September 2, 2016 7:30 am JST

FamilyMart-Uny team to take on Seven-Eleven

President Ueda, second from left, announced the merger Thursday.

TOKYO -- The union of FamilyMart and Uny Group Holdings has created a formidable player in the Japanese convenience store market that could rival top dog Seven-Eleven, with the changed landscape expected to further heat up competition.

Thursday's merger will bring Circle K Sunkus, previously the fourth-largest convenience store chain, into the FamilyMart camp. FamilyMart Uny Holdings' will have 18,123 stores, including 11,872 FamilyMart outlets and 6,251 Circle K and Sunkus locations, surpassing the tally for Lawson

"The expansion in size will lead to improvements in quality," said FamilyMart Uny Holdings President Junji Ueda. "As a reborn FamilyMart, we aim for better quality and services."

Convenience store operators have regrouped repeatedly, with Ministop, now the fourth-ranked player, left with a modest 2,200 stores. Many believe the industry landscape has now been set.

FamilyMart will now focus on profitability. As it aims to transform Circle K and Sunkus stores into FamilyMart locations by end of February 2019, it will add an "eat-in corner" to improve sales. But Seven & i Holdings' Seven-Eleven is still far ahead, boasting per-store sales of 656,000 yen a day. FamilyMart lags behind at 516,000 yen. 

The deli section could be key to bolstering earnings power. FamilyMart renovated stores in late August, and began offering refrigerated prepared dishes in sealed containers that help retain freshness. The lineup of nonrefrigerated products prepared within the store was expanded to include steaks and meals eaten for dinner. About 1,000 stores in greater Tokyo started the services, and the plan is to expand the refurbishments to 5,000 locations in October.

Rebuilding nonconvenience store operations is also a challenge for FamilyMart Uny. In August, Uny decided to sell its unprofitable kimono retailer Sagami and apparel unit Palemo to an investment fund. Its general supermarket business, facing tough competition from supermarkets and drugstores, is in need of adding facilities to attract customers.

Other convenience store operators also reached a crossroads this year. Seven & i CEO Toshifumi Suzuki resigned, and Lawson appointed Sadanobu Takemasu, who hails from Mitsubishi Corp., as president and chief operating officer. With Japan facing a declining population, new players must lead the industry into a new era.

FamilyMart, now under FamilyMart Uny Holdings, will be led by Takashi Sawada, a former Fast Retailing vice president.

"The convenience store business has so much more to offer. Not only do we need to catch up to Seven-Eleven, but we need to go above and beyond," said Sawada. All eyes will be on how well he can get consumers to follow along with his new vision for convenience stores.

(Nikkei)

Lawson, Inc.

Japan

Market(Ticker): TKS(2651)
Sector:
Industry:
Retail Trade
Food Retail
Market cap(USD): 6,572.76M
Shares: 100.30M

Ministop Co., Ltd.

Japan

Market(Ticker): TKS(9946)
Sector:
Industry:
Retail Trade
Food Retail
Market cap(USD): 585.89M
Shares: 29.37M

Seven & I Holdings Co., Ltd.

Japan

Market(Ticker): TKS(3382)
Sector:
Industry:
Retail Trade
Food Retail
Market cap(USD): 35,714.26M
Shares: 886.44M

SAGAMI Co., Ltd.

Japan

Market(Ticker): TKS(8201)
Sector:
Industry:
Retail Trade
Apparel/Footwear Retail
Market cap(USD): 44.41M
Shares: 40.83M

Mitsubishi Corp.

Japan

Market(Ticker): TKS(8058)
Sector:
Industry:
Distribution Services
Wholesale Distributors
Market cap(USD): 39,771.57M
Shares: 1,590.07M

FAST RETAILING CO., LTD.

Japan

Market(Ticker): TKS(9983)
Sector:
Industry:
Retail Trade
Apparel/Footwear Retail
Market cap(USD): 38,836.62M
Shares: 106.07M

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