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Subject: February 2003 VMS3.info: Sazaby Analyzed via the Value Framework
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February 1, 2003 *4,400 subscribers* Volume 5, Issue 2
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Sazaby Analyzed via the Value Framework
by Mitchell Levy, Author, E-Volve-or-Die.com, Author,
the Value Framework™
and Riko Ono, Student SJSU

Sazaby can be the total brand, offering all types of joys: clothing, dining, housing, and time-refreshment with classes for hobbies


Sazaby is a domestically focused Japanese corporation known for creating original brands in dining, clothing, and household goods for the last 30 years. Sazaby promotes its expansion through domestic and foreign alliances that share its philosophy and provide a brand image. Through these partnerships, Sazaby continually offers a new mixture of fashions and lifestyles to its customers.

Sazaby's four core sectors today are:

  1. Product sales
  2. Food and restaurants
  3. Foreign alliances
  4. Content

With the long economic slump in Japan, personal consumption continues to decrease with the apparel industry being particularly hard hit. While rival brands are trying to set consumer trends, they appear to be forgetting to establish their own brand concepts. Sazaby, on the other hand, is creating its own brand concept that can be loved by customers over the long haul. After the Japanese "bubble economy" ended in the early 90's, many apparel businesses suffered significantly, but Sazaby did not suffer as much due to its consistent brand image and trusted products.

Sazaby's products are not essential for living. They are luxury goods and services; however, people cannot stop spending for luxury items even in a bad economy. People need to feel a joy for living. Sazaby can thus be the total brand, offering all types of joy: clothing, dining, household goods, and time-refreshment with classes for hobbies. Sazaby's current strategy is to create a general store that contains the entire essence of Sazaby group's brand values.

In its business strategy, Sazaby focuses on specific targeted customers
(20~35 aged females) and satisfies all their needs for the
three basic concepts of dining, clothing, and housing


Strategy Deployed
Sazaby started as a furniture importer and retailer at 1972. Nine years later, Sazaby created another core brand called, "Afternoon Tea," which offered lifestyle products with in-store tearooms. By 1983, Sazaby made a joint venture with C.M.C.S.A of France. It helped Sazaby create another core brand called "Agne`s b." At this point, Sazaby created its core store concept of dining and clothing. Additionally, in 1993, Sazaby began retailing furniture under the ICL brand that helped to create one last important concept, namely, household goods.

After Sazaby established its three basic concepts of clothing, dining, and household goods, it started expanding with foreign alliances that would generate more sales and opportunities for its groups. In 1995, it established "Starbucks Coffee Japan, Ltd.," through a joint venture with Starbucks Coffee International Inc. of the U.S.A. By November 2002, Sazaby had six consolidated subsidiaries and two consolidated affiliates. Through its 30 years of history, Sazaby has promoted three fundamental business strategies:

  1. Creating a value of lifestyle its products offer
  2. Creating diverse brands
  3. Creating alliances with a global perspective

In its business strategy, Sazaby focuses on specific targeted customers (single women, aged 20~35 years) and satisfies all their needs for the three basic concepts of dining, clothing, and housing. For instance, when a target customer shops for clothing, she will be able to find a matching bag along with the stationery and a purse to carry in that same bag. Having thus satisfied her need for clothing, she can then extend it to satisfying her need for household goods, potentially finding furniture and linens to furnish her home. Finally, she can chose to enjoy a great meal at any one of the restaurants that Sazaby offers.

As described above, Sazaby can satisfy key needs for living under one brand image-the Sazaby Group. Even though Sazaby contains several brands, each brands' uniqueness does not kill the other's uniqueness because Sazaby has carefully chosen the brands that it has incorporated. By focusing on its target market and giving customers great store experiences, Sazaby creates an environment that produces continued replenishment and recurring purchases. From a partner perspective, Sazaby's loyal customers and recurring purchasing cycle makes it a great partner company. In delivering its valued services, Sazaby gives its employees the same level of attention that it gives its customers, thereby creating good synergy with the employees and within the stores.

Key Points for Strategy Deployed:

  • Sazaby is a creative retailer that promotes three fundamental business strategies
  • Sazaby Group is the creation of original brands in dining, clothing, and household needs
  • Sazaby uses B2C models in its product sales business, food and restaurants business
  • Sazaby offers B2B opportunities to other businesses, which can share Sazaby's philosophy and value concepts
  • Sazaby realizes that customer experience from each brand helps to create one core brand image of "Sazaby"


As a retailer, customer satisfaction is a key concept of its business
and its enhancement is a primary concern of management

Strategy Managed
Throughout fiscal year 2002, the Japanese economy remained in severe condition. The retail sector had to contend with deflationary tendencies that took a firmer grip on the economy. In responding to this environment, Sazaby maintained a focus on promoting the mid-term business strategy while assuring thorough control of profitability at each group company.

As a retailer, customer satisfaction is a key concept of its business and its enhancement is a primary concern of management. For maintaining high-level customer satisfaction, Sazaby manages three areas:

  1. Developing products and merchandising innovations that meet the needs of a rapidly changing environment
  2. Working to achieve improved customer care, better services, and shop environments that put the customer first
  3. Assuring a better flow of information to customers

Based on performance metrics, Sazaby is comfortable with closing stores that do not generate sufficient profits for the group.

Management recognizes cash flow management as the key strategic measurement that will assure the following benefits: effective allocation of cash to each business, a return on capital, an overall efficiency in the group's mid-term investments. The key strength of its strategic management is: positive results from each of the business segments, namely, "bags and leather goods," "apparel and accessories," "lifestyle-enhancing products and furniture," and "food operations." Customers from each segment are converted to other segments. For instance, the customers from the apparel and accessories segment could be the customers for the food operation. This conversion of customers could happen because Sazaby has set a common brand philosophy to organize all of its business segments.

Key Points for Strategy Managed:

  • Sazaby focuses on profitability
  • Sazaby maintains a healthy relationship with each brand
  • Sazaby maintains a high-level of customer satisfactions with its three core concepts: innovating the products that meet the needs of a rapidly changing environment, improving customer care, creating better services and shopping environments
  • Sazaby keeps a good cash flow management that will assure some benefits: effective allocation of cash, a return on capital, and an overall efficiency
  • Sazaby maintains each segment's business as a whole under one-brand image while maintaining uniqueness of the brands


Strategy Evolved
To evolve, Sazaby has to face the following five challenges:

  1. Creating new brands under the three core brands concepts: dining, clothing, and household goods
  2. Sharing Sazaby's intellectual property among the groups
  3. Competing in an environment with a downward trend in product prices while maintaining quality
  4. Solving a cost problem; leasing fees for the stores
  5. Keeping a healthy group structure which allows management teams to make quick responses to customer needs

In answering the first challenge, Sazaby has already created several new brands. The first of these will be in the food and beverage business. "Afternoon Tea Baker & Dinner" is the new brand, which is in collaboration with famous English chef, Jamie Oliver. Another is a tearoom called, "Sadeu," offering Japanese style tea to customers. Through these new brands, Sazaby offers several different food brands that satisfy all kinds of needs for its customers. It includes: British style tearooms, American style café (Starbucks,) Japanese style tearooms, large restaurants that are capable of offering bridal services, and a British style diner and bakery.

In answering the second challenge, Sazaby has created a general store called "Afternoon Tea the General Store in Ginza," which comprises the entire 10 floors of a building. In each floor, Sazaby offers its own brands. Through this store, Sazaby offers tearooms, wardrobes, living products, and furniture from the "Afternoon tea" brand. It also offers two new brands: "Taacoba," which consists of a nail saloon and a nail academy, and "Jane Packer," which consists of a flower shop and a flower arrangement school. Through this project, Sazaby is expecting current loyal customers from "Afternoon Tea" brand to be the new customers for its two new brands and new concept-academy.

For answering the third and fourth challenges, Sazaby needs a success from it's second challenge; opening a general store. If its general store succeeds, Sazaby could reduce the number of smaller stores and expand to fewer numbers of larger stores.

For answering the last challenge, Sazaby continues to track each brand through the open network.

Sazaby's primary customer segment is single women who are aged between 20~35. With this customer segment, it is highly probably that about half of them will eventually be wives and mothers. Following this trend, Sazaby can try creating a new brand for young wives and soon-to-be mothers. This new brand could consist of a bridal department, different lines of apparels for single-career women, maternity, and baby brands. However, Sazaby should operate these new brands separately from its other mainstream brands. We have some concern that mixing them could cost Sazaby the loss of current customers (single-career women) loyalty to the existing brands.


About the Authors:

Mitchell Levy, is President and CEO of ECnow.com (http://ecnow.com), an e-commerce management consulting company helping corporations transition from the industrial age to the Internet age through strategy, marketing, and off-the-shelf and customized on-line and on-ground training. He is the author of the book E-Volve-or-Die.com (http://e-volve-or-die.com), creator of the Value Framework and author of the Value Framework Workbook (http://ecnow.com/value/).

Read more about Mr. Levy: http://ecnow.com/ml_bio.htm
Public speaking appearances I've given: http://ecnow.com/speaking.htm
Read about ECnow.com's media coverage: http://ecnow.com/media


Riko Ono is a student the San Jose State University.


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