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FamilyMart UNY has released a statement today to confirm a deeper partnership with Don Quijote in Japan.

Details of the deal

FamilyMart UNY will acquire 20.17% stake in Don Quijote in exchange of its 60% stake in UNY hypermarkets. This will mean Don Quijote will wholly own and operate UNY, after acquiring 40% stake of the business last year. Last month, we outlined the full details on what to expect post-acquisition.

Structure to be reviewed...

The companies have decided today to commence the Tender Offer from 7 November 2018. After implementation of the Transfer and the Tender Offer, the retailer we consider reviewing the holding company structure, reorganising the Group and changing the company name. This will be in preparation for the annual shareholders meeting held in May next year. Further details will be announced in due course.

Market dynamics driving reinvention

Trading in Japan continues to be a challenge. With a falling number of customers visiting stores, consumption and market size close to declining, the market is becoming more and more competitive.

Retailers are looking for ways to respond to the country's labour shortages, but as drugstores continue to move into food and grocery sales and ecommerce expansion grows further, shoppers are increasingly more selective in how and where they shop. This has played a significant role in influencing FamilyMart and Don Quijote's decision to partner, allowing the two companies to explore ways to maximise their own strengths.

Better and more efficient stores

In an official statement today, FamilyMart UNY outlines the background and reasoning behind the decision, "the retail business requires creation of attractive stores, diversification of sales channels, more superior product development and procurement, and competitive price setting, as well as more efficient management, such as making store operation efficient and streamlining sales channels."

Shoppers in 16 Japanese prefectures can now benefit from a new online grocery delivery service, Rakuten Seiyu Netsuper, launched by Walmart and Rakuten.

What is Rakuten Seiyu Netsuper?

The new platform is jointly operated by Seiyu (a subsidiary of Walmart) and Rakuten, and is a product of the strategic alliance between the two companies in January. It charges JPY432 (US$4) for home delivery, but shipping is free on orders over a certain amount. Users can select a delivery time within four days (including the purchase date). Rakuten Seiyu Netsuper has been trading as early as September 2018, moving it head-to-head with Amazon, which launched its own food and medicine delivery service in April 2017.

What is available?

Rakuten Seiyu Netsuper carries approx. 20,000 SKUs, including fresh produce, organics, grocery, personal care, baby, pet food, essentials, ready meals, and more. It offers deliveries from Seiyu stores as well as a dedicated Rakuten Seiyu Netsuper fulfilment centre in Kashiwa City, Chiba Prefecture. The platform aims to make use of Seiyu's expertise in fresh food and Rakuten in ecommerce. 

Connected to Rakuten ID

The new online grocery platform is linked to Rakuten’s ID system. This allows customers with a Rakuten ID to use their registered accounts to make purchases on the service, as well as accumulate and use Rakuten Super Points. Seiyu's Executive Officer, Tamae Takeda, said, "We will have access to Rakuten's strong base of 99m members. Rakuten's advantage is in technology, so we can combine our strengths [...]."

The three leading convenience store chains in Japan are facing increasing challenges to hiring staff for their stores. Labour shortages driven by the country's ageing population is deepening and retailers opening new stores require new workers.

Discounts and benefits for workers

The current approach for many convenience store operators is to incentivise workers with benefits and discounts. The average wage for convenience staff is around JPY1,000 an hour, but varies based on location in the country.

Seven & i Holdings, which operates over 20,600 7-Eleven stores in Japan, opened a day care centre for employees on the second floor of a store in the northern city of Sendai in July. In April 2017, it began offering workers discounts on hotels and travel services.

The second largest CVS chain in the country, FamilyMart, is partnering with Iris Ohyama to offer part-time workers nationwide discounts of up to 60% on rice cookers and other appliances. While Lawson, which operates more than 14,300 stores, offers its employees discounts on DVDs and books, serviced by the retailer's subsidiary companies.

Automation part of the solution

At an recent exhibition, Lawson launched an unstaffed store concept, featuring a robot that can prepare food as per customer preferences, e.g. cook gyoza dumplings. About a year and half ago, we covered how Japan's Ministry of Economy, Trade and Industry is backing the introduction of RFID technology in retail. Since then, we have seen Japanese retailers in different industries trial this technology. Retailers are now working harder to retain and attract new employees, but also promote automation to drive efficiencies in-store.

Traditional stores go by many names: mom-and-pop stores, kiranas (India); warung (Indonesia); kedai runcit (Malaysia); sari-sari (Philippines). They include markets, street vendors and kiosks, and are a major feature of Asia’s grocery retail landscape. 

They’re also the specialist subject of Johann, one of our Singapore-based senior retail analysts. We asked Johann for his views on the traditional channel and the opportunities it presents for suppliers.

Q: How are traditional stores making themselves stand out? 

A: They’re known for providing the freshest produce. In fact, the traditional channel began when farmers’ markets started selling excess produce directly to consumers. Stores prepare products – like cheese – freshly every day or offer ranges shoppers can’t find elsewhere.

Offering personalised service is another way to be distinctive. Many traditional stores serve a small catchment area, so owners inevitably get to know their shoppers well. They can then offer advice, product recommendations and value-added services like free home delivery.

Q: What do shoppers like about the channel?

A: As well as the above, many shopkeepers are willing to sell loose products in smaller quantities. We’ve seen this flexibility across many product categories – rice, spices, dried goods, vegetables, biscuits, snacks. 

Shoppers can buy what they need, manage their spending and reduce wastage. It can also encourage them to sample a wider range of products. So, if you supply traditional stores, you should consider whether you can help provide this level of choice. 

Q: How does traditional trade compete with the rise of online shopping? 

A: It’s quick to recognise the benefits of modern innovations and adopt them to attract shoppers. In India, banks are giving traditional shopkeepers handheld payment devices that operate on a mobile network. In China, stores and even market vendors are increasingly accepting cashless payments by displaying a QR code. 

Traditional retailers are also improving their in-store environments. In Malaysia, we’ve seen stores with spacious, clutter-free aisles and attractive displays. Some stores in India have upgraded to include air-conditioning, bright lights and electronic tills.

Q: What’s the outlook for traditional trade in Asia?

A: Traditional trade forms 79-98% of the grocery market in Indonesia, India, the Philippines and Vietnam. We forecast that by 2022 it will still dominate these markets. 

However, the growth rate varies greatly across the region. We expect it to decline in Singapore and Japan over the next five years. 

Q: What’s the one thing suppliers need to know about the channel?

A: Traditional trade remains a vital part of Asia’s grocery retail market. You’ll need to continue investing in it, as it’s here to stay. 

Subscribers to IGD Asia can find more examples of best practice in traditional trade here

Asia’s FMCG market is the largest in the world, making it the number one growth opportunity for suppliers and retailers. We can help you trade successfully in Asian markets, and benefit from this growth, with our new IGD Asia service.

This in-depth guide to Japan explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Datacentre the most reliable and robust source available for data of this type. 


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