Q&A with top management | From the president to investors
Responses to questions below are as of the month posted. The situation may have changed, due to various factors including economic conditions and the competitive landscape within the industry, depending on the time of viewing.
- Regarding November Monthly Results
- Sales for November 2018 were 88.4% compared to the same period of the previous year (79.7% in goods sales and 94.0% in solution service sales on a year-on-year basis).
As announced at the earnings result briefing for Q2/FY2018, held on November 20, 2018, we are evolving our business model from recurring maintenance services to recurring future consulting services that make proposals for planned creation. We have been accepting pre-orders for services slated for next spring and summer to fulfil our customers' future needs. (Text partly omitted). Although these pre-orders are unrealized orders and profits at the moment, we will maintain our effort to make the evolution of our business model take root, so that we can service customers' needs in the future. Please click here to view the video of the earnings result briefing for Q2/FY2018 (in Japanese only).
- New Year's Holidays for Stores
- We will be open for business as usual through December 31, 2018, and all stores will close on January 1, 2019 (excluding some stores).
Our call center exclusive to premium members is open for business all year around.
To check our business hours, please click here for stores and view the information page for members (in Japanese only).
- Will the spread of 4K and 8K broadcasting work to your advantage?
- The penetration of super high definition content can create demand for compatible peripheral equipment, components and video cameras and lead to the sale of e-sports compatible devices that allow users to enjoy high-quality video. Furthermore, demand for support from our members will follow the popularization of the new technology. Therefore, this move will not affect our business adversely.
However, our view is that a too rapid rise in demand would not be particularly desirable.
- Wi-Fi hotspots were greatly appreciated during the recent disruption of mobile phone services. Can we use such hotspots in PC DEPOT stores?
- Each PC DEPOT Smart Life store and PC DEPOT store is equipped with a public wireless LAN (Wi-Fi hotspots).
Please contact stores for details on using their hotspots.
- What is an "evolution of the business model" as explained at the announcement of the second-quarter financial results?
- We have been promoting digital-life consulting that provides well‐planned proposals and well‐planned creations, so that premium members will entrust us with their future digital lives. In the first half of the year, we invested time and expenses for the "learning" of our human resources.
For each premium member, we have been dedicating a consultant and an engineer who work for them as a team, and this scheme has been enhanced starting in October. Moreover, various changes have been made, including a provisional termination of temporary special sales and short-term employment, which were measures that had previously been implemented at certain times of the year. We will continue to invest in and use time for our human resources, who play a key role in this evolution.
- Will an increased use of electronic payment, including payment through smartphones, positively affect your business performance?
- An increase is expected in, for example, demand for support services to a certain degree. With our situation-oriented "well‐planned proposal for digital life" for the future and provision of support to members, there will be greater opportunities for us to be of assistance to premium members, and we trust this will be a positive factor in the long run.
- Will the demand for elementary school children to learn programming be a positive factor?
- Learning programing-based thinking is an effort toward a form of learning using computers in the long term, and we regard it as a positive factor given an expected increase in demand for support services. "Digital life planners" dedicated to each premium member will continue to improve their consultation-designing skills, including their ability to make a "well‐planned proposal for digital life" for the future.
- Can you tell us about the renovation of Smart Life stores?
- Smart Life Makuhari Inter Store, which had operated in a makeshift store due to renovation work, reopened in September 2018. In November, the first Smart Life store in the Shikoku region, Smart Life Takamatsuhigashi Bypass Store, will open by renovating our existing PC DEPOT store in Takamatsu, Kagawa Prefecture.
Each store is now expanding its floor space to support its members with more tables and seats. The Company is adding some improvements including installation of additional seats to already-renovated Smart Life stores one by one in order to respond to increased opportunities to provide consultation services and more frequent visits of their members resulting from renovations.
- Can you tell us about your recruitment activities?
- While we are in the final stage of new graduate recruitment activities for next spring, we carry out our hiring activities on a continual basis. Such activities include the internal promotion of part-time workers to full-time employees.
We have also started employing individuals who can leverage experience in their previous job as part of our initiatives to support diverse ways of working.
- What is the situation of the PC market?
- Although private-sector PC demand is not strong, the demand for various products is gradually increasing due to changes in the way of working, which have resulted from the work style reform and other relevant initiatives being pushed ahead by the Japanese government and companies, increased awareness of the need for programing education due to the transition to new official guidelines for school teaching and increased popularity of e-sports. In light of this, we believe that the PC market has the potential to expand backed by diversified needs.
- A large earthquake hit Hokkaido. Was there any effect on your stores in the Tohoku region there?
- Fortunately, our stores in the Tohoku region received no serious damage. However, we would like to offer our deepest sympathy to the people affected by this earthquake.
- What is the status with regard to your handling of the new iPhones?
- The new iPhone models are high-performing and attractive products. We will be offering them to our members.
We started selling iPhone XS/iPhone XS Max on September 21, 2018.
Additionally, we will start accepting preorders for the iPhone XR on Friday, October 19, and it is scheduled to go on sale on Friday, October 26. Depending on the supplies of goods from carriers, we believe that there will also be demand created by consumers seeking the membership service that we are offering in addition to contracts with carriers.
- Do you plan a large-scale sales campaign for the busy season toward the year-end?
- We are planning no large-scale sale that part of online stores or consumer electronics superstores will offer. We strive to provide all solutions, including resolving consumers' problems, in a stable manner throughout the year.
- What is the financial situation for the first quarter of FY2018?
- The company performance is almost in line with the plan. We are pushing forward with a shift to digital life consulting through face-to-face communication in store sales activities so that we can propose smart life solutions at home in a comprehensive manner into the future.
- The contract period of mobile phones has made the news. Have you felt any impact?
- Although we are handling smartphones from major carriers, mainly iPhone, there has been no direct effect at the moment. With smartphones under the membership service hardware solution plan that we are offering, members may choose telecommunication lines freely.
Additionally, we have a plan that allows members who use phones currently to change to another carrier or low-cost SIMs. We are providing services that can meet the requirements of members in each of their various situations.
- Reportedly, the esports market is going strong. How will that impact you?
- We feel it will have a positive impact on our business since esports will induce interested customers to consider purchasing devices, such as peripheral equipment and PCs more often, and that esports is accepted as entertainment will lower the psychological hurdle to enjoying the digital life.
- The western region of Japan experienced torrential rainfall. Has there been any impact on the stores in western Japan?
- We send our heartfelt sympathies to the victims of the damage caused by the devastating rain that hit western Japan.
Fortunately, there was no significant damage to our stores, their staff, or their families due to this recent unfortunate event.
We are placing the highest priority on helping those who suffered damage from the “Torrential Rain of July 2018.”
Please click here(Japanese only) for details.
- How did the General Shareholders’ Meeting go?
- We have uploaded images from the General Shareholders’ Meeting on our website.
Please click here for details.
After the Shareholders’ Meeting, we held an opinion-exchange session with our shareholders.
- How has the heat wave impacted your business performance?
- We cannot rule out the possibility that consumers are refraining from going outside unless they absolutely need to do so, thereby restricting opportunities to visit our stores.
At present, we believe the impact is limited, but we are also considering changing our stores’ opening and closing hours as temperatures continue to rise. We will announce these changes on our website.
- Will the General Meeting of Shareholders involve any other event?
- The 24th Ordinary General Meeting of Shareholders will be held on June 27, from 10:00 a.m. at Queens Hall on Floor 2, Manor House South Building, Shin Yokohama Kokusai Hotel. For details, please see here.
We plan to hold an opinion exchange meeting after the General Meeting on the day.
- You increased the number of regular days that your stores are closed. Has this affected your sales?
- Although it affected our sales, the effect was negligible.
We seek to facilitate the planned use of stores through customers making appointments to visit our stores in anticipation of future use by individual members.
- Will there be any effect from the lowering of age of adulthood to 18 years of age?
- We currently think there will be no effect.
The Company employs part-time workers and so on from among persons at least 18 years old.
Moreover, in order to enroll as one of our members, a customer needs to show his/her ID and hold a credit card, in principle.
- What was your intention behind your letter to stakeholders?
- The intent was to inform all our members, customers, associates as well as all other stakeholders to whom we may contact in the future of our concept and approach.
We defined which areas we think are growing, and what approach we are considering for these areas, as well as how we are going to create value for our customers, aim for the company’s sustainability and growth and help our employees have stability in their lives.
- The Ministry of Education, Culture, Sports, Science and Technology is promoting the use of IT at schools. Will this boost your business?
- We are not certain about its direct influence on our PC sales.
However, as the “skill of information usage” has been recognized as the capacity and skill that form the basis of learning, support needs will arise as more homes and individuals turn to PCs. It could also create diverse learning styles and fun activities.
- What is mini-renovation?
- It means small-scale renovation of our existing PC DEPOT Smart Life Stores. Some of the first PC DEPOT Smart Life Stores that opened in August 2013 are not equipped with enough seats for the future.
To make our stores more comfortable for our customers we will carry out mini-renovations as needed.
- Tell me about the appointment of outside directors.
- With the objective of raising corporate performance and stimulating the corporate governance system, we have selected two candidates to be outside directors.
After leaving Japan's Ministry of Economy, Trade and Industry, Hidetaka Fukuda, a candidate to be an independent outside director, managed a business corporation, and with his experience from the viewpoint of government and also his wealth of experience in management, the decision was made to appoint him, as it was judged that he would contribute to the expansion of our company's business.
Based on her wealth of experience in customer relations, Yumiko Masuda, a candidate to be an outside director, is an expert in consumer/customer-orientated management and customer contact, and as such the decision was made to appoint her, as it was judged that she would contribute to the expansion of our company's business.
Thus, it is planned to obtain the consent of the General Shareholders' Meeting to have the Board of Directors composed of 11 directors in total, out of which three will be outside directors.
- Do you deal in wireless earphones?
- We deal in Apple's AirPods and the like.
- What do your company’s work style and productivity mainly include?
- We are tackling various challenges to cope with Japan’s aging society with its falling birthrate. Specifically, the whole company as a united force is working on establishing a variety of work styles and promoting activities such as resolving difficulties in acquiring manpower, shortening working hours, turning fixed-term employees into regular employees, extending retirement ages, and setting regular holidays in addition to emphasizing labor productivity in accordance with the changing circumstances.
- When will you start selling Apple’s HomePod?
- The date of the HomePod Japan’s release is yet to be announced, so as such we are unable to let you know the sale time. However, we will keep an eye on it because it is expected to develop into a key device.
- How are sales of the iPhone X?
- The popularity of both the iPhone X, which went on sale in November, and the iPhone 8 and iPhone 8 Plus, which came out in September, are holding steady.
We will continue to deliver updates and products to existing members and to those who require support going into the spring season.
- What is the impact of the snow storms in January?
- Since a majority of our stores are located in the Kanto region, we saw only some impact to January figures overall, mostly due to shortened business hours.
- Please tell us about your hiring plans for the following and subsequent years.
- We plan to hire 40 new graduates in April and promote an additional 40 part-time employees to full-time employee status. In addition, we plan to hire about 100 new graduates in April 2019.
- What percentage of your executives (managers and higher) are female?
- The percentage of our managers who are female is 7.8%.
When we hire employees, we do not limit them to certain job types such as general or clerical workers, and this indicator is calculated based on the total number of regular and contract employees. * Part-time workers are not included.
- When are the stores closed?
- Basically, we have adopted several irregular holidays a year such as New Year's Day. We plan to set up regular holidays as a general rule from next fiscal year.
- Do you expect any special demand related to XXIII Olympic Winter Games in PyeongChang?
- We expect no direct change in demand.
- Tell us about your plans to open new stores and renovate stores in this and next fiscal years.
- We opened a new store in Roppongi this fiscal year.
We renovated six stores before the end of December 2017 and plan to renovate several stores by the end of this fiscal year.
In the next fiscal year, we plan to renovate about the same number of stores as in this fiscal year and expect to open new stores considering the situation.
- How about support services for smart speakers?
- Some products are sold at some stores.
Specific support services such as member support are currently undecided.