Structural Reform and Profitability Improvement in the Supermarket Business

「Operating revenue in the SM business was ¥256.574 billion, up 8.9% year on year, and operating profit was ¥10.397 billion, up 23.1% year on year.」

「Operating revenue in the SM business was ¥235.579 billion, up 6.3% year on year, and operating profit was ¥8.447 billion, up 3.8% year on year.」

「The business opened 4 new stores and closed 2 stores, bringing the total number of SM stores to 318 as of the end of the third quarter. In October 2023, core company 株式会社バロー opened SM Valor Sakai Toyota Store in Sakai, Osaka, its 4th store in Osaka Prefecture, and SM Valor Nakashoda-i Store in Nishi Ward, Nagoya, Aichi, its 60th store in Aichi Prefecture.」

「Operating revenue in the SM business was ¥221.523 billion, up 7.3% year on year, and operating profit was ¥8.134 billion, up 54.9% year on year. … In July, core company 株式会社バロー opened SM Valor Kusatsu Shimotsu Store in Kusatsu, Shiga, the company’s 16th store in the prefecture, as a destination-store format that leverages manufacturing functions to improve product appeal and provides a clear reason to visit.」

「Operating revenue in the SM business was ¥107.777 billion, up 5.6% year on year, and operating profit was ¥4.181 billion, up 35.5% year on year. … In April, core company 株式会社バロー opened SM Valor Omihachiman Store in Omihachiman, Shiga, a destination-store format that leverages manufacturing functions to improve product appeal and provides a clear reason to visit.」

「Operating revenue in the SM business was ¥421.838 billion, up 4.0% year on year, and operating profit was ¥13.374 billion, down 10.3% year on year. … Existing-store sales, excluding the impact of the revenue recognition accounting standard and other factors, fell 0.1% year on year, gross profit declined, and water, utility, and other costs increased, resulting in lower profit.」

「Both stores offer a wide range of products that leverage the Group’s procurement, manufacturing, and processing functions. As destination stores designed to improve product appeal and provide a clear reason to visit, they have adopted EDLP (everyday low price), offering products focused on freshness and quality at affordable prices. In the business, food processing and wholesale operations supporting the strengthening of the fresh-foods and prepared-foods departments contributed, while 株式会社八百鮮 and 株式会社ヤマタ, which became subsidiaries in the previous fiscal year, contributed throughout the fiscal year, resulting in higher revenue. However, existing-store sales, excluding the impact of the revenue recognition accounting standard and other factors, fell 0.2% year on year, gross profit declined, and utility and other costs increased, resulting in lower profit.」

「The business opened 4 new stores and closed 3 stores, bringing the number of stores to 313 as of the end of the second quarter. Core company 株式会社バロー rebuilt SM Valor Mizunami Store and converted it into a destination store with a clear customer purpose, improving product appeal by leveraging its manufacturing functions.」

「The business opened 4 new stores and closed 1 store, bringing the total number of SM stores to 315 as of the end of the first quarter. Core company 株式会社バロー opened 2 new stores, SM Valor Minamikusatsu Store in Kusatsu, Shiga, and SM Valor Rubit Town Kariya Store in Kariya, Aichi, and renovated 8 stores.」

「株式会社バロー renovated 26 stores into destination stores and further strengthened fresh foods. Existing-store sales, excluding the impact of the adoption of the revenue recognition accounting standard and other factors, increased 0.9% year on year. The number of stores using EDLP (everyday low price) as a sales promotion policy without relying on flyers reached 64, including new stores.」

「株式会社バロー renovated 18 stores into destination stores and further strengthened fresh foods. Existing-store sales, excluding the impact of the adoption of the revenue recognition accounting standard and other factors, increased 0.6% year on year. The number of stores using EDLP (everyday low price) as a sales promotion policy without relying on flyers reached 58, including new stores.」

「株式会社バロー opened 1 new store and renovated 12 stores into destination stores, further strengthening fresh foods. The number of stores using EDLP (everyday low price) as a sales promotion policy without relying on flyers reached 54, including the new store.」

「株式会社バロー renovated 22 stores, changed them to layouts highlighting fresh foods, and switched the sales promotion policy to EDLP (everyday low price), bringing the number of EDLP stores to 44.」

「The business continued its transition to destination stores. 株式会社バロー renovated 17 stores, changed them to layouts highlighting fresh foods, and switched their sales promotion policy to EDLP (everyday low price), expanding the policy to a total of 39 stores.」

「株式会社バロー renovated 10 stores. At 6 medium-sized stores, the store layouts were changed to highlight the fresh-foods departments, the sales promotion policy was changed to EDLP (everyday low price), and the policy was expanded to a total of 30 stores. In July 2020, SM Valor Ryoge Store, one of the medium-sized stores, was expanded by approximately 200 tsubo through a scrap-and-build project, substantially enlarging its fresh-foods, prepared-foods, and bakery departments. The store introduced products focused on taste, including “fishmonger’s sushi,” made with generously sized toppings, “cabbage menchi-katsu,” designed to bring out the savoriness of the meat and sweetness of the cabbage, and “rich nama shokupan,” a new bread texture that is rich, moist, and chewy.」

「The business sought to transition to destination stores by highlighting distinctive categories and improving product appeal, an element of that format. 株式会社バロー renovated 4 stores. At 3 medium-sized stores with sales-floor areas of 400–550 tsubo, the store layouts were changed to highlight the fresh-foods departments, and the sales promotion policy was changed to EDLP (everyday low price).」

「However, earnings deteriorated at 三幸株式会社, and opening costs for 株式会社公正屋 and the Korean SM business could not be fully absorbed, resulting in lower profit for the business as a whole.」

「The business focused on improving product appeal while renovating 9 stores of 株式会社バロー and the flagship store of 株式会社フタバヤ, with the aim of evolving into destination stores offering products and categories that motivate customers to visit.」

「In August 2019, the business made 株式会社てらお食品, which operates fresh-food discount stores in Chiba Prefecture, a subsidiary. Including its 2 stores, 9 new stores were opened, while 3 stores, including 2 involved in relocations or format changes, were closed. As of the end of the second quarter, the Group had 296 stores. Core company 株式会社バロー renovated 8 stores and relocated and newly opened SM Valor Nakashidami Store and SM Valor Seike Store, arranging attractive categories consecutively around the expanded produce and meat sections.」

「However, the gross profit margin declined, particularly for processed foods, where sales growth slowed at 株式会社バロー. Improvements at 三幸株式会社 were also delayed ahead of the planned switch to the company’s logistics system and changes to distribution flows in August, resulting in lower profit for the business as a whole.」

「At core company 株式会社バロー, 26 stores were renovated with the aim of expanding trading areas and increasing regional market share through product appeal rather than store count. In Gifu Prefecture, where the company had pursued concentrated store development under its dominant strategy, it advanced large-scale renovations designed to highlight each store’s distinctive features. At SM Valor Seki Midorigaoka Store in Seki, Gifu, which was expanded in September 2018, and SM Valor Takayama Store in Takayama, Gifu, which was expanded in November in conjunction with a full renovation of the commercial facility, the meat sections were substantially enlarged, direct-from-producer sourcing was strengthened in the produce departments, and value appeal was enhanced in the seafood departments through merchandising reviews and the introduction of specialty stores.」

「At core company 株式会社バロー, 18 stores were renovated, mainly in Gifu Prefecture, where the company had pursued concentrated store development under its dominant strategy, with the aim of expanding trading areas and increasing regional market share through product appeal rather than store count. At SM Valor Seki Midorigaoka Store in Seki, Gifu, which was expanded in September 2018, and SM Valor Takayama Store in Takayama, Gifu, which was expanded in November in conjunction with a full renovation of the commercial facility, the meat sections were substantially enlarged, direct-from-producer sourcing was strengthened in the produce departments, and value appeal was enhanced in the seafood departments through merchandising reviews and the introduction of specialty stores.」

「At core company 株式会社バロー, 14 stores were renovated, mainly in Gifu Prefecture, where the company had pursued concentrated store development under its dominant strategy, with the aim of expanding trading areas and increasing regional market share through product appeal rather than store count. At SM Valor Mizunami Chuo Store in Mizunami, Gifu, which was expanded in April 2018, the meat section was substantially enlarged, direct-from-producer sourcing was strengthened in the produce department, and the seafood department was reinforced by reviewing merchandising and introducing tenants.」

「At 10 stores, mainly in Gifu Prefecture, where the company had pursued concentrated store development under its dominant strategy, SM Valor renovated stores with the aim of expanding trading areas and increasing regional market share through product appeal rather than store count. At SM Valor Mizunami Chuo Store in Mizunami, Gifu, which was expanded in April 2018, the meat section was substantially enlarged, direct-from-producer sourcing was strengthened in the produce department, and the seafood department was reinforced by reviewing merchandising and introducing tenants.」

「In the supermarket business, where progress had been delayed, the benefits of the store layouts tested at renovated and newly opened stores finally began to emerge. However, deteriorating earnings at stores not yet renovated prevented the renovation costs from being absorbed, and improving the earnings structure is taking time.」

「SM Valor, whose priority is strengthening existing stores, continued its policy of strengthening fresh foods while dividing its renovation program into stores with the conditions to serve as flagship stores and potentially secure the largest regional share, and stores requiring fundamental review to complement dominant areas. It renovated 24 stores.」

「With regard to establishing a competitive format, a key pillar of profitability improvement in the main businesses, progress was steady in the drugstore and home-improvement businesses. In the supermarket business, however, although store renovations were advanced, they did not lead to a change in the earnings structure, and progress was delayed as the business was affected by competition, particularly in dominant areas.」

「Continuing from the previous fiscal year, the business worked to strengthen store competitiveness and improve product appeal, representing the “front.” SM Valor renovated 11 stores, mainly in Gifu and Aichi, and advanced the transition to a competitive format centered on expanding the growing meat department and returning to a stronger value proposition for seafood, in addition to the previously emphasized strengthening of produce.」

「SM Valor renovated 18 stores, strengthened its fresh-foods department, and advanced the transition to a competitive format pursuing both breadth and depth of assortment. The EDLP (everyday low price) policy, which generally does not rely on newspaper flyers and focuses on creating dynamic store environments centered on fresh foods, was expanded from 6 stores at the end of the previous fiscal year to a total of 10 stores by adding 2 of the renovated stores that changed their sales policies, SM Valor Neyagawa Store in Neyagawa, Osaka, opened in October 2016, and SM Valor Chagazaki Store in Otsu, Shiga, opened in December of the same year.」

「As infrastructure development as the “back system” was largely completed by the previous fiscal year, the business focused on improving store competitiveness and product appeal, representing the “front.” SM Valor renovated 18 stores, strengthened its fresh-foods department, and advanced the transition to a competitive format pursuing both breadth and depth of assortment. In addition to 2 stores that changed their sales policies as part of the renovations, SM Valor Neyagawa Store in Neyagawa, Osaka, opened in October 2016, and SM Valor Chagazaki Store in Otsu, Shiga, opened in December of the same year. These stores adopted an EDLP (everyday low price) policy, strengthening price appeal, particularly in fresh foods, and developing dynamic store environments. As a result, both customer numbers and spending per customer remained firm.」

「As infrastructure development as the “back system” was largely completed by the previous fiscal year, the business focused on improving store competitiveness and product appeal, representing the “front.” SM Valor strengthened its fresh-foods department, advanced the transition to a competitive format pursuing both breadth and depth of assortment, and renovated 11 stores.」

「SM Valor is improving its product mix and renovating 3 stores in order to strengthen the fresh-foods department and transition to a competitive format that pursues both breadth and depth of assortment.」

「To achieve the current 3-year medium-term management plan, the Group will improve the profitability of its core supermarket business while expanding the scale of its drugstore and home-improvement businesses, which it positions as growth-driving businesses.」