Established supermarket chains across Japan are feeling the pinch as consumers opt instead for smaller shops at more conveniently located Japan convenience stores.
A feature in The Japan News, an English language version of The Yomiuri Shimbun, says business performance is deteriorating at Ito-Yokado (not at all ironically part of the Seven & I group, which owns 7-Eleven as well) and Aeon.
Aeon is actively building its shopping centre and retail reach in other Asian countries, such as Thailand, Malaysia, Vietnam – and most recently Indonesia, as it shores up its growth prospects in the wake of a declining Japanese population and stagnant economy.
As The Japan News reports, while the supermarkets are reporting almost embarrassing results, sales and profits are booming for the convenience store chain giants, especially 7-Eleven, according to financial statements for the year to February 28.
“This illustrates how the retail chain sector has been split into two contrasting segments. Such checkered business results are mainly attributed to ever-diversifying consumer preferences, which analysts say major supermarkets – have been struggling to keep up with.”
The report says Aeon president Motoya Okada had “a grim look on his face” during a news conference last week when he announced his company’s business results for the year were “well below our expectations.”
The largest supermarket chain operator under Aeon’s umbrella, Aeon Retail, saw its operating profits plunge 90.8 per cent from the previous year. Its supermarket business, including Daiei, posted a loss for the first time since 2008.
Ito-Yokado’s profit slumped 83.4 per cent year-on-year.
Seven & i Holdings president Noritoshi Murata told a press briefing earlier this month the Japanese market was “in the process of what you might call an increasingly conspicuous split into two disparate trends in consumer behavior”.
Murata argued that consumer preferences can now be divided into two basic patterns: opting for big-ticket items or prioritising daily necessities.
Read the full feature, including how the retailers plan to respond, on The Japan News website in English.
