Brand consolidation and chain-store revival (2001)

Selection and concentration, a Shiseido refrain

The significance of this decision lies in its turn to the opposite of expansion. Having severed the volume-expansion model with the 1987 inventory recall and stepped into open competition by letting go of seventy years of resale-price maintenance in 1997, Shiseido had, within that competition, let its brands proliferate and so scattered its resources thin and wide. Morio Ikeda’s decision, built on that reflection, switched management from “increase” to “narrow,” returning to skincare — the origin of the company — and to the proprietary asset of proximity.

Turning its back on the glamour of new channels to bet on reviving an old sales network looks, at first glance, conservative. But concentrating resources — before low-price competition could wear down its stamina — on a keiretsu store network that rivals could not easily imitate is what made the reversal from red ink possible. The pattern of “selection and concentration” established here was carried into the megabrand strategy of 2005, pushing the Shiseido business model, assembled out of many products and keiretsu dependence, into its next stage: concentrated investment in a few brands.