New Stores, a Low-Cost Operating Model and Earnings Improvement in China

「イオンマックスバリュ（広州）商業有限公司 completed its liquidation during the fiscal year under review.」

「The company worked to improve management through stronger promotions, enhanced product offerings and digitalization to generate earnings. However, after comprehensively and carefully reviewing the outlook for the Group's business operations as a whole, it resolved to dissolve the consolidated subsidiary.」

「Since its establishment, the company had worked to strengthen its management foundation through various initiatives, including store revitalization, stronger product offerings and digitalization, in order to generate earnings. However, after comprehensively and carefully reviewing the outlook for the Group's business operations as a whole, it decided to dissolve and liquidate the consolidated subsidiary.」

「Advancing product policies in response to changes in consumer trends and needs, creating new sales channels through expanding the e-commerce business, and maximizing customer experience value by integrating physical and online channels」

「In イオンマックスバリュ(広州)商業有限公司, part of the China business, the company responded to changes in consumer behavior and the competitive environment during the COVID-19 pandemic by strengthening promotions that encourage store visits, including the “Fresh Food Market” on Tuesdays and Wednesdays and “Super Weekend” promotions, as differentiation from competing stores, expanding the introduction of TOPVALU products and continuing to strengthen the online supermarket business.」

「In イオンマックスバリュ(広州)商業有限公司, part of the China business, the company responded to changes in consumer trends, including the establishment of a home-meal lifestyle and increased demand for nearby stores and online purchasing reflecting low prices, short distances and short shopping times. It implemented measures to improve customer numbers in line with customer demand, including thorough infection-control systems, the active introduction of AEON TOPVALU products and a focus on the online supermarket business, while also working to reform its profit structure through more efficient operations and changes to its logistics system.」

「The company worked to improve management by strengthening online sales, responding to growing demand for safety, security and health-oriented products, and reviewing promotions and procurement terms. However, it fell significantly short of securing the expected number of customers and closed all operating stores by the end of February 2021.」

「イオンマックスバリュ（広州）商業有限公司 and イオンマックスバリュ（江蘇）商業有限公司 continued their store infection-control systems while working to create reasons for customers to visit by strengthening fresh and ready-to-eat foods, expanding health-oriented products and responding to cost-conscious consumers, and also worked to strengthen their online businesses. In addition to improving profitability through cost controls, both companies each closed 1 store to improve management efficiency.」

「Although customer numbers declined because of the impact of calls to refrain from going out, the company worked to address demand for home meals and stockpiling, strengthen its online business, and secure and maintain a stable supply of products. As a result, the increase in items purchased raised average spend per customer and led to an improvement in profitability.」

「イオンマックスバリュ（広州）商業有限公司 has worked to increase customer numbers by strengthening fresh and daily-delivery products based on frequent visits by customers in nearby trading areas, strengthening online sales and introducing self-checkouts with smartphone payments. In addition, reductions in SG&A expenses through more efficient labor deployment and lower electricity costs contributed to an improvement in operating profit.」

「イオンマックスバリュ（広州）商業有限公司 has focused on product policies targeting middle-income consumers, including store renovations to strengthen fresh products, and worked to increase visit frequency among customers in nearby trading areas by reducing checkout congestion through the introduction of self-checkouts at existing stores.」

「イオンマックスバリュ（広州）商業有限公司 has focused on increasing visit frequency among customers in nearby trading areas by strengthening fresh products and expanding card membership, as well as on product policies targeting middle-income consumers, resulting in an improvement in total customer numbers, particularly in the morning. Strong performance at MaxValu Hengbao Plaza, which opened in the previous fiscal year, was also one factor supporting the company's results. Its operating loss for the cumulative second quarter amounted to an improvement of ¥125 million from the same period of the previous year.」

「At イオンマックスバリュ（広州）商業有限公司, the effects of new stores, together with measures to increase customer numbers centered on expanding card membership and product policies targeting the growing middle-income segment, resulted in a double-digit year-on-year increase in customer numbers. In the online business, which the company is strengthening, both the number of orders and the number of items per order exceeded the previous year's levels. In addition, the ongoing improvement in inventory days reduced them below the previous year's level, contributing to greater efficiency in operations and cash management.」

「In fiscal 2018, in response to changes in consumer spending patterns driven by rising income levels, the company further narrowed its target customers to upper-middle-income consumers in their 30s and 40s and implemented products and operations suited to them. Through measures such as strengthening weekends and expanding premium products, on a total-scale basis including the 2 new stores and concession sales, customer numbers were 125.4% of the previous period, while average spend per customer was 101.1% (items purchased, 91.2%; unit price per item, 110.9%).」

「The company is also actively expanding its online supermarket business, and sales have been increasing steadily. In addition, through measures such as reducing promotional expenses by expanding digital promotions, the selling, general and administrative expense ratio to sales at existing stores improved by 1.4 percentage points year on year.」

「The company has also continued working to improve its profit structure and financial position through further gross margin improvement, more efficient store operations and shorter inventory turnover days at stores.」

「We are also actively pursuing more effective use of expenses to improve our profit structure, including by reducing store inventories to improve freshness, optimizing staff allocation and reviewing back-office operations.」

「In sales operations, during the second half the company shifted its promotional campaigns, featured products and standard products to an assortment suited to local characteristics, while working to improve its gross margin. In addition, as mobile-device cashless payment rates increased, it continued shifting toward clearer promotional methods.」

「To reform its profit structure, the company worked to improve its gross profit margin through focused in-store promotion of monthly priority products, stronger sell-through of fresh products to reduce losses, and reforms to prepared-food sections at certain stores.」

「As part of efforts to rebuild distribution center functions, the company is working to establish a system that reliably delivers the required quantities on designated dates, while reforming its profit structure by improving freshness through lower store inventories and reducing store workload.」

「As part of efforts to build the foundation for multi-store expansion, the company continued reviewing its ordering and delivery system using distribution center functions, while also working to establish a low-cost operating structure through measures such as reviewing advertising tools and using part-time employees.」

「In expenses and administration, we have worked to strengthen our management foundation, including by using a flexible working-hours system and improving the ratio of personnel costs to sales through a higher proportion of part-time employees.」