Market Environment

In domestic market of clothing and personal belongings (apparel, shoes, footwear, Japanese umbrella, bag, trunk, handbag, sewing supplies, jewelry, accessories excluding precious metals) in 2016 is approximately 13.5 trillion yen. Of which the fashion e-commerce market as broad sense is about 1.5 trillion yen (The estimate by the company using researches/reports from Yano Research Institute, the Current Survey of Commerce and the Market Research of E-commerce provided by Ministry of Economy, Trade and Industry). The growth rate of the whole fashion retail market has been staying low, but when it comes to e-commerce market, it has been making steady growth close to 10% per annum. Nevertheless, the proportion of the e-commerce market in the entire fashion retail market (hereinafter “EC penetration”) in Japan is currently around 10.9% whereas that of the West is between 15~20%; therefore, we believe there is still a plenty of room for further growth.

In the past, we recognized this fashion e-commerce market by classifying it into luxury, middle and mass volume but further divided each area based on the diversification of consumer values in the present, to clarify our target market. Specifically, we classified the luxury area into premium and accessible luxury, middle area into upper and lower middle, and mass volume area into fashionable or non-fashionable by our judgement criteria respectively.

Within this new classification, we have been constructing the brand portfolio for opening new shops mainly in the segments of accessible luxury, upper middle and lower middle. However, to meet various demands of consumers, we will continuously set these segments as the center and proactively attract highly fashionable brands in the mass volume segment.

By extending our target market as stated above, we estimate the target market size of fashion retail is around 10.5 trillion yen, that of e-commerce is about 1.2 trillion yen (EC penetration close to 11%) (The estimate by the company using articles from SENKEN SHIMBUN, researches/reports from Yano Research Institute, Roland Berger, Bain & Company and the Current Survey of Commerce provided by Ministry of Economy, Trade and Industry).

Within our previous target segments, which are accessible luxury, upper middle and lower middle, our market share in the aggregated fashion e-commerce market of those segments is close to 50%. However, given that upper middle and lower middle segments are shrinking due to diversification of consumer values and bipolarization of consuming trend, it is requisite for us to maintain the current growth speed by reaching consumers of the adjacent segments. On the other hand, our new target segments under the new classification which is adding fashionable mass volume to the previous target, based on the market size calculation of fashion e-commerce is about 1.2 trillion yen, our market share is merely around 20%. By paying close attention to the branding of our website and gradually expanding the target segments, we will secure further growth opportunities while alleviating from the impact from growth trends of certain segments.

*Cumulative gross merchandise value from January to December 2017 is used for estimating market share in the previous and new target segments.

Medium-Term Objective

START TODAY Group is proactively trying to increase the EC penetration in the market of clothing and personal belongings in addition to take higher market share, through constructing highly convenient fashion e-commerce infrastructure for both consumers and brands, and fashion oriented internet media.

While we are expanding the ZOZOTOWN business putting its axis in the fashion e-commerce market, we will start new initiatives such as the private brand business and advertisement businesses to accelerate the development of various business fields.

Based on above, the Group is working together to challenge and achieve the total transaction value target of 715 billion yen in FY2020.

Medium-term Management Plan (3 Years)