Business Overview 4. DX Regional Collaboration Project Signpost's DX and Regional Collaboration Project started in March 2022 with the establishment of the DX and Regional Collaboration Division. It aims to provide products and services that contribute to regional collaboration by collaborating with local financial institutions nationwide, utilizing its own DX technology and open innovation. In August 2022, it began working with Oita Made Co., Ltd., which was established with the investment of multiple companies in Oita Prefecture, including Oita Bank, to sell original products made in Oita Prefecture to both domestic and overseas markets and to match local companies and Signpost's products and services in order to promote the revitalization of Oita Prefecture's economy. In addition, in April 2024, it started offering DX support services for medium-sized and small businesses. As the first effort, it supports the creation of DX declaration by (The) Fourth Hokuriku Bank, Ltd. (Niigata City, Niigata Prefecture) to deploy DX declaration support services to the market. Furthermore, it will realize new solutions by commercializing its own technology and open innovation and promote regional collaboration through innovation.

1. Business Environment

It is difficult to expect natural growth in the market for beauty, Japanese traditional clothing and jewelry, DSM, education, and reuse businesses operated by Yamano Holdings <7571> due to the domestic population decline, trend of low birth rate and aging society. However, it is a market where certain demands are certain and further increase in market share can be expected in the future, judged from the size of each company's business. Since its founding, the company has accumulated resources for growth, including a customer network accumulated with the brand "Yamano Akiko" and the ability to carry out bold M&A and its business operation power as well as to maximize them in the group through synergy effects, which have become assets. Acquiring and consolidating small and medium-sized companies in the same industry that have no successor through M&A, even if they open new stores, will be an important measure to secure human resources from the standpoint of securing human resources. Acquiring new businesses through M&A and strengthening human resources within the group is also one of the options. The company's M&A strategy can be positioned as a growth strategy unique to the company that has a history of M&A since its founding.

In the beauty industry, customers are attached to beauticians and their independence is strong. In addition, there are industry-wide challenges such as long working hours for trainees, making it difficult to secure and retain personnel. On the other hand, many stores go bankrupt and the invoicing system increases the burden on freelancers. If the workplace environment is improved in the future through measures such as improvement of store operation by employees through franchise conversion, smooth personnel acquisition will become possible. In addition, the brands acquired by the company are each heavily involved in limited dominant expansion in their own region, which is advantageous for securing human resources and customers, and employees have limited transfer ranges, which can secure a work-life balance. This is also true of Japanese clothing stores, which have six stores in Okinawa Prefecture, where no National Chain (NC) has expanded, and have a high market share. In the Japanese clothing and DSM industries, aging of both customers and employees is a major issue, and measures to secure a wide range of customers will be an urgent issue.

2. Business Overview

(1) Beauty Business

The beauty business of Yamano Holdings Group consists of 74 beauty salons mainly in the Tokyo metropolitan area and Kansai region, and four nail salons with high quality and good location in Tokyo. The beauty salons operate three brands, "My jStyle", "PLAZA HAIR", and "La Bonheur", according to customer age and price. "MY jSTYLE" is an anti-aging salon for middle-aged and elderly people, and has been expanding stores in a dominant manner in the Kanto region at a low price. In the beauty salons, many stylists follow customers, but "MY jSTYLE" is a regional type and its strength lies in customers attached to the store. "PLAZA HAIR" is a family salon that targets families with children, with a kids room where small children can play and a kids corner where children's haircuts are available, and it operates in the middle price range in commercial facilities. "La Bonheur", which joined the group by acquiring L.B.G in October 2019, proposes unique hairstyles tailored to customers' lifestyles for women in their 20s and 30s, and operates 11 stores mainly in Tokyo and Saitama, as well as a WEB SHOP that sells beauty products such as hair treatments. The fact that it is a high-price range and that it efficiently attracts customers from "Hot Pepper" is its strength. As a Yamano Holdings Group, the addition of "La Bonheur" has become a strength as it has made all age groups customers and covered each price range, but in the future, it is expected to convert "La Bonheur" with few stores into a different business.

"NAIL CARE SALON miura" has been in business for about 30 years and has built a brand as a pioneer in this industry. It operates a nail and hand and foot care salon in Kichijoji and Ogikubo, Tokyo, and Nankou Port Town, Osaka. The Ogikubo store is located next to the "MY jSTYLE" store, while the Nankou Port Town store is located next to the "PLAZA HAIR" store. The Inokashira-dori store also offers organic germanium hand and foot baths and aromatherapy massages in addition to relaxation and spa menus, and each store has also started facial esthetics.

In the beauty business, the company previously operated "MY jSTYLE" and "PLAZA HAIR", L.B.G operated "La Bonheur", and Miura operated "NAIL CARE SALON miura" separately in three divisions. However, with changes in the business environment, cross-divisional initiatives have been implemented, such as expanding dressing services in beauty stores, opening collaborative stores between"MY jSTYLE" and Miura in January 2022 (collaborative stores between "PLAZA HAIR" and Miura were opened in July 2023), and changing the business format to "La Bonheur" from "MY jSTYLE" and "PLAZA HAIR" in July 2022. To accelerate this business transformation, in October 2022, the business departments of the beauty business operated by the company and two subsidiaries were consolidated and integrated into Yamano Plus. The management departments such as store development, business planning, personnel, and general affairs were consolidated into the company to create an organizational structure that can make flexible and prompt decisions. This will strengthen the ability to respond to changes in the business environment surrounding the beauty business and promote the creation of new services by activating personnel exchange that makes use of the unique features of each department. In addition, we will work on system reform to optimize personnel deployment by promoting unified recruitment of personnel and sharing knowledge and know-how of training plans, as well as clearing the important challenge of securing hairdressers, which is vital to the beauty business. Furthermore, we plan to strengthen our marketing and sales promotion planning capabilities.

(Author: FISCO Guest Analyst Shuji Matsumoto)