Core Insights - The article discusses the insights gained from a study tour of Japanese retail, highlighting the evolution and current state of the retail industry in Japan, and the lessons that can be applied to China's retail sector [1] Group 1: Retail Positioning - Japanese retail has transitioned from a growth phase to a focus on maintaining market share, with a decline in department stores and GMS, while community supermarkets, discount stores, and convenience stores have seen growth [2] - Successful Japanese supermarket chains maintain clear positioning and differentiation, targeting specific customer segments, unlike the more homogenous competition seen in China [3] Group 2: Discount Store Dynamics - The trend of discount stores in China is seen as somewhat blind, with a need for a deeper understanding of the underlying supply chain capabilities required for success [6] - Japanese discount stores are categorized into four types based on their operational strengths, emphasizing the importance of supply chain efficiency [6][7] Group 3: Product Trends - The 3R (Ready to Eat, Ready to Heat, Ready to Cook) product category is gaining traction, with a significant portion of Japanese consumers preferring these convenient options [8] - The sales figures for different food categories in Japan indicate a growing trend towards ready-to-eat and ready-to-heat products, with in-home dining dominating the market [8][9] Group 4: Private Label Development - Japan's private label market has evolved through several stages, with many Chinese retailers still in the earlier phases, indicating a potential for growth and differentiation in this area [12] Group 5: Brand Value Communication - Retailers must effectively communicate their brand values to consumers, as demonstrated by OK Supermarket's consistent messaging around its EDLP (Everyday Low Price) strategy [15] Group 6: Organizational Innovation - Innovative management practices in Japanese retail, such as empowering store managers and employees, are highlighted as key factors in the success of new retail players [17][18]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - Rising food prices have curbed demand, while catering and department stores have sustained growth [3][16] - Consumer confidence index fell to 35.2 in January 2025, the lowest in 16 months, indicating deepening economic concerns [2][7] - Inflation accelerated in January 2025, with CPI rising 4.0% year-on-year, driven by structural increases in food and energy prices [9][12] Macro Summary - In January 2025, the inflation rate accelerated again, with the consumer confidence index dropping to 35.2, marking a 16-month low since September 2023 [2][7] - Real wages in December 2024 increased by 0.3% year-on-year, marking the second consecutive month of growth, while nominal GDP grew by 2.9% in 2024 [2][12] - The January PPI rose by 4.2% year-on-year, continuing a moderate upward trend [13] Industry Summary - In the essential goods retail sector, food and beverage sales increased by 0.9% year-on-year, while drug and bath product sales rose by 4.9% [3][16] - The optional consumption sector, including dining and department stores, benefited from a surge in inbound tourism, with significant growth in same-store sales [5][16] Essential Companies Summary - In January, PPIH's same-store sales increased by 6.7%, while Aeon and 711 Japan reported increases of 2.0% and 0.9%, respectively [4][20] - The beer industry saw a high single-digit growth in traditional beer sales, driven by a record number of inbound tourists [4][23] Optional Companies Summary - Major dining companies like Sally's and Toridoll reported same-store sales growth of 17.3% and 12.5%, respectively, benefiting from the influx of tourists [5][32] - Uniqlo and ABC-MART reported same-store sales growth of 8.6% and 6.1%, respectively, driven by seasonal promotions and new product launches [5][36] Stock Market Summary - In January, most optional consumption stocks rose, while essential consumption stocks mostly fell [6] - The report suggests focusing on companies with optimistic profit growth prospects, such as Asics and Fast Retailing [6]