RESPONSIVENESS TO CHANGE

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2 変 対応 Top Message We will demonstrate our ability to respond to change in taking the next step during turbulent times. Valuing the customer as our utmost priority A philosophy dating back to our earliest days in business like a key building block of our corporate DNA Corporate Philosophy Reverse Pyramid Structure with Customers as Starting Point Customers Frontline (store) staff Authority Headquarters 02 Responsiveness to Change Don Quijote Holdings Co., Ltd. The retail industry is undergoing drastic transformation, fueled by dwindling demand in a society of fewer children and more seniors as well as the impact of increasingly popular online shopping. Current challenges have prompted a survival-of-the-fittest situation that is likely to become more entrenched. Against this backdrop, Don Quijote Holdings has charted higher consolidated sales and operating income for 28 straight years, as of the fiscal year ended June 30, This achievement reflects the support and guidance of everyone involved with the Don Quijote Group, and I offer my heartfelt thanks to everyone who has contributed to our success. The Group adheres to the corporate philosophy of valuing the customer as our utmost priority and straightforwardly promotes store-specific strategies that are firmly rooted in the community and facilitated by the delegation of authority to each store to provide products and services that delight our customers. What has earned us customer loyalty is none other than the ability to respond quickly to customer needs through store staff members careful attention to even the slightest change in customer trends. To support frontline efforts, during the fiscal year ended June 30, 2017, we kept the development wheels turning, with good progress in organizational, personnel and product development. This consistent responsiveness to change is certainly what drives our growth, highlighted by net sales of billion, operating income of 46.2 billion and a store network of 368 locations on a Groupwide basis. Indeed, responsiveness to change is a corporate state of mind and, without a doubt, a true corporate strength. The road ahead is not necessarily bright and rosy. These are difficult and challenging times. Regardless, we will faithfully apply the corporate philosophy of valuing the customer as our utmost priority and convey widely to customers at home and abroad the strength, appeal and fun derived from a business that is responsive to change. President and CEO Koji Ohara Future Don Quijote Group s Vision 2020 We formulated Vision 2020 with goals to be achieved by 2020, the year that Tokyo hosts the Olympic and Paralympic Games. Our medium- term management targets are 1 trillion in net sales, a store network of 500 locations and ROE of 15%. All employees will work as one to reach these targets, firmly putting the corporate philosophy of valuing the customer as our utmost priority into practice, increasing the number of customers who visit our stores and realizing consistently higher profitability. As always, the Don Quijote Group will strive to uphold customer satisfaction and contribute to society through its core business. Expand store network with high store-specific competitiveness Valuing the customer as our utmost priority. This is a corporate philosophy that infuses all activities and decisions executed by the Don Quijote Group, from corporate management to store operation. Demonstrate superiority in battle to attract inbound spending Restructure, and develop next generation of human resources Delegation of Authority Adhering to the philosophy of valuing the customer as our utmost priority, the Don Quijote Group places frontline personnel that is, store staff members at the top of the in-house structure as they have more opportunities than anyone else for direct contact with customers, and management delegates considerable authority to these employees for store operations, from purchasing and pricing to decisions on the merchandise mix and displays. Strengthen ability to redefine product lineup and develop private brand products Develop new store formats Overcome effect of consumption tax increase Responsiveness to Change Don Quijote Holdings Co., Ltd. 03

3 Fun and Excitement Key Component of Business Model The times and society are always Eye-catching handwritten POP cards with product customer attitudes. Not content with past interiors with a local feel, vibrant décor and other changing. This is also the case with successes, Don Quijote Holdings has presented shopping spaces that give customers a fun and exciting shopping experience regardless of the times. We have built a business model the consumable time store format which not only allows customers to find what they want when they want it but also turns the routine chore of shopping into a fun and exciting experience. This model is underpinned by store operations and merchandise strategies based on a unique store concept Cv+D+A descriptions, voluminous compression displays, store constantly changing components of store design Store Design Bursting with Entertainment Appeal epitomize the quintessential attractiveness of Don Quijote Group stores. These efforts in store design are intended to make shopping absolutely enjoyable. Originality separates our stores from ordinary discount stores and big general supermarkets and infuses sales areas with entertainment appeal, one of our corporate strengths. that offers customers convenience (Cv), discounts (D) and amusement (A) as part of their shopping experience. Cv Convenience Business hours and days, Product assortment, Store location We strive to create stores emphasizing convenience and a diverse assortment of products, from daily necessities to electrical appliances and luxury brands. D Convenience Discount Reasonable prices, Comfortable feeling, High expectations We always work hard to maintain our promise of offering incredibly low-priced products* so that customers can enjoy shopping with the knowledge that they are getting the lowest possible prices in any area. Discount *Incredibly low-priced products that thrill and excite customers through great savings 04 Responsiveness to Change Don Quijote Holdings Co., Ltd. Valuing the customer as our utmost priority Amusement In the pursuit of enjoyable shopping, we came up with a business model the consumable time store format that uses smile-inducing handwritten POP (point-of-purchase) cards as markers on a treasure hunt through a jungle of different products. A Amusement Compression Displays New discoveries, Surprises, News 変 対応 Trumping conventional retailing wisdom of easy to see, easy to buy, our unique product display technique that evokes a sense of overwhelming volume, with an immense quantity and huge variety of products piled high throughout each store. Handwritten POP Cards Colorful, handwritten cards bursting with entertainment appeal fill every available space inside stores. They highlight product features in a way that customers find amusing and easy to understand. Spot Products This term refers mainly to surplus products in the distribution market as well as highly seasonal items and incredibly low-priced or rather unusual items. The merchandise mix is always changing, offering customers something new on every visit and thus functioning as a vital ace in the hole. Responsiveness to Change Don Quijote Holdings Co., Ltd. 05

4 Delegating Authority to Store Staff Members Globalization Accelerated by Inbound Demand and Overseas Expansion 06 Responsiveness to ChangeDon Quijote Holdings Co., Ltd. Responsiveness to ChangeDon Quijote Holdings Co., Ltd. 07

5 Diverse Store Formats Facilitate Flexible Approach to Store Openings 08 Responsiveness to ChangeDon Quijote Holdings Co., Ltd. Responsiveness to ChangeDon Quijote Holdings Co., Ltd. 09

6 1store Realizing sustainable growth 10stores 100stores 200stores 368stores 10 Responsiveness to ChangeDon Quijote Holdings Co., Ltd. Responsiveness to ChangeDon Quijote Holdings Co., Ltd. 11

7 Products That Reflect Customers Feeling of Fun and Excitement Don Quijote Group Passionate (jonetsu) retailer Customers Passionate (jonetsu) Partner companies supporterspassionate (jonetsu) partners Jonetsu Kakaku lineup 12 Responsiveness to ChangeDon Quijote Holdings Co., Ltd. Responsiveness to ChangeDon Quijote Holdings Co., Ltd. 13

8 Demonstrating Responsiveness to Change in Creating Stores Loved by Customers Genryu Genryu Genryu Genryu 14 Responsiveness to ChangeDon Quijote Holdings Co., Ltd. Responsiveness to ChangeDon Quijote Holdings Co., Ltd. 15

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