Completion of Convenience Store Brand Integration
Convenience store brand conversion is moving forward briskly, with post-conversion daily sales and customer numbers above their pre-conversion levels. In the next phase, our network of 17,000 stores in Japan will work in concert to accelerate initiatives to provide new added value.
Brand Conversion on an Unprecedented Scale
After management integration, FamilyMart Co., Ltd., faced a daunting task. It had to convert the brands of roughly 5,000 convenience stores in just over two years. This was a project on an unprecedented scale. However, we realized that completing the brand conversion as quickly as possible was essential if we were to create management integration synergies and provide customers with new added value. Therefore, we made brand conversion our highest priority management strategy and took maximum advantage of know-how acquired from past brand integrations involving am/pm and Cocostore. As a result, the benefits of brand integration are emerging clearly, with sales and customer numbers up more than 10% compared with their levels before the conversion.
Converting Products, Infrastructure, and Stores
In preparation for brand conversion, we completed the conversion to FamilyMart products at Circle K and Sunkus stores by the end of February 2017 and unified logistics in June of the same year. Other preparations before the brand conversion included integrating services by enabling the use of T-POINT and other services at these stores in August 2017.
In addition, we increased efficiency by integrating a range of different functions and infrastructure related to store management. FamilyMart has been implementing structural reform in ready-to-eat items since fiscal 2014, the year ended February 28, 2015. This reform has two objectives: enhancing product quality through new investment and increasing efficiency through reorganization of production and distribution bases. Since management integration, FamilyMart has extended these initiatives to encompass reorganization of the entire supply chains of Circle K and Sunkus stores, including the production bases for ready-toeat items, distribution bases, and logistics networks that have been producing and handling the stores' products. As of the end of February 2018, we had rightsized production bases for ready-to-eat items from 120 to 96 bases and distribution bases from 213 to 164 bases compared with their numbers at the time of management integration.
More Efficient Supply Chain
Business Alliance with Don Quijote Holdings
In August 2017, FamilyMart UNY Holdings Co., Ltd., concluded its final agreement on a capital and business alliance with Don Quijote Holdings Co., Ltd., and a transfer of 40% of the issued shares in UNY CO., LTD., held by FamilyMart UNY Holdings to Don Quijote Holdings was completed in November 2017. The remaining 60% of the issued shares in UNY held by the Company were transferred to Don Quijote Holdings on January 4, 2019.
As a result of this transfer, UNY, which operates a general merchandise store business, became a wholly owned subsidiary of Don Quijote Holdings while FamilyMart Co., Ltd., remains a wholly owned subsidiary of the Company.
In regard to the business alliance between the Company and Don Quijote Holdings, the companies will continue to share the strengths and know-how of each company beyond industry boundaries.
Aiming for Full-Scale Development of Financial Services and Businesses That Service E-Commerce
To leverage the retail industry's unique advantages to establish financial services as new growth fields, we have strengthened our relationships with Group companies responsible for financial services and businesses that service e-commerce. We will focus on such areas as payment method diversification and marketing that uses loyalty points.
Establishment of UFI FUTECH
In September 2017, we changed the status of the company that managed the FamilyMart Internet shopping website to establish a new company tasked with promoting fintech-related businesses. Specifically, FamilyMart UNY Holdings assumed all shares of famima.com Co., Ltd., which had been held by FamilyMart Co., Ltd., and changed famima. com's name to UFI FUTECH Co., Ltd. We will advance fintech-related businesses in such areas as electronic money, credit cards, loyalty points, and customer IDs.
Entrenchment of Relationship through Joint Tender Offer Bid for Pocket Card
FamilyMart acquired shares of Pocket Card Co., Ltd., which manages Famima T Card, through a joint tender offer bid with the ITOCHU Group in November 2017. As a result, FamilyMart and the ITOCHU Group acquired an 80% stake in Pocket Card. Based on this reinforced relationship, we will further strengthen financial services, which promise to become a new growth field.