Overview of the business Isetan

Isetan of Japan Sdn bhd is a company name of Malaysia branches under Isetan Company limited, which was the world’s leading Japanese departmental store retailer during 20’s and 30’s after merging with Mitsukoshi Sdn Bhd. The combination of Isetan and Mitsukoshi is mainly to sell woman and men’s apparel, home furnishing, foods, electronic appliances, etc. They create better life towards their customer by delivering good and quality products and services in order to improve their life style in every aspect in their lives. Isetan is targeted their local customers and Southeast Asia country customer as well. Meanwhile, they has been opened 3 stores in Malaysia which is Lot 10 (1990), Suria KLCC (1998) and The gardens (2007) respectively. (Isetankl.com.my 2010)

History of the business:

Isetan was established in 1886 where Isetan Shinjuko located in Tokyo was the headquarter store in Japan. Be capable of creating fashionable kimono designs and obi sashes with the latest collection were made them succeed in becoming a well- known Japanese departmental store. They gained high reputation from the customer that they always provide better services and deliver the best ever possible products for the customer. Further, their shopping bags with the design of “tartan” pattern have become popular choice for skirts as well. (Isetankl.com.my 2010) Thus, they start to plan their business into such diverse marketing environment and expand the businesses throughout local market to Southeast Asia country.

Isetan way:

They hold true with their corporate objective is to “do business with the highest integrity and in a sincere spirits of service”. They must assist customer once request has upon them no matter how was the situation it is, because they are responsible to provide the right solution to resolve their enquires. Either they could look help from other staff and not to leave customer facing the problem alone. (ibid)

Products:

Isetan Kuala Lumpur have maximum 5 levels of departmental store where the concourse level is mainly selling woman’s apparel with the style of casual, work, school, formal and dinner categories. Ground floor is basically selling premium products such as cosmetics and fragrances, international boutiques and branded accessories. While the first floor is men’s department, second floor is kids and children department and third floor is food market where they sell selective dairy products, foods, fruits, exclusive of selling Japanese foods, snacks and meals, in house bakery, wine shop, chocolate delight, home items, etc. (ibid)

Services:

Isetan have a high reputation on serving customer where they provide excellent before and after sales service, customer services department by giving gift wrapping service, application of member card and inquiry as well. They will send newsletter for members to inform them the upcoming sales promotion event and product. Then, seating area, toilets, pray room and a room special for parents to clean and exchange pampers for their babies. Besides, free parking for members who purchased RM 100 and above, gift voucher, hampers, orchid delivery services, reservation and alteration services will be available all the time. (ibid)

Customer:

Isetan is targeting middle class to higher class customers which is business to customer (B2C). Most of the products selling are from mid to high price, at the same time services such as availability of online purchase option are being implemented in Malaysia. Customers can purchase and make payments easily without visit to the store. Besides, return policy in the form of refund or exchange basis which is confirmed to every customer that with any reasons but terms and condition is applied.

Competitor:

Isetan is a high end departmental store where they are competing with other same level retailer such as Parkson, Metrojaya, Debenhams, Tangs, etc. They are struggling with each other whom able to offer the best ever product and service for the customer in order to retain customer value and satisfaction. Besides, Jusco, Carrefour and Sogo are competing with Isetan but in different competitive advantages. They able offer cheaper price at supermarket and variety products and services due to the larger scale of store that they have compare to Isetan.

Chapter 2: Literature review

Customer relationship

In today business environment, retailer should engage a close relationship with customer in order to generate a significant profit from there. Generally, every retailer would tie close with the customer relationship management (CRM) to identify the customer behavior and modify the business operation and produce the best for the customers.

Below are four factors that must be concerned by a retailer. It helps to gain customer value and satisfaction.

Customer base:

Shugan stated that “Customers are assets and their values grow and decline”. Retailers apply market segmentation in their market plan would help them to target their customers based on their lifetime value and marketing mix activities aim at enhancing customer value. (Teck et al 2005) Besides, it would useful for identify the customer base which take into consideration of the customer’s lifestyle trends, population, attitudes, reason for shopping and the level of loyalty. A specific marketing strategy is determined to analyze customer needs and wants according to the availability information. (Berman & Evas 2006)

Through this, retailer uses various methods to retain its core customer and make product that difference from other competitor, because core customer would generate volume profit once expected satisfaction is achieved. By having more and more core customers, businesses gain market share and attract more investor into the business at the same time market capitalization increased.

Customer service:

Customer service is often seen as an activity, performance and a philosophy. It is a process for providing competitive advantage and adding benefits in order to maximize the total value to the customer. (Customer Service Manager.com 2010) There are two elements of customer services such as expected and augmented. Expected customer service is the service level that customer want to receive from any retailer, for example, basic employee courtesy. Augmented customer service is the activities that enhance the shopping experience and give a retailer competitive advantages. (Berman & Evas 2006)

Customer service is applied to build strong relationship within the customer through the attributes of personnel in term of knowledge and polite to provide them needed information to solve their problems. In addition, employees’ empowerment can be added value to customer service. By giving power to employees to make certain decision, it would cultivate the employee confidence in dealing with customer problem. Hence, employees would act more pro- active and deliver better remedy for customers. Gift wrapping service, alteration and installation, delivery, parking and others are examples of customer services.

Customer satisfaction:

Customer satisfaction is a customer’s positive or negative feeling about the value that was received as a result of using a particular organization’s offering in a specific use situations. (Woodruff & Gardial 1996) Thus, it can be experienced in any circumstances and connected both goods and service. (CSSP 2007) Three categories of customer satisfaction such as shopping system satisfaction which regard the availability and types of outlets, buying systems satisfaction which involve the wide range of products that being offer and consumer satisfaction which about the use of the product. (Berman & Evas 2006)

Retailer can measure its customer satisfaction by using survey techniques and questionnaires. Hence, higher level of customer satisfaction is vital for a business, it shows the loyalty customers and significant achievement of the products or services offered by the business are feasible. (The times 100 2010)

Loyalty program:

As recapping back to the customer satisfaction, it does not work without customer loyalty program. Both of them are interrelated in every aspect of retaining customer and auditing what the customer perceives and offering best suit products for them. A customer loyalty program such as memberships with discount price use to build up the relationship between the retailers. It would benefit the customer in the form of reward such as cash voucher, travel packages, coupons, free trial purchase, free sample and others that treating customer in a special way compare to other miscellaneous customers. (Wisegeek 2010) Besides, retailers track the customer database by providing necessary and expected products and services. By referring back to the customer database, it helps them knowing their core customers deeply in the perspective of spending pattern, buying behavior, preferences and others. It adds value to the customer relationship where expected customer needs are obtained through great shopping experience.

Channel relationship:

Distribution channel comprises of manufacturers, wholesalers and retailers where they group together and become value delivery system. All of them have their own responsibility with each other such as developing, producing, delivering and selling variety kind of products and services. (Berman & Evas 2006) It would add values to a business by having a great relationship between each other. For instance, delivery time would affect the business when products are running out and delayed. It makes business unable to meet the demand of customer in the market place.

Value delivery strategy is a guided for the whole process of the value delivery system. It is a way thinking about how to attain competitive advantage in markets. (Woodruff & Gardial 1996) As part of this strategy, category management applies for channel operators managing products in a proper categorize way rather than by individual item. (Berman & Evas 2006) This strategy is known to be adopted by retailers concern on different part of the business operation such as operational excellent, product leadership and customer intimacy. Retailers could concentrate on customer and managing supplier efficiently as well.

Chapter 3: Problems

Below are the problem that faced by Isetan of Japan Sdn Bhd.

Customer base:

Different type of customer would react differently in any buying environment. There are loyal customers who contribute much for the business. For instance, needed- based customer who only purchase when needed. Besides, discounts customer who being attracted to purchase during sales promotion. Next, impulse customer who purchase whatever sounds good for them during particular time and wandering customer who observe and think frequently only make the purchase decision or buy nothing. (About.com 2010) Each of them is varying from different life styles such as price sensitivity oriented, quality oriented, entertainment oriented, fashion- oriented and health- oriented. (XzamCorp 2010) Isetan could not deliver value of meeting every customer needs as they shop at Isetan. As we know they are more focus on working apparel, less choices for men apparel, sizing problems which are Asian sizes, no quality guarantees, no veggie, organic or supplemental foods.

Customer service:

Customers found that the general services that being provided by Isetan are not sufficient. Besides, numerous customers have been complaints that Isetan staffs are not being trained and lack of knowledge which they suppose to know and sometimes give improper information. They behave low performance, not clear and irresponsible with the task, not initiative, poor attitude and impolite. Most of the time, a long queue are exist at customer services or cashier counter to make payment. Further, problems cannot be solved and it wastes a lot of time in solving that particular problems. Another major problem is facilities matters, for example, toilets in poor conditions, no Automated teller machine (ATM), return policy, no wheel chairs or more seating places for senior citizen, baby rooms and “Surau” for prayers.

Customer satisfaction:

Isetan has been losing its customers from shifting to their competitor due to the reason of seldom sales and promotions. In facts, sales promotions are threatening their brand image as a high end retailer. By giving more discounts, it would down grade their premium brand prestige in customer’s perception. Besides, they concern less on tourists even their stores are located at tourist’s attraction crowd areas. For example, no directory guide or assistant available for tourists to enquire and no special sales or reward that attracting them to shop at Isetan. The most embarrassing issue is certain foreign bank credit cards and currencies cannot be used for purchase. It makes a lot of inconveniences for them and reduces their purchasing power as well. The highest rate of closing the sales transaction at Isetan might be tourists since their money values is higher than our country.

Loyalty programs:

Some customer found that Isetan is too focus on rewarding those repeated purchase customer without identify the actual needs of a customer. (Greatbrook.com 2010) Customer found that less variety of merchandise sell at Isetan, even more, those general range or fashionable of merchandise that customers expect are not exist at all. Besides, reward structures are not attractive which they only give cash or gift vouchers rebate to pursue customers purchase frequently. It looks bored and dull that causes our customers feel that being a member is meaningless since competitors are even offer more attraction structure for them and wide range of merchandise with discounted price as well. For example, Parkson offer double points or vouchers for all customers who purchase RM100 and above without concern of the membership issues.

Channel relationship:

Apparel suppliers are not having a good relationship with Isetan that they have limited floor space and counter for displaying and keeping their stocks. Every brand suppliers insist that they needed a bigger and wider stock space and counter. The situation might be getting worse if they cannot allocate to a counter which they satisfy. It would lead to a situation where they would not cooperate with Isetan such as stock in and out without the approval from Isetan, no teamwork exists, no mutual trust, and they not bound with the rules and regulations that being set. Hence, retailer might not continue contract with Isetan, for example, Soda, Seed or Elle which are the well known brand for middle class customers. Isetan might loss a huge group of customer due to these issues.

Chapter 4: Recommendations

Below are the recommendations that being recommended and suggested to deal with the problems in chapter 3.

Customer base:

As referred to the problems, different type of customers with variety combination of life styles brings a lot of difficulties towards Isetan. Hence, Isetan has formed its own brands such as “Crescendo” for stylish woman, “Cicada” and “Cultivation” for working executives, plus size and total woman for larger size women. In addition, imported brands such as DKNY, Polo Ralph Lauren, BCBG and Dior are available for those high end customers. Without overlook men, Isetan has created a western homemade suit for men where an experience tailor would provide professional services and make the suit that meet their expectation. Further information is attached in appendix 1. Besides, more organic and supplement foods are selling in Isetan food market. All foods and veggie are checked daily. To ensure the freshness of the foods and veggie, Isetan food market has additional promotion for certain foods, veggie, fruits and meat every day after 8.30pm. Hence, customers can more enjoy shopping by getting cheaper promotion. (Isetankl.com 2010)

Customer service:

Isetan should provide training for staffs in handling of customer matters and products knowledge but it is excluded their partners from the training. Certain companies are profit oriented and less concern about their staffs. Hence, additional training should be developed by Isetan to train the entire partners’ staffs regard the proper manners, standing postures, rules and regulation which must be followed. Examples are shown in appendix 2. Moreover, “fire prevention training” should be held with the cooperation with Malaysian fire and rescue department in guiding them on how to escape from the disaster.

As what have been mentioned in chapter 3, Isetan should try to upgrade their facilities and address customers’ complaint properly in order to show their full concern on customers. I would suggest that staff should use fragrances during housekeeping in order to keep the environment neat and odorless. Meanwhile, return policy is applied according to the terms and condition. Customers would satisfy and appreciate Isetan if a fair basis of return policy is there.

Customer satisfaction:

Isetan are trying to design seasonal promotion such as bazaar sales, festival sales, stock clearance to attract more customers by preparing product bundle selling strategy, gift with purchased or higher discounts. For example, Isetan wish to share their happiness of celebrating its 20 years anniversary and achievements with customers. As a token of appreciation, customers who purchased latest spring collection items with pink color able to enjoy 10% off on it which attached in appendix 3. Besides, Shiseido fashion parade that held at Isetan KLCC ground floor could be attract more customers and launched for the newest products, it would increase the brand prestige and further information will be attached in appendix 4. To shown the concerns of caring towards tourists, floor maps and floor managers are available to assist the tourists and special reward is giving to tourist who purchased normal merchandise able to redeem 5% voucher where they enjoy the next purchased at Isetan. To reduce the inconveniences of tourists, Isetan should allow foreign customers use its currencies or credit cards to make payment. For example, China credit card union pay can be used to shop at the stores in Japan and further information is attached at appendix 5.

Loyalty program:

Isetan should take prompt action to determine their behavior and attitude in order to meet customer satisfaction by improving their merchandise and services. (Greatbrook.com 2010) They could work together with third party who can offer better promotion packages or purchased with free gift which incur quick increase in sales efficiently. For example, it is only privilege for CIMB credit card holders who ever purchased RM1000 and above at Isetan can enjoy zero interest installments within 12 or 36 months. Further, Isetan have been held “Isetan Fukubukuro” the first time coming to Malaysia which also known as Lucky bag and only for RM100 each. Further details are attached in appendix 6.

As showing a premium prestige toward customer, thus customer would feel better by joining Isetan membership. Isetan currently is reforming a newly loyalty program which named “go green” card with the theme of “save our earth campaign” for their customer. (Isetankl.com 2010) They reduce the wastage of printed newsletters and enhance the use of internet facilities for their members updating the current sales promotions. It sounds meaningful for customers to join this campaign where they hand in hand to conserve the environment. It is better if Isetan could donate some money to support the “green” activities or implantation as well.

Channel relationship:

Isetan believe that having closer relationship with supplier able to meet the customer demands and gaining back their loyalty as well. To avoid complaint from apparel supplier, a supply contract has been signed between them which regard the profit margin, floor and store space and other terms and conditions being take into account. Hence, Isetan should have a fairly basis for every apparel supplier who ever make better sales and better option is available for them. It builds better relationship between them at the same time meet its customer demands. A supply chain management (SCM) is adopted at Isetan to ensure the entire delivery process undergoes smoothly and conformity. (Docstoc.com 2010) For example, by having close relationship with larger corporation such as Koolkes Sdn Bhd which is a refrigerator supplier. They offer low cost refrigerator for storing freeze foods and drinks, guarantee maintenance services check- up and quality assurance. (Asian Journal of Case 2008)

Chapter 5: Conclusion

Isetan of Japan Kuala Lumpur aim to become the most successful retailer in serving customers until the ultimate goal is achieved where customer satisfaction is met. To strive for this with other competitors, they must be differentiating themselves from others. Hence, Isetan way have been developed as a guideline that bound to follow by every Isetan’s employees to ensure that the ultimate goal is accomplished in a proper and wisely manner. “The customer always comes first” is their core stand of the business operation which means customer is the main concern of Isetan. Employees are well- trained under a series of training assessment which specialized formed by Isetan as well as their own brand companies. Thus, knowledgeable and courteous employees would response speedy and desirable performance towards customers.

By holding truthfully the Isetan way, to achieve its miles stone would not being seen as difficult. The most important thing is everyone must be cooperate with each other and responsible in dealing every task appropriately. In addition, they would perform ethically and honesty when serving customers which leave them a great shopping experience and knowledge in using that particular products. As recapping to the examples and appendix in chapter 4, Isetan has made a significance achievement in getting to their business mission. They would ensure that every step is performing in a proper way and delivering in a specific time to achieve customer’s satisfaction.

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