Facing the challenges of the COVID-19 pandemic, the company took steps to strengthen the foundation of its business – this meant going back to its roots as a skin care expert.
“Last year, as we faced [COVID-19] we came up with was an idea to build back better. In the next two, three years up to 2023, we want our core to be stronger, which is skin care where we have a long R&D expertise, marketing expertise… My scope in the next three years or so is really to get our business foundation stronger by making use of skin care,” said Uotani.
This August, Shiseido announced that it was selling off three of its make-up brands to focus on high-end skin care. This followed the decision to shed its entire personal care division, which consisted of brands like Senka.
“We decided to make a tough decision of divesting the fragrance and make-up brands and that’s going to get us in financially independent position having better profitability, better operating margins and cash,” said Uotani.
He elaborated that this would allow the company to act from a position of financial strength for the next five to six years.
The company does not rule out investments in make-up or fragrances in the future, but it would have to consider the profitability of those categories.
“The key principle is that it should be profitable business... So, if we get into make-up, there should be a certain level of financial strength that should be profitable. It’s the same for fragrances.”
The priority for Shiseido now will be its investments in skin care, which Uotani believes is going to remain as the reigning category in beauty.
“Number one is to get the skin care category even stronger because there are a lot of emerging segments in the overall skin care category. I don't believe it's just going to disappear but it's going to become even bigger.”
Beauty beyond cosmetics
The company believes the next stage of its growth lies in the beauty and wellness space.
“Skin care is so much related to your internal health. And using a data platform… we can get all the data of consumers – what you eat, what you drink, the quality of your sleep that is affecting your skin conditions,” said Uotani.
In 2019, the company launched Optune, a personalised skin care system that analyses and collects data on the skin, measuring factors such as sleep to dispense a bespoke serum for the day.
Uotani concluded: “We're going to provide a holistic value to the consumer. That's the next kind of business model we are going to be building. That's the journey of transformation from here to say, the next 10 years to 2030.”
At the same time, the company will be making use of the cash generated from the divestments to invest in digital technology as well as its manufacturing capabilities.
The company has unveiled three new plants in Japan with the Internet of Things (IoT) capabilities “This is going to help our business in the near future a lot,” said Uotani.
