Leading Japanese beauty company Shiseido has unveiled the Shiseido Global Innovation Center (GIC, also known as S/Park), a major investment in the future of the group. The Moodie Davitt Report was on location for the opening of the Y40 billion (US$360 million) facility on Tuesday. [A full report and extensive comment from senior executives, including President and CEO Masahiko Uotani, will follow.]
The research hub begins full-scale operations this month in the Minato Mirai 21 area of Yokohama. An urban open lab, the GIC promotes communication and collaboration with consumers, researchers, business partners and experts inside and outside Japan. Shiseido will open its public spaces on the first and second floors of the building from 13 April to encourage interaction with the visiting public.
Shiseido said it would create “unprecedented value” through the “fusion of diverse people and knowledge” at the state-of-the-art research facilities.
Group President and CEO Masahiko Uotani hailed the opening and reiterated the role of the GIC in hitting the group’s long-term targets of Y2 trillion (US$18 billion) in sales and Y300 billion (US$2.7 billion) in operating profit.
“We aim to enhance our marketing and brand strategy,” he said. “That means ensuring value for our consumers, and innovation is central to that. In 2014, investment in research & development (R&D) was just 1.4% of sales. We have increased that to 3% and want to reach 4% in the future. We will strengthen R&D in the regions [Shiseido has research centres in China, US, Korea, France and Singapore as well as in Japan – Ed] so it is more localised for consumers. Innovation is not only about products but about technology and its application, and we will develop that.
“We will collaborate with others to create a new business model. We also have to pay attention to the world around us and want to be the most trusted beauty company in the world. That means being trusted by society and being an employer of choice.
“Creating corporate value means economic value and social value. This means being transparent, empowering women, acting to protect the climate and our oceans, and being a positive force for an ageing society. We want people to feel better about themselves. That’s why we have created a new mission statement: ‘Beauty Innovations for a Better World’.
He added: “We have opened this facility not as an ordinary manufacturer. We are creating culture.”
Chief Innovation Officer Yoichi Shimatani noted that Shiseido had been at the forefront of beauty innovation for over a century, having opened its Testing Room in 1916 to develop new products.
Today, Shiseido’s global research centres are engaged in research and development activities to study and analyse the skin conditions and makeup activities of consumers in each region.
Looking ahead, Shiseido will enhance its research in digital and environmental technologies, said Shimatani. In addition, the company will accelerate its research to improve cosmetics research, propose and develop new areas within cosmetics and explore beauty solutions beyond cosmetics.
Through this, the company said it aims to offer new value to consumers and stakeholders and “be a global winner with our heritage”.
“We were understated before in travel retail but in the last three and a half years we have developed our business and our organisation.”
Shimatani said: “R&D is not only about skin science or cell analysis but also about behaviour and psychology, the emotional side of consumers. We want to deepen and widen our research here, add new ideas and see inspiration born. That’s why the name S/Park is relevant. We welcome the creative spark of diverse people with knowledge.”
Highlights of the GIC include the S/Park Beauty Bar, a space where visitors can have their skin analysed and a personalised, tailored skincare regimen created, and Chat Beyond Time, a cubicle with a monitor that simulates facial aging. The ground floor also features the world’s largest crystal LED display system, developed by Sony, offering an immersive visual experience.
The S/Park Museum on the second floor is an exhibition of beauty innovation, while the centre also features a collaboration site on the fourth floor for engagement with business partners.
The first and second floors of the GIC form a dedicated open communication space where visitors and researchers can interact, offering content based on the concept of being “inspired by beauty.” The open communication spaces were produced by Kundo Koyama of Orange and Partners and designed by Naoki Sato of Nendo. The collaboration area on the fourth floor includes a lab for joint research with outside institutions and a space for business negotiations, which Shiseido said is unique for a research centre.
Leading-edge facilities and equipment to support research are located on the fifth through fifteenth floors. Through an out-of-the-box office layout, researchers can pursue “flexible and diverse” working styles, said the company.
Speaking later about the group’s wider plans, Uotani said Shiseido was mirroring its GIC investment by opening three new production facilities in each of the next three years, to allow the company to overcome its supply chain challenges.
Speaking to The Moodie Davitt Report about the role of travel retail, Uotani said: “This channel is very important. We were understated before in travel retail but in the last three and a half years we have developed our business and our organisation.
“The majority of the growth has come from China and although we have seen short-term challenges in the economy, the business is coming back. Also, we are asking ourselves what is the specific value we can offer to this channel? How can we make sure people will want to buy?
“Take this current season, when many people visit Japan to see the cherry blossoms. How can we match that with our services or promotional offers? Can we do a cherry blossom packaging, or something to match their emotions around this season? Travel retail is not only a place to buy, but a place to create new occasions.”
On the international business priorities for 2019 and beyond, he added: “Our overseas business is growing and China is a priority. But globally we are focused on other regions too. In the US that means a dedication to makeup, in EMEA it means prestige luxury and fragrances. Clé de Peau will launch in Harrods of London this Autumn. That’s a signal of our penetration into this market with prestige luxury.”
Shiseido (through its China subsidiary) also recently announced a partnership with Alibaba Group to share big data and consumer insight. Shiseido has set up a Strategic Development Office in Hangzhou, China, where Alibaba Group’s headquarters are located. Shiseido is the first Japanese company, as well as the first cosmetics company in the world, to set up such a dedicated office in partnership with the e-commerce powerhouse.
Uotani said: “We aim to analyse the consumer needs together to come up with new products. It can become a real eco-system. It is not only about selling, it’s about understanding what consumers want, to ensure the right content, the right messages and it will change the way we do marketing.”
Shiseido said it would focus on developing products for the Chinese market and provide new services to meet Chinese consumers’ needs, as well as acquiring new, younger consumers.
The first co-developed products with Alibaba Group will be available exclusively on Tmall starting this September under the hair/body care brand Aquair.
On the wider China market, Uotani said he was confident about the long-term picture, despite recent slower growth.
“GDP per capita is still one fifth of developed countries so there is a long way to go,” he said. “The economy will come back. Penetration of the beauty business in China is still not very high yet so we have room to grow.”