Message from the Officer in Charge of Managment Planning and Human Resources Strategy

Koji Tanaka

Director and Managing Executive Officer

In charge of Management Planning and

Human Resources Strategy

Looking forward to 2050, the Group has established the management philosophy of “Connecting people and society to the future with a smile.” As part of our efforts to put this into practice, we have set an interim goal of being “A company that supports growth of local communities and contributes to the future of people and environment” by 2030. We are developing a system of management that contributes to building a sustainable society through the creation of two social values: helping to strengthen the resilience of an aging society and achieving carbon neutrality in households.

The theme of the Group’s medium-term management plan is to be a concierge to customers, drawing closer to their daily lives. This is also an unchanging theme in our training of human resources. We have established interconnected initiatives to [secure human resources] who can satisfy a diverse range of customer needs, [train human resources] who can support new growth businesses, and [increase employee engagement] in pursuit of the idea that “new customer satisfaction equals new business.” We consider our human resources strategy for increasing corporate value to be an integral part of our management strategy that aims to contribute to a sustainable society.

Based on our human resources strategy that is grounded in Diversity & Inclusion (D&I), one of the Group’s seven material issues, we are working to secure a diverse range of human resources who can respond flexibly to changes in the management environment and to increase the level of employee engagement.

The Group is expanding its business in the five categories of home appliances, entertainment, renovation, mobile communications, and support business, and the retention rate of the employees who support these businesses will have a large effect on the business growth potential. Improving the already high retention rate increases the level of employee expertise, and long-standing relationships of trust with the customers will produce lifestyle ideas with high added value and increase the income ratio. (See p. 65 for details.) In the home appliances business, which is a stable foundation of management, the percentage of employees who have home appliance advisor certification has risen to 84.2%, and we have trained approximately 300 qualified electricians and installation technicians as we pursue a higher level of expertise.

An issue for the future will be securing personnel in growth businesses. In the home appliances business, we must proceed with training of IT personnel and using ICT installation to reduce the required labor in order to improve CS while shifting our human resources to growth businesses.

The renovation business is closely related to the two social values that the Group aims for, namely “helping to strengthen the resilience of an aging society” and ”achieving household carbon neutrality,” and is a growth field where we can expect synergy with the home appliances business.

The renovation market is supported by the needs for “stock recycling” and “improving QOL by increasing efficiency” of housing, backed by factors such as the soaring prices of new housing and the increase in empty housing units. We expect steady growth in this market as a result of demand for nursing care renovations in a super-aging society, and housing energy conservation aimed at reducing GHG emissions. We must expand our renovation menu to meet a diverse range of needs, and must also pursue specialization in the home environment field. Training of housing environment coordinators who are experts in nursing care renovations is an urgent issue, and we must also expand our construction system, including by securing architects and interior planners who are capable of large-scale projects. We will strengthen the sales and construction system by shifting human resources in order to support growth in the renovation business.

Another important management issue is maximizing employee abilities and the desire of employees to participate in management, and strengthening the organizational capabilities that will support continued growth. We will refine our sensitivity to the variety of issues faced by society (potential needs), and construct a resilient organization that is capable of turning the ideas that come from the freethinking of diverse employees into new businesses. This is the sustainability management of the Joshin Group.

Aiming to create “new customer satisfaction,” the Group is now engaged in securing and training a diverse range of human resources with D&I as the pillar of our strategy. The universal value of respect for human rights is the foundation of D&I that aims to ensure diversity. As well, initiatives for health and productivity management maximize organizational performance by fully harnessing the potential of diverse employees.

The Group’s human resources strategy includes creating a work environment where diverse people can perform at their best and play an active role, in this way creating an upward spiral that increases ease of work, leading to job satisfaction, then to employee ownership, and finally to improved engagement.

Although the indicators for capital-related profitability including ROE, ROA, and ROIC fell below the plan targets in fiscal 2023, the first year of the JT-2025 Management Plan, as a result of our pursuit of expertise in human resources we were able to increase the gross profit margin from 25.4% in the previous year to 26.0% this year. Starting from 20.2% in fiscal 2013, we have achieved a 5.8-point improvement over the last 10 years. Regarding “Human capital RoI” in the graph on the following page, although no immediate benefits from investment are visible, continual investment in human resources for training concierges leads to high value-added product sales based on lifestyle proposals, and has raised the profit base.

In May 2024, the Group introduced a performance-linked stock-based compensation system for employees. The purpose is to engender a sense of belonging and desire to participate in management among employees, and improve the awareness of increasing business performance and stock price, in order to improve the medium- to long-term corporate value of the Group.Granting stock of the Company and sharing economic value as a result of improved business performance creates a feeling of unity among Joshin employees, and leads to sharing of interests with stakeholders. Aiming for partnership management where the Company and its employees share the same perspectives in creating economic value, we hope that this will serve as a trigger for a positive cycle of increasing corporate value starting from employee engagement.

The goal of our human resources strategy is for the Company and employees to share a management vision and values, have every employee feel a bond with the Joshin brand and actively demonstrate their abilities, and to motivate them to contribute to the creation of new social value. We intend to connect “new customer satisfaction” to improved corporate value through the active participation of employees in management, and to realize our management philosophy of “Connecting people and society to the future with a smile.”

Recognizing roles of the team and oneself and having a sense of ownership will lead to improved personal and organizational performance. As an opportunity to learn and grow on one’s own, we provide our workforce with training programs according to their job levels.

When employees feel a sense of empathy towards the Company's reason for existence and vision, the trust relationship between the employees and the Company will deepen, and a greater employee engagement will be achieved. The Joshin Group is committed to creating new customer satisfaction through improved employee engagement, and thereby achieving sustainable growth and increased corporate value.

Human Resources Linked with the Business Stage

At present, we are making upfront investments to maximize the potential of our human resources and create value for the future. Going forward, we will continue investment to produce future leaders.

1. Customer satisfaction (%) = very satisfied + satisfied in our online questionnaire 2. Human capital RoI: ISO 30414 indicator [Sales - {Sales, general, and administrative expenses - (Wages and allowances + Bonuses + Legally required and other welfare expenses)}] ÷ (Wages and allowances + Bonuses + Legally required and other welfare expenses) - 1 3. In fiscal 2019 we carried out large-scale investment in electronic pricing.

Internal Environmental Improvement Policy

The Group believes that the active participation of diverse human resources is the source of our organizational strength to seize new business values, and to achieve sustainable growth. To improve the Group’s corporate value by contributing to society as an infrastructure hub for a better life, it is necessary to create new value by understanding the issues and needs of society. For that reason, the Group will create an internal environment where everyone is given a fair opportunity and can thrive in good mental and physical health while achieving job satisfaction. We will then turn the ideas coming from the freethinking of diverse employees into new businesses as well as make sustainability management a reality.

Human Capital KPI for Realization of Our Management Philosophy