Intensifying competition with retailers, discounters, specialty stores and e-commerce

「While various store operating costs, including procurement costs, utilities, equipment maintenance, personnel and promotional expenses, may rise due to a rapid deterioration in the economic environment caused by exchange-rate fluctuations and inflation, as well as abnormal weather, the difficult market environment may make it difficult to pass these costs on to selling prices.」

「The group's business, financial condition and results of operations may be affected by a future deterioration in the Japanese economy, a decline in personal consumption, adverse weather caused by extreme weather events, market contraction due to population decline, and intensifying competition across industries and business formats.」

「The business environment surrounding the group is changing more rapidly than before as social change accelerates further. This reflects changes in demographics, changes in customer behavior associated with climate change, the spread of digital technology into all areas of daily life, growing environmental and health awareness, structural changes in the competitive environment, and major changes in customer behavior, awareness and values due to the spread of COVID-19.」

「In addition, rapid changes in values and behavior patterns prompted by the COVID-19 pandemic have had a major impact on customer consumption trends, while social transformation, including the advancement of digital transformation (DX), has progressed.」

「The China business was affected by the backlash from the discount sale held during the Chinese New Year period and intensifying competition with other companies in the same industry.」

「In recent years, customer preferences and needs have become increasingly diverse, including growing interest in ethical consumption that considers the global environment and local communities, in addition to health-oriented and low-price-oriented consumption. At the same time, companies whose main business is e-commerce have become increasingly prominent, and competition has intensified.」

「These competitors may have advantages over the group in their ability to procure funding, personnel, store sites, products and services, in the efficiency of business operations, and in their ability to respond to changes in marketing conditions or customer preferences. Intensifying competition in the retail industry could adversely affect the group's business, financial condition and results of operations.」

「In addition to retail companies such as general merchandise stores, supermarkets and convenience stores, the group competes with discount stores that use low prices as a competitive advantage, specialty stores focused on specific retail categories, and companies without physical stores that operate e-commerce businesses.」