Asia retailer results and strategies to drive growth

Most Japanese retailers continue to grow

Japanese retailers showed decent growth in their full year and year-to-date results, aided by improved sales in value products such as private label, and a boost from tourism growth.

Aeon’s revenue grew 5.7% year on year to JPY10.7 trillion (US$67 billion), driven by increased spending in food-to-go private label and growing demand from tourism.

Pan Pacific International Holdings saw its revenue rise by 8.2% in its 9 months year-to-date results, with its Don Quijote discount banner in Japan benefitting from increased price sensitivity among shoppers. Its tax-free sales increased by 32.8%, boosted an increased tourism from East Asia, Europe and USA, which more than offset the decline in tourism from China.

Seven & i Holdings was the lone major retailer to see a decline, with its revenue dropping by 7.9% to JPY17 trillion (US$110 billion). This decline was expected, due to the divestment of its large stores formats. However, a leaner company focused purely on its strengths in convenience puts it in good stead for improved margins and future growth.

Value a priority for Japanese retailers amidst cost concerns

Amidst the Middle East conflict resulting in rising fuel prices and supply chain costs, and an expected increase in inflation, providing value for shoppers is a key strategic focus on Japanese retailers moving forward.

Seven & i Holdings, Aeon and Pan Pacific International Holdings will be focusing on expanding their private label ranges, while looking for opportunities to optimise their value chains.

Convenience retailer Lawson has almost announced plans to target value with a new ‘L Minimart’ banner. The banner will have a top-up convenience concept, with a greater grocery range and offering better value compared to the usual convenience concept.

CP Group benefits in Thailand from election season and tourists

CP Group’s convenience store business, much of it comprised of its 7-Eleven operations, posted a 7% year on year increase in Q1 revenue to THB122 billion (US$3.7 billion). This was aided by favourable factors such as improved mobility during the election season, as well as a growth in Tourism, particularly from China.

The retailer aims to increase its customer base by expanding its product range and growing its online and delivery services. This will give shoppers a greater choice in products and purchase channels.

OK Mart acquisition leads to consolidated Taiwan market

Simple Mart grew 10.5% year on year in quarterly revenue to TWD 3,837 billion (US$121 billion). Its most notable move in the quarter was acquiring a 100% stake in convenience banner OK Mart. Simple Mart is expected to retain the OK Mart brand name and operate it as a separate banner.

With the acquisition, Simple Mart now has an improved presence in the convenience channel, and will hope to enjoy operational synergies and benefits, such as greater bargaining power with suppliers and more efficient supply chains.

What can we learn from these retailer strategies

Value will increasingly become a major focus for retailers in Asia in the months and years ahead, amidst cost of living concerns and impacts from the Middle East war on supply chain costs, which could worsen inflation. Retailers will need to strengthen their operational and cost efficiencies, while offering shoppers value in the form of private label, promotions, loyalty and strengthen value communication.

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