1. Japan Supermarkets Association Chairman Yukio Kawano
The Present Conditions of Japanese Retail Business and Challenges in the future - Current Situation and Future of Retail in Japan, With a Focus on Foods Supermarket -
Japan Supermarkets Association
Chairman Yukio Kawano
As in the introduction, I’m Yukio Kawano, Chairman of the Japan Supermarkets Association.
It is a great pleasure for me to address this conference today. In my presentation entitled “Current Situation of Retail in Japan and Issues Going Forward,” I’d like to talk about the circumstances for retail and the situation for members of our association–foods supermarkets.

2. © 2017 Japan Supermarkets Association
Agenda
Overview and main activities of Japan Supermarkets Association
Current situation of retail in Japan
Management indicators of supermarkets
Changes among retail categories, as indicated in sales and number of stores
Initiatives based on Scenario 2025
Issues arising from the decreasing birthrate and aging population, population decrease, and labor shortage
From Scenario 2020 to Scenario 2025
- Ten years in which supermarkets will truly become “super”
Standardization efforts to increase productivity
Toward utilization of advanced technology
As for the specific items I will be covering, I will first share a brief overview of the Japan Supermarkets Association.
Next, I will be talking mainly about the status of retail in Japan and the situation of foods supermarkets.
Finally, I will be covering our research activities based on the “Scenario 2025 Report”–a report publicized by the Japan Supermarkets Association on the future of supermarkets ten years down the line.
© 2017 Japan Supermarkets Association

3. Overview of Japan Supermarkets Association
1. Date of Japan Supermarkets Association: July (Heisei 11) Establishment (as general incorporated association: established on April , transitioned on July 1) 2. Purpose In enabling stable food supply and contributing to the enrichment of citizens’ lives, to promote the modernization / streamlining of our nation’s food distribution system by supporting the sound advancement and growth of supermarkets through mutual development amongst members. 3. Membership <Regular Members> Requirements As a general rule, supermarkets with food category constituting 50% or more of total sales <Support Members> Those who support the purpose of the association and offer cooperation for its business activities 4. Number of Regular Members: 87 companies (number of stores: 6,845, Members 2016 sales: billion yen) Support Members: 458 companies Total number of members: 545 companies (as of July 2017) 5. Board Members Chairman Emeritus: Chairman and CEO of Life Corporation Nobutsugu Shimizu Chairman: Chairman and Representative Director of Yaoko Co., Ltd. Yukio Kawano Vice Chairman: 7, Executive Director: 1, Director: 25 (Total board members: 35)
Now, I’d like to make a brief introduction about our Japan Supermarkets Association.
This association was established in 1999.
The association is composed of regular members and support members.
Regular members include supermarkets in which foods generate 50% or more of the total sales, and support members include partners such as wholesalers / manufacturers.
Currently, 87 supermarket companies are enlisted, and the total sales of our members add up to 8 trillion yen.
The main activities of the association include “Promotion of standardization within the industry,” “Research regarding the future of supermarkets in ten years’ time,” and “Position statement regarding revision of laws / systems.”
© 2017 Japan Supermarkets Association

4. Association’s Recent Main Activities
1. The future of supermarkets in ten years time 1) From Scenario 2020 to Scenario ) Utilization of advanced technology for productivity increase 2. Promotion of standardization / joint usage 1) Standard distribution crates 2) Supermarket cloud EDI service for Distribution BMS 3) Shared digital currency system “SUPACA” 4) Payment services 3. Policy proposals for revisions in law / systems 1) Multiple tax rates and invoice system for consumption tax 2) Deregulation in price indication 3) HR / labor: advancement of female, elderly, and foreign workforce 4) Work style reform: equal pay for equal work, adjustment for appropriate work hours, promotion for acquisition of holidays
For our main recent activities, the first activity is our research that delves into what is expected of foods supermarkets and our agendas going forward, with the aim of identifying the ideal image of supermarkets ten years down the line. The research results are shared at the “Annual Seminar” held in October every year.
The second is the promotion of standardization / joint usage, and the third, policy proposals for revisions of law / systems.
Our association engages in issues revolving around foods supermarkets through such activities.
© 2017 Japan Supermarkets Association

5. Current Situation of Retail in Japan
Now, what does the current distribution industry look like? I would like to share with you the status of retail in Japan through highlights on the situation of foods supermarkets.
© 2017 Japan Supermarkets Association

6. Management Indicators of Supermarkets (aggregate results of FY 2015 performance)
Store Floor Area
Annual Sales Per Store
Sales Per m2
(annual)
Sales Per Customer
Weekday
Weekend
Number of Purchase Per Customer
Area / Ratio of Stockroom
Number of Employees
Full-Time Part-time (1,000m2)
Number of Cash Registers
Average Number of Customers
Weekdays / Weekends
Number of data aggregated
174 companies
167
companies
171
162
166
183
174
Average
1,443.2m2
(FY 2014 performance)
1,450 million
(1,480 million)
1.113 million
(123.0%)
1,825 yen
2,016 yen
(1,931 yen)
9.9 items
(10.0 items)
539.2m2
27.7%
(31.6%)
10.7
(12.8)
34.5
(38.8)
7.1
(7.5)
1,982
(1,975)
2,251
(2,337)
Less than 800m2
970 million
1.64 million
1,695 yen
1,784 yen
8.9 items
225.8m2
27.1%
20.1
58.1
5.0
1,524
1,620
Less than 1,200m2
1,160 million
1.16 million
1,730 yen
1,901 yen
9.3 items
380.5m2
26.7%
10.5
38.7
6.2
1,661
1,876
Less than 1,600m2
1.02 million
1,799 yen
2,025 yen
9.6 items
632.5m2
29.9%
10.8
30.2
7.0
2,069
2,421
1,600m2 or more
1,980 million
0.91 million
1,991 yen
2,248 yen
10.9 items
920.0m2
27.9%
7.9
26.4
9.7
2,447
2,933
The average figures of the 2015 data aggregation results here depict the situation in foods supermarkets.
The annual sales is 1,450 million  yen and the average store size is 1,450 m2.
The sales per customer is 1,800 to 2,000 yen.
The number of customers per day is 2,000 to 2,200.
The average number of purchases is approximately ten items.
From the above, the average price per item is 180 to 200 yen.  
© 2017 Japan Supermarkets Association

7. Management Indicator 1 Management Indicator 2
2012
Management Indicator 1
Management Indicator 2
2013
2014
2015
2016
Gross Profit Margin
Capital Adequacy Ratio
Break-Even Point
Operating Income Ratio
Recurring Profit Margin
Total Asset Turnover
Labor Share
Management Indicator (%)
2012
2013
2014
2015
2016
Gross Profit Margin
24.04
23.90
24.85
24.95
25.47
Capital Adequacy Ratio
27.61
28.48
28.12
33.35
35.16
Labor Share
47.11
34.25
41.46
44.43
44.21
Break-Even Point
95.19
96.79
96.94
94.33
93.29
Management Indicator (%)
2012
2013
2014
2015
2016
Operating Income Ratio
1.14
0.87
0.84
1.29
1.60
Recurring Profit Margin
1.28
1.10
1.18
1.61
1.94
Total Asset Turnover
3.07
2.97
2.73
2.80
This graph that shows the changes in the management indicators, such as profit ratio, labor share, etc. within the last five years.
In the past five years, the gross profit margin, operating income ratio, and recurring profit margin have increased. Also, the capital adequacy ratio has risen while the break-even point has surely decreased.
© 2017 Japan Supermarkets Association

8. Changes in Retail Sales Overall and By Category
Changes in Sales Volume of Overall Retail and by Category <Source: Current Survey of Commerce>
[unit of bar chart: million yen]
Bar Chart (Retail Sales Volume)
[unit: million yen]
1991
Collapse of
Bubble Economy
Supermarkets
Retail Sales
Volume
Department
Stores
Supermarkets
Convenience Store
Foods / Beverages
Section
2008
Lehman's Bankruptcy
Convenience
Stores
Department Stores
Foods Section within Supermarkets
Next, I’d like to share about the big trends in overall Japanese retail.
Until 1991, retail in Japan showed steady growth. However, due to the collapse of the bubble economy, sales peaked.
Amidst such circumstances, our foods supermarket industry expanded in sales until 1999 and has still slowly increased in recent years, demonstrating a firm standing. Especially notable is how the sales of foods and beverages continue to grow, without being affected by the economic climate. This is the biggest reason for the growth of the foods supermarkets industry.
Meanwhile, the sales of department stores peaked at 12 trillion yen in 1991 and have dropped to upper 6 trillion yen today.
Currently, convenience stores are showing the highest growth in retail and have exceeded 10 trillion yen.
1988
Consumption Tax 3%
1997
Consumption Tax 5%
2014
Consumption Tax 8%
© 2017 Japan Supermarkets Association

9. Analysis of Japan Supermarkets Association Members
After deregulation of price indication in October 2013, pre-tax price indication made possible!
本体各表示がメインになって以後、既存店の売り上げは好調に推移している
This is the aggregated figures of sales made by 60 members of our association.
Excluding the impact of the consumption tax hike, most overall sales surpassed that of the previous year, and positive changes from last year can be seen in existing stores as well.
Let’s look at the annual performance of the past. Year on year performance of existing stores were
100.9% in fiscal year 2013 ending in March
100.4% in fiscal year 2014 ending in March
102.7% in fiscal year 2015 ending in March
100.6% in fiscal year 2016 ending in March
Furthermore, this period was when price indication shifted to pre-tax price, after deregulations. Thus, we hope for pre-tax price indication, as opposed to tax-included figures, and are requesting for the permanence of the current price indication deregulation.
Positive changes in sales of existing stores after pre-tax price indication permeated
Total Sales
(10,000 yen)
vs. previous year of all stores (%)
vs. previous year of
existing stores (%)
© 2017 Japan Supermarkets Association

10. Changes by Retail Category… Changes in Number of Stores
Source: Current Survey of Commerce, Ministry of Economy, Trade, and Industry
Source: Franchise Chain Statistics Investigation
These are the changes in the number of stores among the main retailers in Japan.
After 1991, the overall number of retail stores dropped due to a decrease in privately owned stores and the recent surge of online shops, but convenience stores and foods supermarket stores still continue to increase today.
Source: Statistics, Japan Department Stores Association
Source: Supermarket Annual Statistical Surveys, AJS / JSA / NSAJ
© 2017 Japan Supermarkets Association

11. © 2017 Japan Supermarkets Association
Initiatives Based on Scenario For Productivity Increase and Work Style Reform in the Age of Low Birthrates and Aging Population -
Under such circumstances, in order to contribute to the development of the industry, the Japan Supermarkets Association announced the “Scenario 2025,” which speaks to the future of supermarkets ten years down the line, and since then, we have engaged in various research efforts.
Currently in Japan, labor shortage, arising from the decreasing birthrates and the aging population, is a critical issue. In addition, measures for the government-led work style reform efforts are required of us, and we are starting to see competition that goes beyond the boundaries of business sectors and categories.
Foods supermarkets are no exception, and in order to survive going forward, increase in productivity and work style reform are urgent agendas.
From here, I’d like to explain about issues of foods supermarkets going forward, in the order of items listed in Scenario 2025.
© 2017 Japan Supermarkets Association

12. Forecast on Changes and Future of Japanese Total Population
Onset of Low Birthrate and Aging Population – Changes in Population and Age Distribution -
Forecast on Changes and Future of Japanese Total Population
Estimate by National Institute of Population
and Social Security Research
2050
Below 100 million
Age 65 and above
Ages
First, we’ll look at the low birthrates / aging population and decrease in population, which are imminent issues in Japan.
The Japanese population peaked at 2008 and since then, has been in decline.
Also, in terms of the age segments, those aged 15 to 64, which is said to be the working-age segment, and children aged 14 and under, who will lead the next generation, are decreasing, and only the elderly segment, aged 65 and above, is on the rise.
In 2016, last year, it was highlighted in the news that the number of births dipped below 100 million people for the first time since the statistical records started.
Forecasts of the future also predict that the Japanese population will continue decreasing, the ratio of elderly citizens will increase, and whereas the total population was million at its peak, it will fall below 100 million by 2050.
Ages
1945
1955
1960
1975
1985
1990
2005
2015
2020
2030
2040
2050
2060
Created by processing data from Census by Ministry of Internal Affairs and Communication
and from National Institute of Population and Social Security Research
© 2017 Japan Supermarkets Association

13. 2015 2010 Distribution of Age Segments in 2010 and 2015
Elderly Population
Distribution of Age Segments in 2010 and 2015
2015
2010
Ages 65 and above
29.48 million people => million people
Approximately 23.0% => 26.6%
Those aged 65 and above will dominate 30% of the population by 2025!
Working-Age Population
Ages 15 – 64
81.73 million people => million people
Approximately 63.8% => 60.8%
For clarity, we’ll cover the aging trends using a graph that compares figures in 2010 and 2015.
The ratio of the population aged 65 and above was 23.0% in 2010, but grew to 26.6% in It is known that by 2025, the ratio will amount to 30%.
As you see, the population of those ages 64 and under is shrinking, and only the segment aged 65 and above is on the rise.
Ages 1 – 14
16.84 million people => million people
Approximately 13.2% => 12.5%
Junior Population
© 2017 Japan Supermarkets Association

14. © 2017 Japan Supermarkets Association
Labor Shortage Issue
Regular Employee Ratio
Non-regular Employee Ratio
Workforce Population
Non-regular <female>
1985
1990
1995
2000
2005
2010
2015
million people
Minimum Wage
<National Average>
Jobs-to-Applicants
Ratio
The decrease in population, especially of the working-age population, has created a labor shortage.
From the need to attain sufficient resources, employment of females and the elderly is advancing.
In the foods supermarket industry, although new stores are opening, thanks to positive sales, we are struggling with labor shortages, and efforts to improve employee working conditions or hourly wages for part-timers are taking a toll on labor cost. As a result, business strategies for the future and plans for store openings are being affected.
Meanwhile, it has been pointed out that productivity in retail is not as competitive as in manufacturing. Also as labor shortage measures , raising productivity levels in retail is an urgent issue.  Remark: Please note that the meaning of the highlighted text is unclear. Please revise the same for better understanding.
2010
2011
2012
2013
2014
2015
2016
© 2017 Japan Supermarkets Association

15. Issues and Roles of Supermarkets in Path to 2０25 - Next 10 -
1. Efforts for Compact City and holistic regional care system 2. Measures for new merchandising 3. Research into the utilization of robotics 4. Research for and utilization of next generation IT systems 5. Incorporation of service functions 6. Research for expansion of payment methods and point systems 7. Efforts for delivery services and in-field needs 8. Further promotion of standardization and joint usages 9. Research for foreign market development 10. Research into HR policies
This is the “Issues and Roles of Supermarket in Path to 2025, Next 10,” which captures the main agendas of the association, in light of the future supermarket that we envision.
For improvement in productivity, to this day, the association has been engaged in the following efforts.
For the third item, research into the utilization of robotics, we have been promoting the utilization of advanced technology in the distribution in industry by holding study groups for robotics / AI (artificial intelligence) utilization or subcommittee meetings for segment map systemization.
In the fourth item, research and utilization of next generation IT systems, the focus has been on the expansion of the joint usage “supermarket cloud EDI service”–abbreviated “SCES”–and advancement of information infrastructures.
For the fifth, efforts in service functions, we are engaged in the establishment of joint usage systems for payment services.
In the sixth item, research into the expansion of payment methods and point systems, here as well, activities revolving around the establishment of a joint usage e-money system.
For the seventh, efforts for delivery service and in-field needs, research into the current best practices of fresh produce delivery services have been conducted within the study groups of online supermarkets.
For further promotion of standardization and joint usage in item eight, we are engaged in the standardization / join usage of plastic crates and the promotion of Distribution BMS.
© 2017 Japan Supermarkets Association

16. Scenario 2025 Part 1 From results of simulation by area
Decrease and aging of population in
City A in Metropolitan Area (approximately 350,000 people)
City B, Major City of Rural Area (approximately 430,000 people)
City C, Small City in Rural Area (approximately 30,000 people)
Total Population:　- 2%
Population of Ages 75 and above: % -> 17%　
Total Population 　- 5%
Population of Ages 75 and above: 13% -> 19%
Total Population 　- 14%
Population of Ages 75 and above: 19% -> 24%
Although decrease in total population is limited, due to rapid increase in ratio of elderly segment, sales at stores with fewer population in neighborhood expected to drop.
Since total population will decrease to certain extent, sales base will drop. Significant impact on stores with customers visiting from wide area.
Since total population will decrease significantly while ratio of elderly segment will further increase, sales at all stores expected to notably fall.
Sales at Existing Stores
＋1%　 to 　- 6%　
- 2%　 to　- 9%
- 17%　 to　- 20%　
Although sales at stores will drop, cost reduction and other such efforts will be able to offset decrease.
Not too many closing of stores and other such restructuring to be expected.
Summary of Simulation Results Regarding Changes in
Impact on Sales of Supermarkets and other Existing Stores
Stores with high break-even points will face operating deficit.
Closing of some stores and other consolidation efforts within each business area to be seen to some extent.
Due to the significant decrease in sales, area-wide restructuring efforts and consolidation of stores to unfold, including closing of large-scale stores. Closing of stores expected to result in increasing number of people with limited access to shopping.
In Scenario 2025, firstly in Part 1, we looked into and summarized precisely what kinds of changes are brought forth by low birthrates / aging population and decrease in population in three representative areas.
In the metropolitan area, although aging trends will progress, the population will not decrease significantly by However, due to the shrinking of commercial areas brought on by the aging trends, the sales in most stores will drop at rates higher than the decrease in population. Meanwhile, it is thought that the positive effects will be seen in stores where the surrounding population is high.
Aging trends will be seen in the major cities of rural areas, and the ratio of those aged 75 and above will amount to nearly 20%. The sales base will dip due to the 5% decrease in population and the shrinking in commercial area caused by aging trends will have a negative impact to a significant degree for stores targeting wide areas, and as a result, closure and consolidation of stores can be expected.
Small cities in rural areas are in the most critical situation, and the ratio of the elderly, aged 75 and above, will be one out of every four people, and the population will decrease by 14%. Thus, sales will notably fall in all stores, restructuring will take place in the entire area, and eventually, we will see an increasing number of people having limited access to shopping.
© 2017 Japan Supermarkets Association

17. © 2017 Japan Supermarkets Association
Scenario Part 2 　Ten Years in Which Supermarkets Will Truly Become “Super”
Next, as Part 2 of Scenario 2025, in light of the low birthrates / aging society or decrease in population, the needs for utilization of advanced technology such as robotics / AI, or artificial intelligence, IoT and other such IT technology can be expected to emerge.
© 2017 Japan Supermarkets Association

18. Compact City and Consolidation of Bases in Areas
District under plan for adjustment of locations
Residential zone
Medical Mall
Self-care Wing
Governmental Facilities
Nursing Care Wing
Urban function zone
Cultural Facilities
Pre-school
Nursing Day Care
Supermarkets
Meal Delivery
Nursing Care Business
Public Transit
Regional public transit
Tokyo Olympics / Paralympics
Next Generation Public Transit System (ART)
Advancement of Personal Mobiles Devices
<Purpose>
1) Contribute to the next-generation advancement of Tokyo and Japan
2) Materialize the following by utilizing ITS / auto-cruise technology and ICT
(1) World-class accessibility (measures for those with limitations in transit)
(2) Overall express speed
Roles of Small-scale Stores
First, on adjustment planning of locations.
The compact city model will be highly sought for, especially in the rural areas where the population will decrease. It calls for community planning that aggregates the functions supporting everyday life.
Meanwhile, in the future, autonomous driving technology will advance, while auto cruise transit and personal mobile devices will increase within public transit as well, enabling an elderly-friendly environment for transit.
We will be paying attention to environmental changes such as these.
Bullet-train level smooth acceleration / deceleration, prevention of passengers falling
- automatic cruise control
Minimal waiting time, allowing seamless transit
- integrated, organic operational system
Improvement of express speed, punctual operation
- advancement of PTPS (public transit prioritized system)
- automatic cruise control
Time reduction and improvement in safety for embarking / disembarking
- automatic cruise (accurate arrival) control
Battle between
small-scale supermarkets and small-scale hard discounters
Reduction in accidents and ease in driving
automatic cruise technology
advanced drive support
Time reduction in embarking / disembarking and prevention of passengers from falling
device to secure wheelchairs
contactless charging system
Streamlining of traffic. Reduction in traffic jams/ CO2
C-ACC
© 2017 Japan Supermarkets Association

19. Pursue convenience for customers by enhancing services
Enhancement of services: payment services, governmental services, food court…
Pay your utility and other bills here
Pursue development of gathering places (community) and restaurant functions
Pursue convenience for customers by enhancing services
Furthermore, stores are offering ever more convenience for consumers by providing enhanced services, for example, accepting payment of utility bills and providing access to ATMs and multifunction printers.
Moreover, not only will stores sell fresh produce and ready-made foods but also increasingly offer space for recreation and get-togethers, such as “eat-in” areas where purchased foods can be enjoyed in-store.
© 2017 Japan Supermarkets Association

20. Provision of delivery services and pick-up points
Delivery service: enhancement of online supermarket (fresh produce delivery)
In recent years, as a means of encouraging store visit, even pick-up lockers, where one can receive delivered parcels, have been installed.
Also, there are needs not only for store visits but also for delivery functions such as delivery services or mobile catering.
Provision of delivery services and pick-up points
© 2017 Japan Supermarkets Association

21. Toward utilization of advanced technology
Face authentication Server
confirm
Move to sort section
Parcel number
Processed Food A
Toyocho Station
Condiment AA
Cart position: 01-01
10m ahead right turn
We, at the Japan Supermarkets Association, are very aware of the significant issues currently faced by the distribution industry, namely the improvement of productivity and work style reform.
Among them, we are especially keen on research activities aimed at the utilization of advanced technology to improve productivity, such as demand forecast or big data analytics by robotics and AI (artificial intelligence), which can substitute human labor. 
Now, I’d like to introduce to you an example of the association’s efforts in productivity improvement and work style reform.  
© 2017 Japan Supermarkets Association
Image source: Websites of respective companies, including Seiko Epson Corporation, Softbank Group Corp, NEC Corporation,
Toshiba Tec Corporation, Robot Taxi Inc., Rethink Robotics, Wal-mart Stores Inc.

22. Demand Forecast by AI - Number of Visiting Customers -
AI made highly accurate forecasts of the number of customers
Graph Comparing
Number of Customers Forecasted by AI
and Actual Results
Average Margin of Error in Estimate / Actual Number of Customers
Average Actual Number of Customers
264 people / day
3890 people /day
Estimate Number 1
Estimate Number 4
Actual
Estimate
Margin of error resulting from irregular customer visits (considered to be impact of special events / competitors)
Margin of error due to typhoon impact
In regards to utilization of advanced technology, we forecasted customer visits–the basis for retail sales forecast–using AI (artificial intelligence).
This graph shows the estimated visiting customers, based on information of the past number of customers that was input into AI. It is clear that estimates could be generated at high levels of accuracy.
Although there are deviations between the forecast and the actual customer traffic in some of the weeks, it is thought that this is due to the impact of irregular weather factors or special events in the area. In other words, if information on these irregular factors are reflected in the AI, the accuracy levels will increase.
To attain quality results with AI, highly accurate forecasts can be calculated by identifying factors that would affect actuals, gathering the necessary data, and providing the information to the AI.
© Japan Supermarkets Association

23. Demand Forecast by AI - Sales Volume -
Company K: Yogurt (medium)
Before Input of Price Information
Estimate Number 5
Estimate Number 6
Actual
Estimate
After Input of Price Information
Actual
Estimate
Estimate Number 0
Estimate Number 7
Next, we estimated the sales volume of products.
The upper graph is an estimate generated by providing the AI with only last year’s sales volume.
In the lower graph, information on sales prices was added.
It is obvious that, more accurate demand forecasts can be generated by providing information on both sales volume and price.
Therefore, it can be concluded that demand forecast using AI is highly effective.
Currently, we are working on improving the system so that it could be utilized for order placements of daily foods, where daily sales volume is high, or fresh produce and ready-made foods, which are partially prepared in-store.
Models regarding characteristics of special sales can be made by reflecting information on product price.
© 2017 Japan Supermarkets Association

24. Intelligent Shopping Cart
Example of New Technology Usage (Product Authentication / Electronic Payment): Cashier-less Payment
Emergence of Stores Without (POS) Cashiers
Long queue for checkout…a hassle
Intelligent
Shopping Cart
The tablets equipped with shopping carts
identifies customers through biometric
authentication and automatically reads
products selected by the customer
(IoT, RFID tag, image recognition, AI)
Self-checkout? Semi self-checkout? Not a fundamental solution to waiting for checkout.
Problem lies in
existence of cashiers
Pass through gate with
products in shopping cart,
and complete payment
with electronic currency
Now, what we would like to focus especially on this year is the optimization of cashier work. Currently, cashier-less payment methods are being considered, using various technologies.
All of you may know that Amazon Go is in the spotlight, and in Japan,
a new automatic checkout system called “Reji robo” is being rolled out. Details of the Amazon Go’s system is unclear, but it is said that image authentication technologies are utilized. With Regi-Robo, IC tags are secured on products, bar codes do not have to be scanned as in conventional processes, and payment can be calculated in one go. Furthermore, purchased items are bagged automatically.
We are conducting also research on cashier-less payment systems. Firstly, in regards to authentication methods for purchased items, various methods can be considered, including one that secures tablets on shopping carts, have customers themselves scan purchased items, or have customers download a smart phone application and use it to read the items. The last process would be to ensure tight security by checking the weight of the loaded shopping cart.  Payment through credit cards or e-money would speed up the process, and if by cash, specified pay machines would be used, and then, the process would finish.
Now, the Ministry of Economy, Trade, and Industry is said to be researching on securable IC tags, including costs, for usage within ten years later in If this materializes, it would boost productivity  significantly. Although it will take more time to materialize, reduction in labor costs for cashier work, which cover approximately 15% of overall labor costs, will contribute largely to the enhancement of productivity.  
Queues will not happen if (POS) cashiers are removed from stores |
If eco-friendly bags are used,
counters to bag purchases
will be unnecessary as well
>
Can reduce cashier staff
Can expand sales space
© 2017 Japan Supermarkets Association

25. Situations without standardization result in…
Standard Specification
for Food Crates
Increase of crates results in increase of storage space and work in manufacturing / distribution / sales processes
Exterior by Type
Exterior
Measurement
Interior
Usable
Dimension
Type I
Width 578mm
Depth 388mm
Height 132mm
Width 534mm
Depth 348mm
Height 120mm
Width 520mm
Depth 334mm
Height 110mm
Type II
Deep
Width 557mm
Depth 459mm
Height 148mm
Width 509mm
Depth 419mm
Height 138mm
Width 490mm
Depth 400mm
Height 126mm
Shallow
Height 108mm
Height 98mm
Height 86mm
Half
Width 459mm
Depth 277mm
Height 156mm
Width 419mm
Depth 229mm
Height 146mm
Width 400mm
Depth 210mm
Next, let me introduce our standardization efforts, which aims at increasing productivity.
In our association, we have been involved in the standardization of distribution crates so far. Distribution crates all differ in size, according to manufacturer and product, and at stores where various crates arrive, much time, labor, and space are needed to organize crates after they are emptied of products for shelving.
Consequently, we decided on these four types of distribution crates.
© 2017 Japan Supermarkets Association

26. Efforts in Standardization / Sharing of Distribution Crates
ONE ＷＡＹ
No need for sorting
Minimization of storage space
Improvement of work efficiency
Improvement in productivity (enables line work)
Consolidation of distribution / distribution equipment
No reloading work
Improvement in distribution efficiency etc.
(vendor)
(retail)
(rental depot)
Cleansing / management
Then, to drive efficiency at levels higher than before, competitor retail companies gathered together to discuss the issue and concluded that overall optimization can be realized by standardizing and sharing distribution crates.
The association has started supporting the initiative in order to optimize distribution.
Implementation has actually begun from 2009, and currently, 190,000 crates per day, or up to 70 million crates per year, are circulated.
Approximately
190,000 standard crates per day are in circulation
© 2017 Japan Supermarkets Association

27. Development of jointly used system (SCES)
Can continually use, without having to always invest in newest systems
SCES
continues to
upgrade!
Retail Company A
ＢＭＳ
Format
Retail Company B
ＢＭＳ
Format
(Eg.) Functions Expected of EDI
Measure for latest version of distribution BMS
Measure for legal agendas
Latest operational improvement functions
Supermarket
Industry ＶＡＮ
スマクラ
(SCES)
2016
2015
2014
2013
2012
Ver. 1.0
Compliant with six basic messages (placement of orders, shipment, receipt,
return, billing, payment)
Ver. 2.0
Fresh produce functions
Compliant with data transmission / reception
Ver. 3.0
Reinforced handwriting function
Additional client request function Compliant with new design
Ver. 4.0
Compliant with multi-tenants notification function
Parameters for subsidiary functions
Ver. 5.0 (as of plan)
Compliant with reduced tax rate Compatible with multiple browsers…
New Retail Company
ＢＭＳ
Format
New Partner
ＢＭＳ
Format
Next, as part of our efforts in standardization of IT, we have the Distribution BMS.
Distribution BMS refers to “Distribution Business Message Standardization” and is a standard specification for common electronic data interchange (EDI) that all distribution parties (manufacturers, wholesalers, retail) can use. This system enables fast and low-cost interchange of data relating to order placements, shipment, receipt, inspection, or billing.
In order to promote this Distribution BMS, the association established and recommended a joint usage system, SCES.
Currently, the implementation of the system in foods supermarkets has progressed, and SCES shares in the industry are up to 40%.
Allows transactions with BMS-using partners with only small investments
No barriers to new entry
Allows transactions with BMS-using partners with only small investments
No barriers to new entry
ＢＭＳ
Format
Partner
ＢＭＳ
Format
Partner
© 2017 Japan Supermarkets Association

28. Further Expansion of “Joint Usage”
Expand Areas of Joint Usage,
For the Future
Previous Systems
Company A Applications
Company B Applications
Applications
Company C
Areas of Competition
Company A
Original
Application
Company B
Original Application
Company C
Original Application
Company D
Original Application
Company A Software
Company B Software
Company C Software
Joint Usage
Areas of
Common Application
SCES
ＥＯＳ
E-money
Automatic Order Placement
Inventory Management
Sales Management
Rebate Management
Finance / Accounting
HR / Compensation
Client Management
Online Supermarket
Company A OS
Company B OS
Company C OS
We are focusing currently on furthering areas of joint usage today.
Furthermore, in the future, we will be trying to position its role not only as a system for orders and receipts but also as an infrastructure.
By doing so, costs can be reduced by sharing a basic system, and for individual systems that respective companies would like, they can connect still to the main system with their original applications, enabling further convenience for all.
Infrastructure
Joint Usage Platform
Company A Device
Company B Device
Company C Device
Foundation for Distribution Industry
(Distribution BMS)
Foundation for Machines / OS (AWS etc.)
© 2017 Japan Supermarkets Association

29. Main Policy Proposals
1. Measures for consumption tax issues 1) Position statement regarding opposition toward reduced tax rates 2) Request for permanence in deregulation of price indication 2. Measures for work style reform 1) Submission of statement regarding agendas of Council for the Realization of Work Style Reform 2) Publication of research results regarding impact of equal pay for equal work policy on business management of foods supermarkets 3) Requests for expansion in technical intern training program for foreigners 3. Establishment of common store holiday system 1) Proposal regarding establishment of common store holiday system in each region, in promoting acquisition of paid holidays
Lastly, our association has been making statements regarding revisions of laws / systems that influence the foods supermarkets industry. Although this is only a few of our recent examples, let me introduce them to you.
The first item is on consumption tax. As a way to mitigate the negative impacts of a consumption tax-hike on low-income earners, we believe refundable tax-credits are preferable to reduced tax rates. Also, it is not up to the law to enforce tax-included price indication, but a matter that businesses should decide on. Currently, as a time limited measure, it is left for businesses to decide, but no particular issues have arisen so far.
Regarding the second item on work style reform, there is a need for the improvement of work environments, including restrictions on long work hours or overtime, promotion of acquiring holidays and paid leave etc. In order to realize these changes, as mentioned earlier, raising productivity is key. We have been communicating the realities of the industry regarding this point as well. At the same time, we believe that there is need for employment of talented foreigners in Japan, in addition to the advancement of female and elderly workforce. Thus, we requested for deregulatory measures.
As for the third item, currently, stores also need to have holidays, in order to improve work environments. Through discussions with the relevant parties, we would like to take this issue forward.

30. © 2017 Japan Supermarkets Association
Thank you very much!
Although in parts due to restriction in time, that was an introduction to the various agendas faced by the Japanese food supermarket industry and some of the major actions being taken by our Association.
Going forward as well, we, the Japan Supermarkets Association, would like to continue engaging in research efforts for the improvement of productivity and work style in the industry.
Thank you very much for your time.
© 2017 Japan Supermarkets Association