by further raising awareness of our brand among potential customers.
iii) Diversifying our business operations
We believe it is important to respond to the diversifying needs of customers, as well as making proposals which help to identify and trigger potential customer needs. In order to address this area, in addition to BtoB business operations at our subsidiary TIMELESS Inc., from January 2019 we launched operations at an additional three companies—BROTH DINING Inc., which specializes in restaurant management; ANDYOU Inc., whose main business is the rental service of women’s party dresses; and DO Inc., whose main business is advertising agency operations. In December 2019, we entered the resort wedding business by acquiring a US-based company that develops wedding-related businesses in Hawaii. Going forward, we will work to further advance the diversification of business operations throughout the Group.
iv) Securing and developing human resources
It is essential to secure human resources for the businesses operated by the Group, such as the arrangement of weddings and banquets, the rental and sale of wedding dresses, and the restaurant operations. The staff involved in these operations must have planning and proposal skills with an accurate understanding of customer needs, and a high level of product knowledge and skills are also required as a prerequisite to this. For these reasons, we consider securing and developing human resources to be a key focus area. In order to address this area, we are strengthening our recruitment of new graduates to secure essential human resources. In terms of training, we have established a specialized department called the Education and Training Department. We also help staff to acquire the necessary knowledge and enhance their skills through on-the-job training (OJT). Training our staff takes a certain amount of time, and we try to strike the right balance between training and business development, as we work to maintain and improve our services. In order to create an environment where all employees can work with peace of mind and have job satisfaction, regardless of gender or nationality, we have established the “pursuit of maximizing staff happiness” as part of our basic personnel policy. In addition to the existing flex career system, mandatory 100% use of paid leave, and scholarship loan repayment support system, we have also introduced the PARANOVA personnel system that allows employees to work some side jobs, and will continue to implement various initiatives in the future.
v) Hygiene management
The Group believes that hygiene management is a key focus area to prevent the occurrence of food poisoning and other such incidents. To address this issue, we obtain business permits from local public health centers based on the Food Sanitation Act, and assign food-sanitation managers to all wedding & banquet facilities. We also manage quality based on a food sanitation manual, formulated to prevent food poisoning and other such incidents, and rigorously manage employee hygiene through measures such as regular stool sample examinations and health checkups. We are also renovating facilities as appropriate to improve store operations and the state of hygiene management at each store. In addition, we ensure thorough hygiene management by conducting regular and irregular hygiene inspections through a third-party organization.
vi) Risk management and compliance
We believe that enhancing corporate governance and improving our compliance system are key issues in order to continue being a company that is trusted by shareholders, customers, suppliers, employees, and other stakeholders of the Group, as well as wider society. The Group regularly reviews its systems and business processes through committees and other organizational bodies to ensure that everyone throughout the Group is fully aware of risk management and compliance. Specifically, we have established a Compliance Committee for the purpose of planning, implementing, and managing activities to raise awareness of compliance among staff, develop internal systems for the purpose of preventing violations of laws and regulations, and other overall compliance activities. We have developed a company-wide compliance system and endeavor to identify compliance-related problems, and have also established a system to report details to the President in the event of the discovery of an important compliance issue through internal audits by the Internal Audit Office. In the event that a staff member discovers a compliance-related problem, we have established a system to promptly report it to the department in charge or the whistleblowing hotline, determine measures to prevent repeat occurrences according to severity, and make the relevant measures thoroughly known among staff.
vii) Strengthening the financial base
The Group believes that securing stable funds is a key focus area because there will be demand for funds such as increases and decreases in working capital due to seasonal fluctuations in sales revenue, and capital investments associated with the opening of new stores. In order to address this area, we believe it is important to expand internal reserves and build good business relationships with financial institutions in order to raise funds, including through borrowing.
