Axial Retailing Inc.

In the food retail industry, an overstore condition continues due to aggressive store openings across regions and business formats, and competition has arisen in the areas where the Group operates stores, affecting gross profit margin and average customer spending. It is recognized that sales at a given store typically decrease by around 10% in the first year after a competing store opens nearby, and such competition arises at several stores each year. The Group strives to recover sales through product and service differentiation and the realization of low-cost operations.

For the Group, which aims to be "Japan's No.1 in Service," securing and developing personnel capable of supporting store operations is a key challenge, and the recent labor shortage has had some degree of impact. If the Group is unable to secure and develop personnel in line with store expansion, the impact on business performance is recognized as varying depending on circumstances. The Group strives to create a comfortable working environment through the use of diverse recruitment methods, flexible employment arrangements, and enhanced employee benefits.

For the Group, whose main business is food products, if an issue arises that undermines confidence in food safety, the impact on business performance is recognized as varying depending on the nature of the incident, with several minor incidents occurring each year. The Group strives to secure procurement routes that ensure a stable supply of safe products and to properly process and label products. It addresses this through the establishment of a dedicated department, thorough compliance with laws and internal rules, and rigorous management utilizing information systems.

Since the Group handles many food products with short quality retention periods or that require in-store processing, strict attention to hygiene management, including temperature control and handling, is required. The impact on business performance in the event of a hygiene-related issue is recognized as varying depending on the nature of the incident, with several minor incidents occurring each year. The Group works to enhance hygiene management through the assignment of dedicated quality control staff, the development of various training programs and manuals, and improvements in facilities.

If the Group is unable to proceed with its store opening policy as planned due to changes in the business environment, legal regulations, or difficulties in securing store locations, this may have a negative impact on business performance. The impact is recognized as being in the range of approximately ¥1.0 billion to ¥3.0 billion in sales per store. As a countermeasure, the Group strives to secure stable store opening opportunities without over-concentrating in specific regions.

New store openings or expansions with a store floor area exceeding 1,000 square meters are required to be reported to prefectural and other authorities under the Large-Scale Retail Store Location Act, and the status of screening or changes in regulations may affect store opening policy. The impact is recognized as being in the range of approximately ¥1.0 billion to ¥3.0 billion in sales per store, although at present the possibility of this risk materializing is not recognized. The Group strives to comply with laws and regulations and build good relationships in the areas where it opens stores.

If laws and regulations restricting the opening of stores above a certain scale are enacted by relevant government ministries or local municipalities, the Group may be forced to change its store opening policy, potentially having a negative impact on business performance, with the impact recognized as being in the range of approximately ¥1.0 billion to ¥3.0 billion in sales per store. At present, the possibility of this risk materializing is not recognized. The Group addresses this by proceeding carefully with store opening projects in compliance with laws and regulations.