Chapter 588 Distribution and Retail

Next, the meeting moved on to the distribution and retail sector.

Yanai Tadashi was in charge of the report.

This man, who just a few years ago was running a clothing business in Hiroshima, was now one of the most important heads of the Saionji Group’s retail sector.

Besides Uniqlo, which he had personally developed, he also oversaw the management of S-Mart hypermarkets. One sold apparel while the other sold everyday consumer goods; though seemingly unrelated, both had expanded rapidly over the past few years by riding on Saionji’s continuously improving supply chain.

Furthermore, Yanai Tadashi clearly had not disappointed Satsuki.

“First is S-Mart.”

Yanai Tadashi opened the operating report in front of him.

“As of the end of January, overall operations for existing stores are in good shape. The new stores opened last autumn have mostly passed their initial adjustment period, with member renewal rates and repeat purchase rates both exceeding original targets.”

“Looking at the sales structure, food and household daily necessities still account for the main share. However, compared to the same period last year, consumer price sensitivity has risen noticeably, and sales of some mid-to-high-priced goods have dropped slightly.”

“We have adjusted our procurement plan for the first quarter of this year accordingly, reducing inventory of non-essential high-priced items while expanding the supply of private labels, staple foods, and household consumables.”

He paused briefly and turned to the next page.

“Additionally, the scale of direct agricultural supply between S-Mart and S-Farm continues to expand. Hokkaido’s dairy products, meats, and certain produce can now enter stores in the Kanto region directly via the group’s cold chain network.”

“In tandem with SIS’s existing sales data system, stores are gradually reducing their reliance on manual experience for replenishment. Inventory spoilage in certain fresh food categories has dropped significantly.”

“Our expansion plan for this year will also be adjusted accordingly. We do not intend to simply pursue store counts anymore; instead, we will prioritize acquiring well-located, low-operating-cost properties in core residential areas to increase the coverage density of our existing distribution network.”

Saying this, Yanai Tadashi looked up.

“Next is the apparel business.”

“Uniqlo’s performance during last autumn and winter was quite good. Sales of basic thermal wear, fleece jackets, and casual clothing all exceeded initial expectations, and the supply capacity of the Shanghai production base can now stably meet existing store demand.”

“Currently, we are further unifying S-Style’s production standards with Uniqlo’s product development system to shorten the cycle time between design, procurement, production, and shelving.”

“As for S-Collection, although overall market demand for high-priced apparel has contracted due to the deteriorating consumption environment, purchases by core customers remain stable. We plan to suspend some new store plans and allocate more resources to service and member retention at existing boutiques.”

Yanai Tadashi set down a report in his hand.

“Judging from this year’s operating environment, I believe the most important priority for the retail business is no longer continued expansion.”

“While maintaining price competitiveness, we need to control inventory and operating costs to ensure that every new store can generate stable cash flow as quickly as possible.”

A few people in the conference room nodded softly.

They had no objections to Yanai Tadashi’s assessment.

In fact, the reason Saionji’s retail sector was able to expand so rapidly over the past few years was largely because it did not invest massive amounts of capital into expensive commercial properties and multi-tiered markup distribution channels like traditional Japanese retail companies.

Uniqlo could obtain clothing directly from factories in Shanghai.

S-Mart could source goods through S-Farm and the group’s procurement network.

Central kitchens, cold-chain warehouses, and logistics fleets connected operational links that originally belonged to separate enterprises.

And as the Japanese economy continued to deteriorate, the advantages of this business model became increasingly pronounced.

With overwhelming advantages in both cost and quality, these few retail operations had few rivals within Japan.

However, what truly brought major changes to Saionji’s retail system in recent months was not just these existing businesses.

“In addition, regarding the acquisition of distribution assets that began last autumn, I will continue the report.”

Kenjiro, sitting next to Yanai Tadashi, took over the conversation.

He was responsible for integrating several newly acquired companies with the group’s existing procurement, logistics, and financial systems.

Especially after Endo’s health deteriorated last year and required him to reduce his workload, a significant portion of these coordination matters involving multiple subsidiaries fell into his hands.

“Last October, we reached an agreement with Mr. Tsutsumi Seiji’s side regarding equity transaction arrangements for FamilyMart, Ryohin Keikaku, and PARCO.”

Kenjiro handed a new report to the secretary beside him.

“Among them, FamilyMart and Ryohin Keikaku have completed the transfer of main operational control, while PARCO is continuing with phased shareholding according to the previously established plan.”

These three companies originally belonged to the Seibu distribution system that Tsutsumi Seiji had operated for many years.

For the executives present who were familiar with Japanese financial circles, these transactions carried significant weight.

After all, unlike the Seibu Railway, hotel, and real estate businesses controlled by Tsutsumi Yoshiaki, Tsutsumi Seiji’s faction operated department stores, supermarkets, convenience stores, and an entire commercial and consumer culture ecosystem.

And Satsuki had not attempted to buy out the entire Seibu distribution group in the first place.

What she targeted were precisely the assets that could complement Saionji’s existing retail business.

FamilyMart offered a nationwide network of convenience stores across Japan.

Ryohin Keikaku possessed a unique system for product design, branding, and daily lifestyle goods, and was a proven, high-quality business plan verified in future generations.

PARCO held a grip on the young consumer market, along with experience in commercial facilities, cultural events, and brand promotion.

For Saionji, which already owned S-Mart and Uniqlo, the value of these three companies naturally extended far beyond their individual balance sheets.

“First is FamilyMart.”

Kenjiro continued.

“This company was integrated into S-Food’s fresh food supply system years ago, and product distribution has always been handled by S.A. Logistics, so the handoff was relatively smooth.”

“After completing the operational integration at the end of last year, we collaborated with SIS to upgrade the existing real-time replenishment system, further integrating point-of-sale data from stores, central kitchen production schedules, and dynamic dispatching of logistics vehicles.”

“Now, the system not only arranges immediate replenishment when store stock is low, but also adjusts production volumes and delivery routes in advance based on historical sales data across different regions and time slots, consolidating replenishment needs for nearby stores as much as possible.”

“According to the January operating statistics just completed, average per-store delivery costs in the Kanto region fell by another eleven percent compared to the same period last year, while sales of winter hot foods and bento boxes supplied centrally by the group’s central kitchens grew by fourteen percent.”

Saying this, Kenjiro paused slightly.

In fact, after integrating into Saionji’s delivery network several years ago, FamilyMart’s logistics costs had already dropped significantly.

The most important breakthrough back then was the real-time data system developed by SIS under Shimomura Tsutomu’s leadership, which allowed every item sold at a convenience store to be rapidly converted into production and dispatch commands for central kitchens and logistics centers.

Today, after years of continuous improvement, this system was far more mature than at its inception.

In particular, with continuous advancements in logistics, telecommunications, and computing technologies under Saionji, technological achievements originally used in other industries were gradually applied to retail distribution.

Furthermore, after the issue of temporary re-delivery fees discovered by Kenjiro last year was rectified, cost accounting now unified regular distribution and emergency replenishment calculations.

As these improvement measures were implemented one after another, delivery costs—which were already low—dropped by another eleven percent.

For Saionji, which had long established a cost advantage, the fact that its sheer cost dominance could crush any competitor refusing its supply chain made it virtually impossible for any convenience store chain not to choose Saionji’s supply chain.

“In addition, some duplicate procurement contracts are being cleared out. We expect that in the first half of this year, FamilyMart and S-Food can further unify raw material purchasing and product development.”

Kenjiro turned a page.

“As for Lawson and 7-Eleven, they still operate under the previously established cooperation system. The three companies share S-Food’s production and logistics systems while retaining their respective product positioning and management teams. Exclusive sales rights for quarterly S-grade new products will continue to be allocated based on each party’s performance.”

Endo nodded slightly upon hearing this.

This system was originally devised by Satsuki herself.

Back then, to secure the supply chains of the top three convenience store chains, she had gone so far as to engage in a “fierce commercial war” with Suzuki Toshifumi, ultimately compelling the man hailed as the father of Japanese convenience stores to accept Saionji’s terms.

Today, although Suzuki Toshifumi remained the operator of 7-Eleven, he was deeply involved in high-end product R&D and production standard setting for S-Food.

In a sense, he could almost be considered half a Saionji employee.

More importantly, this system had operated with remarkable success up to now.

To secure exclusive sales rights for S-grade new products, the three convenience store chains were forced to continually boost their operational efficiency and fight for market share.

Yet no matter which one prevailed in the end, the goods they sold, the logistics they used, and the underlying information system always originated from Saionji.

For the group, the fiercer the competition among the three companies, the more advantageous it was for the development of its own supply system.

And now that FamilyMart had officially become a group subsidiary, Saionji’s control over this vast retail network naturally deepened further.

“Next is Ryohin Keikaku.”

Kenjiro flipped the report to the next page.

“Currently, upstream purchasing for textiles, daily necessities, and general merchandise has begun integrating into the group’s existing supply system, with trial production for certain items arranged at the Shanghai production base. Warehouse integration in Chiba is also underway, and we expect to complete phase one of logistics adjustments this spring.”

“However, Ryohin Keikaku retains its original product planning and brand management team, and we will not alter its independent brand positioning for now.”

Hearing this, Satsuki nodded in satisfaction.

This was also something she had agreed upon during her negotiations with Tsutsumi Seiji.

After all, the most valuable aspect of Ryohin Keikaku had never been just the products themselves.

Its unique design philosophy and brand image were the parts truly difficult to replicate.

If, after acquiring it, she simply slapped Saionji’s logo on all its products, why would she have gone through so much trouble to buy it in the first place?

“Finally, PARCO.”

Kenjiro flipped to the final section of the report.

“Currently, the phased share acquisition is proceeding according to plan, and we have not yet acquired controlling operational rights. However, both parties have begun exchanging information regarding commercial facilities, brand promotion, and potential joint projects in the future.”

“Additionally, following the cooperation arrangement Miss previously reached with Seibu, we are studying the feasibility of introducing FamilyMart, Ryohin Keikaku, and other group brands into select stations and commercial properties along the Seibu Railway lines.”

“Among them, several projects around Ikebukuro and Tokorozawa have begun preliminary assessments.”

He paused briefly, then added:

“Regarding commercial promotion, at the end of last year we conducted a round of joint promotional testing in Ikebukuro and Shibuya, using music and images of artists under S.A. Entertainment for publicity.”

“Among them, a four-member all-female rock band named ‘Blue Echo’ performed exceptionally well. During the campaign, the average dwell time of young female customers on relevant floors increased by nearly twenty percent, and cross-purchase rates also rose.”

“Therefore, the marketing department recommends expanding the scope of collaboration with the entertainment business this spring. If negotiations with PARCO go smoothly, such promotional activities can also be introduced to their commercial facilities in the future.”

Hearing this, Satsuki lowered her head slightly and glanced at the publicity photo on the report’s supplementary page.

Blue Echo.

Lead vocalist, Okura Masami.

She hadn’t heard anyone mention this name in quite some time.

The Miss Okura from her memory, who had once gone toe-to-toe with her at Seika Academy, had not only avoided collapsing during the bubble burst, but had now actually become a signed artist whose commercial promotional effectiveness was being studied by the group’s retail department.

And looking at these figures…

This girl is really doing better and better.

The corners of Satsuki’s lips curled up slightly, and she then turned the page.

“Mmh, since the results are good, continue collaborating then.”

“Yes.”

Kenjiro nodded and closed the document.

“That concludes the main current operating status of the distribution and retail business.”

As his report concluded, the meeting naturally moved on to the next topic.

Entertainment Business.

Sitting on the other side, Itakura organized the documents in front of him and then opened his folder.

“Well then, next I will report on S.A. Entertainment’s operational performance over the past year.”