Materiality
Process of Identifying Materiality
We discussed what the Group’s priority issues are and narrowed our focus on their likely impact on our corporate value and stakeholders. As a result, the following priority issues were extracted.
Extracted impact on corporate value and stakeholders
Symbols of classification
Declining and aging population
Social change
Physical stores
Climate change, natural disasters, infectious diseases
Expertise
Laws and ordinances, and ethics
Earnings opportunities
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The speed of market share growth from opening new stores exceeds that of the decline in population.
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Even with a population decline, there is stable replacement demand for home appliance/electronics as daily necessities.
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Customers choose stores to shop at because they are located close to their homes.
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Utility value of stores as exchange hubs for local residents increases.
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The delight of shopping at a physical store is reaffirmed.
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The value of customer service through human intervention and not through e-commerce increases.
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Specializing in home appliance/electronics generates greater profit and allows capital to be concentrated in investment.
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Specializing in home appliance/electronics allows sales staff to enhance their knowledge, differentiating the Company from its competition.
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In order to trade in home appliance/electronics, it is necessary to handle repair, replacement, and installation work as well as disposal in accordance with laws regarding recycling, which requires a high degree of specialization and creates a high barrier of entry.
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Amid the shortage of delivery and installation service providers, educating human resources can improve the quality of services and technology.
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Accumulation and use of customer purchase information associated with the sale of home appliance/electronics.
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Innovative merchandise is launched consistently, enabling us to create new demand.
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As social infrastructure adapts to the use of personal computers and smartphones (Society 5.0), there will be an increase in the number of participants in computer and smartphone classes for the elderly.
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The percentage of people participating in programming classes will increase on the back of programming education becoming compulsory in elementary schools.
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Diversity is enhanced by employing the elderly who are capable of and willing to work.
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Creating employment in the local community contributes to regional revitalization.
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The risk of profit fluctuation can be reduced by developing stores across wide areas.
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Demand for seasonal merchandise such as air-conditioners increases due to climate change.
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Replacement of, and attention to, energy-saving home appliance/electronics increases on the back of heightened awareness of energy saving.
Risks
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Total demand for home appliance/electronics decreases due to population decline.
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The elderly have fewer opportunities to visit stores due to a lack of access.
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Closure of stores due to difficulties in securing personnel arising from a decrease in working population.
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Inability to hedge risks due to the absence of portfolio outside of home appliance/electronics.
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The completion of our dominant store-opening strategy leaves no available locations for the opening of new stores near existing stores.
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Intensified competition with stores of other companies squeezes profits.
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Entry into the home appliance/electronics retail business by non-specialized retailer of home appliance/electronics (such as DIY stores and furniture stores).
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Decrease in opportunities to visit stores in person as online shopping becomes the norm.
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Increase in procurement and operational costs due to accelerating inflation.
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Changes in consumption trends toward non-material lifestyles.
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Decline in television viewing due to a change in lifestyle toward not watching terrestrial broadcasting.
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Cooling consumer sentiment to replace durable consumer goods due to a decrease in disposable income as a result of inflation, etc.
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Changes in employees’ mindset on work styles.
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Racial discrimination and human rights issues at workplaces in business partners and supply chains.
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Decrease in opportunities to visit stores due to climate change (bad weather, etc.).
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Closure of stores due to damage caused by natural disasters triggered by climate change.
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Delays in delivery and installation work due to climate change.
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Profits squeezed due to an increase in energy use and a rise in usage fees caused by climate change.
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Falling motivation to visit stores due to the spread of infectious diseases.
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Temporary store closures due to difficulties in securing personnel resulting from the spread of infectious diseases.
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Shortage of supply of merchandise from manufacturers due to natural disasters and infectious diseases.
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Increase in costs due to the introduction of carbon tax.
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Damage to public trust due to leakage of personal information.
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Delays in adapting to changes in laws and regulations relevant to our company.
Identified Materiality
The Board of Directors has identified the following priority issues of the Group from among the extracted impacts on corporate value and stakeholders.
The table below can be scrolled horizontally.
| Classification | ESG axis | Priority issues | Specific initiatives | Page where explanation is provided |
|---|---|---|---|---|
| Expertise | - | Refine our expertise by specializing in home appliance/electronics Expand our market share by developing new stores
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Refine our expertise specialized in home appliance/electronics | Corporate Information / Message from the Chairman |
| Reduce SG&A expenses to sales ratio through our dominant store-opening strategy that concentrates store openings in areas near existing stores | IR Information / Message from the Chairman |
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| Improve skills of delivery and installation service providers | Delivery & Installation Training Center | |||
| Physical stores | Create sales floors where customers can enjoy shopping | K’s Denki Services and Store Development |
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| Improve employees’ product knowledge, customer service skills, and ability to recommend high-value-added merchandise | Initiatives for Human Capital | |||
| Declining and aging population | Increase our market share despite a declining population | |||
| Improve store design and service to make shopping more comfortable for the elderly | K’s Denki Services and Store Development |
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| Support e-commerce | ||||
| Expand education fields including computer schools, etc. | ||||
| Social change | Social | Pursue human capital management by focusing on value of employees | Secure talented human resources and labor force, reduce turnover, and promote active female participation |
Initiatives Associated with Promotion of Women’s Participation |
| Regional job creation | ||||
| Support diversified work styles | ||||
| Share our stance on human rights with employees, business partners, and suppliers | Our Stance on Human Rights | |||
| Climate change, natural disasters, infectious diseases | Environment | Stable store operation and contribution to the realization of a sustainable society | Disaster preparedness | Disaster preparedness |
| Climate change risk and opportunity analysis, and carbon emissions analysis and goal setting | Climate-Related Disclosures (Information disclosure in line with TCFD recommendations) |
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| Energy-saving store design | Energy-saving / Eco-friendly store operation (Energy-saving initiatives at stores and offices) |
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| Promote sales of energy-saving merchandise | Sale of eco-friendly products (Recommendation of merchandise with high energy-saving performance) |
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| Measures to prevent spread of infectious diseases | ||||
| Laws and ordinances, and ethics | Governance | Compliance with laws and ordinances, and strengthening of governance | Comply with laws and ordinances | Compliance |
| Strengthen supervisory function of the Board of Directors | Status of Corporate Governance |