Core Viewpoint - AEON (永旺) has renewed its lease for the Tianhe City store in Guangzhou, committing over 100 million RMB for an 8-year term, while also planning a significant upgrade to enhance customer experience and adapt to market demands [2][11]. Group 1: Lease Agreement and Financials - AEON Guangdong has signed a lease agreement with Tianhe City Group for a total rent of approximately 101.6 million RMB over 8 years, starting from July 1, 2025 [2]. - The average annual rent in the new agreement is about 12.7 million RMB, a significant decrease from the previous annual rent which increased from 37.2 million RMB to 52 million RMB over 15 years [5][11]. - AEON has been facing continuous losses in the mainland market for 8 years, prompting a need for strategic changes [7]. Group 2: Store Transformation and Market Strategy - The Tianhe City store will be transformed into an AEON STYLE SM flagship store, focusing on the needs of young middle-class families for health, convenience, and quality [2][11]. - AEON's strategy includes downsizing and optimizing store space to reduce rental and management costs, moving away from a "scale worship" approach [7][11]. - The company plans to open 8 new stores in Guangdong this year, increasing its presence in the region despite previous closures in other cities [11]. Group 3: Industry Context and Challenges - The retail market in China is becoming increasingly competitive, with the rise of e-commerce and new retail formats like community group buying impacting traditional supermarkets [7][12]. - AEON's challenges reflect broader issues in the retail sector, where many companies are struggling with high operational costs and changing consumer preferences [7][12]. - The Tianhe City area is undergoing a three-year transformation to adapt to new consumer trends, indicating a shift in retail strategies across the industry [12].

Core Viewpoint - AEON (永旺) has renewed its lease for the Tianhe City store in Guangzhou, committing over 100 million RMB for an 8-year term, while planning a significant upgrade to enhance customer experience and adapt to market demands [2][3][4]. Lease Agreement - AEON Guangdong has signed a new lease agreement with Tianhe City Group for a total rent of approximately 101.6 million RMB over 8 years, starting from July 1, 2025 [2]. - The new lease covers a reduced area compared to previous agreements, indicating a strategic shift towards optimizing operational costs [3]. Store Transformation - The Tianhe City store will be transformed into an AEON STYLE SM flagship store, focusing on the needs of young middle-class families, emphasizing health, convenience, and quality [2][4]. - The renovation will include a 90-day period for refurbishment, aiming to create a "five-sense experience" shopping environment [2]. Market Context - AEON has faced increasing competition from e-commerce and new retail formats, leading to continuous losses in the mainland market for 8 years [5][6]. - The company has been closing stores in various cities, including its last store in Beijing, reflecting the challenges faced by traditional retail in adapting to changing consumer behaviors [5][6]. Strategic Shift - AEON's strategy is shifting towards "small-scale, boutique, and experiential" retail formats to better align with market demands and consumer habits [6][7]. - The company plans to open 8 new stores in Guangdong this year, increasing its presence in the region despite the challenges faced [7]. Industry Trends - The retail landscape is evolving, with traditional department stores under pressure from online shopping and new retail models, leading to a high vacancy rate in commercial spaces [7][8]. - The Tianhe City area is undergoing a three-year transformation to adapt to new consumer trends, with AEON's renovation efforts reflecting a broader industry need to innovate [8][9].