The Merchants Creating Synergies Indefinitely

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Measures for Increasing Corporate Value of Investees Seen through Coordination with the Convenience Store Business of FamilyMart UNY Holdings

ITOCHU has positioned FamilyMart UNY Holdings Co., Ltd., as an important business supporting long-term increases in corporate value and is advancing cross-Group initiatives. In this special feature, we will explain our unique approach toward increasing the corporate value of operating companies with our expertise in the consumer-related sector.

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Business Model Reform Centered on FamilyMart

On September 1, 2016, FamilyMart Co., Ltd., and UNY Group Holdings Co., Ltd., merged to form FamilyMart UNY Holdings. This integration led to the creation of a massive retail group, ranking No. 3 in Japan with gross operating revenues in excess of ¥1.2 trillion. At the same time, this merger represented a large step forward in strengthening the consumer-related sector operations of ITOCHU, the largest shareholder of FamilyMart UNY Holdings.
ITOCHU acquired roughly 30% of the issued shares of FamilyMart in 1998. Our first foray in the retail field, this acquisition necessitated a reform to the Food Company’s business model. Branching out from its traditional model focused on wholesale and logistics businesses, the Food Company adopted a model based on the Strategic Integrated System (SIS) strategy, which entailed constructing a value chain encompassing procurement of raw materials in upstream areas; processing, manufacturing, and intermediate distribution in midstream areas; and retail in downstream areas. With this new model, we have supported increases in the competitiveness of FamilyMart by providing the functions we possess as a general trading company. Today, we are utilizing the information gained through points of contact with consumers to create a strong, bottom-up value chain that stretches from downstream areas (retail) to upstream areas (raw material). These efforts are creating a wider range of growth opportunities for the Food Company as well as for various other ITOCHU Group businesses.

A Stronger Value Chain

Under the control of FamilyMart UNY Holdings, FamilyMart merged with Circle K Sunkus Co., Ltd., thereby forming a network of approximately 18,000 stores in Japan and growing to a scale that rivals the industry leader. Taking advantage of the resulting stronger value chain, the ITOCHU Group is exercising its collective strength to generate massive synergies with FamilyMart. On the following pages, we will explain our strategic directives based on several keywords.

VALUE CHAIN

KEYWORD1
Peripheral Business Initiatives

FamilyMart has evolved as a provider of lifestyle infrastructure by expanding its functions; branching out from supplying food products and other items necessary to daily lives, the company now provides financial services as well as a wide array of other services. This robust lineup of offerings allows ITOCHU to generate synergies with regard to not only food, but also daily items, supplies, and various service fields. Future initiatives will include stepping up coordination with peripheral businesses from a long-term perspective. Specific areas we are eyeing include raw material supply, product development support, logistics efficiency improvement, IT-powered labor saving, e-commerce businesses, and financial businesses.

OUR VALUE Support for Lifestyle and Social Infrastructure

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KEYWORD2
Reinforcement of Food Value Chain

In addition to the increase in transaction volumes attributable to the merger of FamilyMart and Circle K Sunkus, the ITOCHU Group also seeks to generate substantial and even more wide-ranging synergies by strengthening product development capabilities, improving the efficiency of distribution activities, and consolidating production bases to reduce costs.

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NIPPON ACCESS Is Supporting One of the Industry-Leading Store Networks
NIPPON ACCESS, INC., is a food distribution company boasting one of the widest operation scopes in Japan. Its unique infrastructure is compatible with all temperature ranges, from dry to chilled and frozen, and has been deployed at 449 locations nationwide. NIPPON ACCESS is providing background support for FamilyMart, which is undertaking the brand conversion of Circle K Sunkus stores to FamilyMart stores.

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FAMIMA CAFÉ
ITOCHU coordinates with FamilyMart with regard to coffee bean procurement schemes, product development, and equipment selection and procurement and also arranges processes including collection and refinement of coffee beans.

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RIZAP Collaboration Products
Through the business alliance between RIZAP GROUP, Inc., FamilyMart, and ITOCHU, we are planning a lineup of jointly developed products as a centerpiece of our initiatives to address healthcare needs.

KEYWORD3
Delegation of Retail Operation to Industry Professionals

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Representative Director and President,
FamilyMart Co., Ltd.
Takashi Sawada
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Representative Director and President,
UNY CO., LTD.
Norio Sako

Retail operations require precise management to maintain a full and appropriate product lineup, effectively select products based on local consumer preferences, and realize ideal store layouts. ITOCHU is a general trading company that has traditionally focused on intermediate distribution and upstream raw materials procurement. However, this perspective is not one that should be introduced into retail operations. Based on this belief, management of operating companies in FamilyMart UNY Holdings’ convenience store and general merchandise store businesses has been delegated to industry professionals with extensive retail experience. ITOCHU, meanwhile, will contribute to increasing earnings capacity at FamilyMart UNY Holdings by building upon collaborative relationships to develop peripheral businesses.

KEYWORD4
Focus on Effective Governance and Organic Coordination

ITOCHU has been dispatching management personnel to FamilyMart UNY Holdings. These individuals help implement effective governance while setting management directives. At the same time, professionals from various fields are assigned to generate synergies by promoting organic coordination that blurs the boundaries between our business divisions.

Full Utilization of the ITOCHU Group’s Strengths

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Representative Director and President
FamilyMart UNY Holdings Co., Ltd.

Koji Takayanagi

Currently, top-priority measures at FamilyMart UNY Holdings include moving ahead with two important integrations: the integration of convenience store brands and the maximization of intra-group synergies through the integration of the strengths of operating companies centered around FamilyMart and UNY. With regard to the policies set in our medium-term management plan, coordination with the ITOCHU Group will be key to “strengthening store features and services.” Specifically, the ITOCHU Group’s resources will be a great asset with regard to financial, e-commerce, and other functions. ITOCHU is FamilyMart UNY Holdings’ largest shareholder. However, we will be fully utilizing the strengths of the ITOCHU Group in order to improve our own corporate value.