Reform and Institutional Changes in the Fresh Produce Distribution Structure

「Supermarkets and other mass retailers are urgently required to reduce staffing needs in operations and strengthen product appeal, and demand is rising for systems that improve store operating efficiency, such as AI-powered sales-floor proposals and automated shelf layouts. Drugstores are also expanding their food offerings and developing the "drugstore and food" format, aimed at increasing customer visit frequency and capturing demand for bulk purchases.」

「In intermediate distribution, there are also moves to improve delivery efficiency in response to the logistics 2024 problem, including investment in dispatch systems using AI technology, joint transportation based on partnerships among operators, and modal shifts.」

「In intermediate distribution, there are also moves to improve delivery efficiency, including investment in dispatch systems using AI technology in response to the logistics 2024 problem, as well as joint transportation based on partnerships among operators. In Japan's agricultural and production sectors, amid concerns about supply shortages from major producing regions due to the aging of producers and abnormal weather, efforts to address social issues are progressing through investment in IoT equipment and AI technology to improve and streamline farm work and support stable food production.」

「In retail, while promoting digitalization and efficiency improvements, including cashless payments, in response to rising store operating costs such as utilities and labor, companies are pursuing both rationalization and customer satisfaction while seeking to improve services such as e-commerce (Electronic Commerce) and delivery in response to increasingly diverse consumer needs arising from changes in lifestyles since the COVID-19 pandemic.」

「In Japan's agricultural and production sectors, challenges include the aging of producers and the succession issue, as well as unstable production in major producing regions due to climate change. The logistics industry supporting intermediate distribution is also facing driver shortages and the need to improve logistics efficiency, making the response to the logistics crisis an urgent issue.」

「In Japan's agricultural and production sectors, challenges include the aging of producers and the succession issue, as well as unstable production in major producing regions due to climate change. The logistics industry supporting intermediate distribution is also facing driver shortages and the need to improve logistics efficiency, making the response to the logistics crisis an urgent issue.」

「Japan's agricultural and production sectors also face challenges, including the aging of producers, succession issues and unstable supplies of agricultural products from major production areas due to climate change. In addition, the logistics industry supporting intermediate distribution faces shortages of workers and issues relating to logistics efficiency.」

「With regard to the operation of our core imported fresh-produce business, there are concerns that the earnings environment for related businesses in production areas and import trading companies will deteriorate as the yen weakens while resource prices rise and logistics are disrupted.」

「Purchasing behaviour is also changing against a backdrop of diversifying lifestyles, including increases in dual-income households and single-person households, and changes in lifestyles during the COVID-19 pandemic. Supermarkets and other mass retailers therefore need to pursue initiatives with greater competitive advantages in response to structural challenges, including improving the efficiency of store operations and optimising product procurement.」

「Supermarkets and other mass retailers need to pursue initiatives with greater competitive advantages in response to conventional structural challenges, including improving the efficiency of store operations and optimising supply chains, against a backdrop of diversifying lifestyles, such as increases in dual-income households and single-person households.」

「In the supermarket industry as well, competition with other business formats is intensifying as lifestyles diversify, including through increases in dual-income households and single-person households, and as patterns of behaviour change during the COVID-19 pandemic. It is becoming necessary to pursue initiatives with greater competitive advantages in response to structural challenges, including improving the efficiency of store operations, such as securing workers, and optimising supply chains.」

「At production areas and wholesale markets, demand for vegetables for commercial processing declined as restaurants suspended or restricted operations during the COVID-19 pandemic, heightening concerns among producing regions. Alongside efforts to increase transaction volumes with existing customers, efforts such as developing new customers are expected to increase in conjunction with amendments to the Wholesale Market Act and other measures.」

「In particular, in order to respond to changes in social awareness among customers of our group, including greater recognition of the importance of food loss, environmental issues, local circulation and shorter supply chains, as well as heightened hygiene awareness and changes in consumer attitudes, including a preference for saving money and an increase in home cooking」

「Services are becoming increasingly personalised as checkout counters shift to cashless payments, enabling retailers to provide more finely tailored customer support. More supermarkets are also seeking to eliminate checkout counters in order to maintain social distancing. In addition, efforts to increase the value of products are advancing as part of differentiation from other stores, including increasing the range of organic produce and offering fresher locally produced agricultural products, along with making producers more visible to consumers.」

「We believe that, prompted by the COVID-19 pandemic, supermarkets will increasingly review their supply chains, including suppliers and collection methods.」

「After elderly and small-scale producers retire, we expect production to shift to younger medium-sized or larger producers, or agricultural corporations, that are proficient in using IT tools and drones. The number of agricultural operators who develop sales channels and set prices based on their own decisions is also expected to increase. Retailers such as supermarkets are expected to combine existing stores with online sales to retain consumers whose needs are becoming increasingly diverse, while also providing high-value-added services that strengthen their relationships with customers.」

「In the supermarket industry, which is particularly close to consumers, the mass-sales model based on uniform quality and derived from the chain-store theory put into practice after the war has, in some views, resulted in a situation where products cannot be differentiated from those of competitors, ultimately leading to competition based solely on price. As a result, fresh-produce sales are increasingly shifting from overall optimisation through standardisation to optimisation at the individual-store level. In addition, the wholesale-market system, which formed the grand design of Japan's agricultural distribution after the war, has undergone revisions to its transaction rules to reflect a declining population, and the Wholesale Market Act has been revised.」

「In light of these environmental changes and the recent decline in transaction volumes, even wholesale market distribution, the standard channel for domestically produced fresh produce, must review its conventional concepts and traditional transaction formats. We also believe that competition will intensify between wholesale markets and among players within the same market.」

「Changes to laws and regulations governing food distribution, including reforms of agricultural cooperatives, revisions to the Wholesale Market Act and mandatory sanitation management in accordance with HACCP following the revision of the Food Sanitation Act, as well as moves to promote the acquisition of certifications such as GAP in connection with the 2020 Tokyo Olympic and Paralympic Games, are resulting in changes to industry rules aimed at improving distribution efficiency and ensuring safety and security. We believe that these changes in the environment may affect even distribution through central wholesale markets, the standard channel for domestically produced fresh produce, in various ways in the near future.」

「Changes to industry rules aimed at improving distribution efficiency and ensuring safety and security are taking place, including reforms of agricultural cooperatives, revisions to the Wholesale Market Act, mandatory sanitation management in accordance with HACCP (Hazard Analysis and Critical Control Point) following the revision of the Food Sanitation Act, and efforts to promote the acquisition of certifications such as GAP (Good Agricultural Practice: agricultural production process management) in connection with the 2020 Tokyo Olympic and Paralympic Games.」

「The Agricultural Competitiveness Enhancement Program, decided by the government in November 2016 to strengthen Japan's agriculture, has been implemented, along with reforms at JA Zen-Noh and the development of various legal and regulatory frameworks. We believe that the distribution structure for fresh products will undergo major changes, including industry consolidation, going forward.」

「The distribution structure for fresh produce is undergoing major change as a result of agricultural policy reforms based on the Agricultural Competitiveness Enhancement Program compiled by the government, changes in the role of JA Zen-Noh, including its shift toward direct sales, and moves to revise the Wholesale Market Act. We believe these changes will have a significant impact on the business environment surrounding our company.」