7Long-Term Operating Environment Changes and Initiatives Targeting New Growth

Awareness of Long-Term (a decade later) Operating Environment Changes

98

1 . E n v i ro n m e nt C ha n ge s ove r N ext D e ca d e : 7 G row t h Tre n d s

1. Transition to e-commerce

2. Shift from goods to experiences

3. Emergence of sharing economy

5. Increase in demand from inbound travelers

6. Rise of cashless payment methods

7. Change of focus from saving to investment

8. End of era of low interest rates

4. Declining birthrate and aging population

99

O p p o r t u n i t i e s , T hreats , a n d M A R U I ’s Re s p o n s e : Reta i l i n g

Thre

ats

5. Increase in demand from inbound travelersInbound travelers: 20 million → Approx. 40 million

1. Transition to e-commerceRatio of e-commerce sales: 5% → 20%

2. Shift from goods to experiencesContinuation of 3% reductions in apparel product selling prices

3. Emergence of sharing economySharing economy usage ratio: 2% → 10%

4. Declining birthrate and aging population7% reduction in working-age population, to 71 million

Transition to shopping centers and fixed-term rentalExpansion of omni-channel retailing

＜Business structure transformation＞

Diversity and inclusion initiatives targeting customersCompatibility with sharing economy through new businesses(Goods, space)

＜Specific Response＞

MAR

UI′s

Res

pons

e

Opp

ortu

niti

esHypothetical scenario in which MARUI continued to operate a department store-oriented business focused on selling goods in physical stores without any innovation (Over next decade)

100

O p p o r t u n i t i e s , T hreats , a n d M A R U I ’s Re s p o n s e : F i nTe c h

(Over next decade)

・Coordination with omni-channel retailing operations

・Collaboration with new businesses

＜Specific Response＞

6. Rise of cashless payment methods1. Transition to e-commerce2. Shift from goods to experiences

Continuation of 7% average annual growth rates in line with past decade

3. Emergence of sharing economy

6. Rise of cashless payment methods(cash advances)Potential contraction of cash advance market

7. Change of focus from saving to investmentPortion of family financial assets represented by stocks and investment trust receivables: of 15% in Japan, and 30%–50% in Europe and U.S.

Shift from in-house credit card to multipurpose credit card

＜Business structure transformation＞

Transition from credit card services to FinTech

＜Business redefinition＞

6. Rise of cashless payment methods (diversification of payment methods)Emergence of payment options other than credit cards

8. End of era of low interest rates

Opp

ortu

niti

esTh

reat

s

MAR

UI′s

Res

pons

e

101

I n f l u e n ce o f O p p o r t u n i t i e s , T h reat s , a n d M A R U I ’s Re s p o n s e o n Pe r fo r m a n ce : Reta i l i n g

・Threats to Retailing business to be overcome through innovations including transition to shopping centers and fixed-term rental and expansion of omni-channel retailing as well as growth initiatives in new businesses

約180

Precent 10 yearsfrom now

Fixed cost

SC / Fixed-term rental

1. E-commerce

3. Sharing economy

2. Goods→ Experiences

4. Declining birthrate,aging

population

Omni-channel retailing

Customer diversity and inclusion

＜Threats＞

＜MARUI’s Response＞

New businesses

＜Opportunities＞

5. Inbound

(Influence on Marginal Profit)

(sharing)

102

I n f l u e n ce o f O p p o r t u n i t i e s , T h reat s , a n d M A R U I ’s Re s p o n s e o n Pe r fo r m a n ce : F i nTe c h

・Opportunities created by cashless payment options to be steadily leveraged in the FinTech business while deploying unique initiatives merging Retailing and FinTech

Present 10 yearsfrom now

(Cash advances)

6. Cashless options

＜Threats＞＜Opportunities＞

Newbusinesses

7. Saving → Investment (Payment services)

(Diversification of payment methods)

Increase in cardholders

Usage of EPOS card as main cardMarket growth

1. E-commerce2. Goods → Experiences3. Sharing economy

＜MARUI’s Response＞

6. Cashless options

（Influence on Transactions）

Long-term Vision for 30 years

104

A n a l y s i s o f O p e rat i n g E n v i ro n m e n t( G l o ba l O p e rat i n g E n v i ro n m e n t 3 0 Yea r s i n t h e Fu t u re )

・Global population of approx. 10 billion in 2050

・Population of emerging countries71% higher than in 2000

・Concentration of populations in urban areas (expansion of megacities)

Population Trends

Economic Climate

Climate Change and Resource Depletion

Technological Progress

・1°C–2°C rise in average global temperature in comparison to 2000

・Increased demand for food, water, and energy

・Shift toward clean energy

・Deceleration of global economic growth・Emergence of China and India

as No. 1 and 2 GDP leaders

・Approx. 40% of global GDPattributable to China and India

・More than 50% of globalpopulation connected to the Internet

・Further spread of IoT・Evolution of AI

105

MARUI GROUP’s Outlook for the Future (2050)

Realty Ideal

Balance between individuality and

coexistence

・Opposition based onnationality and ethnicity

・Globalism vs. nationalism

・Increased diversity anddilution of concept of

minorities・Connections transcending

traditional dichotomies while valuing individuality

Global income disparity

・Rising wages in developing countries, increasing economic disparity in developed countries

→Wealthy vs. low-income individuals on a global scale

・Business opportunities catering to both low- andmiddle-income individuals creating a massive globalmarket

Coexistence with the natural environment

・Inability for environment to support traditionally high production and consumption levels

→Population growth vs. resource depletion

・Survival only by businesses that coexist with the natural environment

・Renewable energy and circular economies as the norm

Inter dependent world

106

Business Opportunities and Growth Fields for MARUI GROUP

Co-Creation

Provision of options emphasizing balance between individuality and coexistence

Provision of options emphasizing coexistence with the natural environment

Provision of options for alleviating income disparity

107

MARUI GROUP’s 2050 Vision

Harnessingthe power of business

to build a world that transcends dichotomies

108

Path to 2050 Vision

Co-Creation

Inclusive Business

Inter-generational

Financial Inclusion

Inclusive Value= Happiness

Business

Approach to the Business Portfolio

110

Policies for Corporate Value Improvement (Prior)

・Transformation of business structure from prior flow-based businesses to stock-based business focused on credit cards and fixed-term rental contract stores to forge longer-lasting relationships with customers

Past PresentOff-balance sheet assets

On-balance sheet assets

Consignment agreements

Off-balance sheet assets

On-balance sheet assets

Credit cards

Fixed-term rental contract stores

tsumiki SecuritiesRent guarantees

Improvem

ent of LTV

E-commerce E-commerce

Omni-channel retailing

Flow-based

Stock-based

Flow-based

Stock-based

Credit cards

111

・Enhancement of model combining stock-based business and off-balance sheet assets, pursuit of improved corporate value through management emphasizing lifetime value (LTV) and ROIC

Po l i c i e s fo r C o r p o rate Va l u e I m p ro v e m e n t ( G o i n g Fo r wa rd )

Past Future

Credit cards

Fixed-term rental contract stores

tsumiki SecuritiesRent guarantees

Credit cards(Liquidation of receivables)

E-commerce

Fixed-term rental contract storesE-commerce

Omni-channel retailing

New businesses

tsumiki Securities

Rent guarantees

Omni-channel retailing

Heightening of ROIC

Improvem

ent of LTV

Off-balancesheet assets

On-balancesheet assets

Stock-based

Flow-based

Off-balance sheet assets

On-balancesheet assets

Stock-based

Flow-based