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Business

FamilyMart Uny selling stake in supermarket unit to Don Quijote

Partners to open stores in each other's locations, aiming to boost foot traffic

FamilyMart Uny President Koji Takayanagi, left, and Don Quijote President and CEO Koji Oohara.

TOKYO -- Family Mart Uny Holdings will sell 40% of supermarket subsidiary Uny to Don Quijote Holdings, aiming to turn the operation around by tapping the discount chain operator's knack for drawing customers.

The two revealed in June that they were discussing the formation of a business alliance, and Thurday's announcement takes the partnership a step further. Don Quijote will invest directly in Uny, and have no capital relationship with its parent. In November, FamilyMart Uny will transfer 80,000 shares of wholly owned Uny to Don Quijote for an undisclosed amount, lowering its stake to 60%.

"It is necessary to create stores for customers who feel that Japan's merchandising industry has become stale," said Don Quijote President and CEO Koji Oohara. "This partnership is the first step."

Roughly 200 Uny-operated stores under the Apita and Piago brands will be refurbished, with Don Quijote moving into the second or third floor. The companies will start with six locations sometime in 2018.  Don Quijote also plans to open locations where Uny-operated stores have closed.

In 2007, Don Quijote acquired struggling retailer Nagasakiya, restoring the chain's profitability by transforming it into a discount store with an abundance of low price products and high foot traffic.

"Demand for cheap products is firmly rooted in consumers," said FamilyMart Uny President Koji Takayanagi. And with sales continuing to decline, he acknowledged that "revitalizing our supermarkets as they are now would be difficult."

FamilyMart convenience stores, meanwhile, will open in about 50 Don Quijote stores that expect many customers. The first few will open by February 2018. The two companies are also collaborating on shared e-money and point card systems as well as joint product development and procurement.

The companies' combined sales total 4.5 trillion yen ($41.1 billion). The wide ranging partnership strengthens FamilyMart Uny's position as one of Japan's three largest retailers while it chases rivals Aeon and Seven & i Holdings.

Aeon and Seven & i Holdings are also concerned with revamping their general merchandise stores. The success of FamilyMart Uny and Don Quijote's tie-up will likely impact their competitors' plans.

(Nikkei)

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