[Company analysis] Nitori Holdings (ニトリホールディングス)

「Nitori Holdings (ニトリホールディングス)」is a major furniture retail company headquartered in Sapporo, Hokkaido. From Hokkaido to Okinawa, they have about 550 stores in Japan. In oversea, this company operates approximately 100 stores, mainly in Taiwan and China, since 2012 they have expanded it to the United States. The number of consolidated employees is approximately 12,668.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Nitori Holdings
Company name (Japanese)	ニトリホールディングス
Date of establishment	December 1967
Headquarters location	〒001-0907 北海道札幌市北区新琴似七条1丁目2番39号
Capital	13,370
Consolidated sales	608,131
Consolidated operating profit	100,779
Consolidated total assets	619,286
Consolidated capital	500,192
Capital adequacy ratio	80.8%
Consolidated number of employees	12,668

 

 

 

2. Summary and Features

 
Even though during the recession after collapse of bubble economy in Japan,「Nitori」continued to grow. In pursuit of the common sense of "high quality at a low price", they have been working not only on price but also on improving quality. As a result, products of「Nitori」become relatively cheap and good quality that strongly appeal to the Japanese customer.

 

In the background of the above low price / high quality, there was an differentiation strategy unique to「Nitori」. This company is the first company which introduced SPA in the Japanese furniture industry, which means they directly carry out from raw material procure to actual production and distribution. This contributed minimization of  the costs and prompt customer feedback to the product development. That is how this company were able to offer products at a more reasonable price and quality. In other words, the strength of「Nitori」is the cost and quality advantages based on the SPA structure.

Main business area of「Nitori」is furniture. But it is also called "Home fashion store", because it also handles interior goods, accessories, and daily necessities. They are also developing "Nitori Mall", which is a shopping mall type store, and "Nitori Deco Home", whichi is a comparatively small store. This company has more than 10,000 kinds of products handled, and about 85% of them are products developed in-house.

「Nitori」is often evaluated as a company that benchmarked「IKEA」. But in the case of「Nitori」, their product development policy does not target at a specific customer segment. Instead, they offer products that can be easily accepted by any household. So, compared to「IKEA」, products of「Nitori」has a comparatively simple design but better cost-efficiency. Based on this strategy「Nitori」has achieved an operating income ratio of 16.5% on 2018. Considering that the average operating profit margin of the Japanese manufacturing industry is about 4%, it has surprisingly good business performance.

 

 

 

3. Major Business

 

■ Production and sales of furniture and interior goods

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		512,958	572,060	608,131
Consolidated operating profit		85,776	93,378	100,779
Consolidated total assets		487,814	550,507	619,286
Consolidated net assets		394,778	441,668	500,192
Furniture and Interior goods business		512,958	572,060	608,131