Shiseido SWOT and PESTLE Analysis

Strength

1. Building brand through acquisitions: Shiseido had a brand image of a beauty brand for mid aged and older women. Shiseido is changing this image through acquisitions of brands, which appeal more to the millennial. In October 2019, Shiseido acquired Drunk Elephant, a famous skincare brand in US, with a premium of $845 million. The brand is utilized to promote Elixir and Anessa, Shiseido’s home grown skincare solutions. With an eye of grabbing greater market share in America, Shiseido also acquired Toy Burch. Toy Burch, established in 2004, has its own lifestyle product line up in clothing and beauty care. In fiscal 2016, with the objective of expanding footage in the luxurious market of the Middle East, Shiseido acquired Laura Mercier, Revive and Dolce&Gabbana, further bolstering the company's presence as a leading player in the beauty industry.

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Weakness

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Opportunity

1. Harnessing the potential of the Indian sub-continent: Shiseido’s brands represent themselves as luxury skincare and cosmetics products. With opening up economies and betterment in living conditions, consumers of countries of Indian sub continents are looking forward to spend on grooming and beautification through beauty products. India’s luxury market has seen growth faster than the rest of the BRICS nation. The Indian beauty product market was worth $ 6.5 billion in 2017, which is poised to become worth $ 20 billion by the year 2025. With Indian consumers being one of the largest users of Internet and with economic boom in recent years, the consumers are seeking for the availability of makeup options. Shiseido has been present in India since 2014 through its brand Za and has risen to the challenge of evolving in the Indian market with huge base of bio-diversity. Currently it sells in India through a number of ecommerce channels like Amazon, Nykaa, Sephora, Myntra and Facebook. In fact in March, 2020, the Japanese beauty giant has forayed into Sri Lanka through the online store CosmoStore via its distributor LUXASIA PARTNERS PTE. LTD, which the Company believes holds great potential given its population of over 20 million people and large prestige cosmetics market (as estimated by the company) compared to neighboring Laos and Cambodia, where Shiseido already has a presence.

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Threats

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Political

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Economic

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Social

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Technological

1. Usage of E commerce in the China business: Usage of Ecommerce in China business: China has seen intensive growth of E-commerce in its land. Shiseido, following the trend, had collaborated with Alibaba in 2019, to push sales in China digitally. Alibaba has different platform in the premium segment apart from the low cost model to cater 500 million customers together. Shiseido has shown amplifying results through digitization of business using the expertise of Alibaba. The Japanese cosmetics conglomerate witnessed high-level growth on Singles’ Day, or “Double 11,” a Chinese shopping holiday that has seen surging scale in recent times, attributed to the strong performance of exclusive online products. The Chinese business contributes up to 18-20% in the net sales of beauty product manufacturer. The business has grown by 13.3% in 2019, which is over JPY 216 billion. The company remains poised to grow substantially in the Chinese market in the coming years with its Made in Japan products.

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Legal

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Environmental

1. Developing sustainable products and packaging: Shiseido has always maintained priority on sustainable packaging. It is practicing refill packaging since 1926 in its select stores. It also uses biomass containers and recyclable PET for packaging. 700 Shiseido products could be refilled at company owned outlets. Biodegradable packaging is also done. Such packaging is done through processed biodegradable material prepared made from sugarcane. Shiseido has also highlighted the process of preparation in its website. Shiseido products are packaged in a way, so that they could be refilled easily by opening them into various parts. To step towards carbon neutrality. Shiseido proceeds to reduce weight of reusable packaging. In this way, emission of CO2 is considerably reduced. In 2008, Shiseido used paper and plastic in the ratio of 1:1, which increased to 9:1 in 2018. The intentions towards sustainability of environment are clearly reflected in Shiseido’s approach towards product development.

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