DAIICHI CO.,LTD.

In the Hokkaido supermarket industry, competition is intensifying further due to existing competitors shifting to low-price business models, new market entries by capital from outside Hokkaido, and entry by other business formats. In the company's 26-store operating base centered on Obihiro, Asahikawa, and Sapporo, new store openings and business format conversions by other companies continue, raising concerns about a temporary impact on business performance. The company is responding through thorough competitor analysis and strengthening store competitiveness by leveraging its own strengths.

If unforeseen events such as the occurrence of food poisoning, BSE issues, highly pathogenic avian influenza, or pesticide residue problems occur, this may have a temporary impact on the company's business performance. The company implements hygiene and freshness management based on standards documents, but the possibility of future occurrences of food poisoning and similar incidents cannot be denied. In the event such a risk materializes, the company's policy is to maintain customer trust by providing accurate and prompt information to customers.

Appropriate quality labeling is required based on legal regulations such as the Food Labeling Act and the Act against Unjustifiable Premiums and Misleading Representations, and if a problem should arise with products sold, this may impact business performance. The company conducts self-inspections by management personnel in charge, but the social impact would be significant if a legal violation were to occur. The company addresses this by establishing food labeling and hygiene management personnel and conducting regular food labeling surveys.

The company owns facilities such as stores, offices, prepared foods centers, and distribution centers within Hokkaido, and if these facilities are damaged by large-scale natural disasters, infectious diseases, crime, or other events, this could have a material impact on business performance depending on the severity. Given Hokkaido's geographical characteristics, particular attention must be paid to natural disaster risks such as large-scale earthquakes and heavy snowfall. The company responds by developing large-scale disaster response manuals, conducting regular disaster prevention drills, and stockpiling disaster prevention supplies.

Against the backdrop of the declining birthrate, an aging population, and intensifying competition in the labor market, securing and developing excellent human resources has become an important challenge, and if human resource recruitment does not proceed as planned, this may impact business performance. The company is focusing on employee reassignment, strengthening recruitment of new graduates and mid-career hires, securing part-time workers, and accepting foreign technical intern trainees. The company is further addressing this through year-round recruitment of new graduates, strengthened hiring of partner employees, and improvements to the employment environment.

New store openings or floor space expansions exceeding 1,000 square meters require notification to the relevant prefecture or government-designated city under the Large-Scale Retail Store Location Act, and reviews are conducted taking into account the opinions of local residents regarding traffic safety, noise, waste disposal, and other matters. If store openings cannot proceed as planned due to the review status or regulatory changes, this could impede the execution of the growth strategy and impact business performance. The company strives to open stores as planned through accurate information gathering and detailed explanations to relevant authorities.

If personal information of customers or others were to leak, this could lead to a decline in social trust and impact business performance. The company is thoroughly promoting protection through the development of regulations concerning personal information and employee training, but risks from external threats such as cyberattacks and internal misconduct cannot be completely eliminated. The company addresses this risk by implementing information security measures based on internal regulations.

As a company operating retail stores, if the profitability of individual stores declines due to changes in the business environment or other factors, losses associated with the application of impairment accounting may occur, impacting business performance. If intensifying competition or changes in consumer trends worsen the profitability of specific stores, there is a risk that recording impairment losses would significantly reduce financial figures. The company thoroughly manages profit and loss through the renovation of existing stores and the promotion of scrap-and-build to prevent the occurrence of impairment losses.

The company uses numerous IT systems in business activities such as ordering, sales, accounting, and employment management, and if critical IT systems were to stop or malfunction due to increasingly sophisticated and elaborate cyberattacks in recent years, this could force the suspension of part or all of business activities and impact business performance. In addition to technical and physical measures such as installing firewalls, performing backups, implementing virus countermeasures, and controlling access to system rooms, the company is also working on human-based measures such as IT security education. The company's policy is to continue strengthening countermeasures while gathering information on the threat of cyberattacks.