FILE PHOTO: The logo of a Walmart Superstore is seen during the outbreak of the coronavirus disease (COVID-19), in Rosemead, California, U.S., June 11, 2020. Picture taken June 11, 2020. REUTERS/Mario Anzuoni/File Photo

THE NEUTRAL ZONE

Walmart is the latest foreign company to withdraw from the Japanese grocery market after selling its majority shares of Japanese supermarket chain Seiyu. The giant discount retail chain sold 65 percent of its shares to KKR and 20 percent to Rakuten. 

Walmart’s shares were valued at $172.5 billion yen, or approximately $165 billion in U.S. dollars. The company kept 15 percent of the shares and expects to see a $2 billion non-cash loss in the fourth quarter following the majority sale.

Discount stores have struggled in Japan in the past, largely due to the way Japanese shoppers view products that are considered to be cheaply made. This attitude is beginning to shift, however, due to the coronavirus pandemic and a rise in online shopping and bargain-seeking.

Both Rakuten and KKR stated they are hoping to improve Seiyu’s e-commerce capabilities to meet the coronavirus-accelerated demand for online grocery shopping. Primary focuses for KKR and Rakuten’s investment in Seiyi will include a focus on improving customer experience in, cashless payment advancements, app-based payments, shopping and deliveries. 

Rakuten hopes that the Seiyu deal will help it compete with e-commerce rival Amazon. Rakuten has also released a product called Rakuten DX on Monday as a subsidiary to boost physical retail stores. “Customer expectations are on the rise for new online services and seamless experiences across online and offline retail from supermarkets and other businesses operating brick-and-mortar retail stores,” Rakuten said in a statement.

MEDIA PERSPECTIVE

KKR, Rakuten to acquire most of Walmart’s stake in Japanese supermarket chain Seiyu – TechCrunch – 11/16/2020
Japan’s online grocery delivery market has trailed behind other countries, due in part to the reluctance of shoppers to purchase fresh food online. But the COVID-19 pandemic prompted a rapid shift in consumer habits. According to a July 4 report from the Japan Times, internet sales accounted for about 5% of total grocery sales, compared to 2.5% before the pandemic.

Walmart retreats from Japan by selling most of its stake in Seiyu supermarkets – CNN – 11/16/2020
The American big box retailer first invested in Seiyu in 2002. In the early years, Walmart plowed more than $1 billion into the company, and brought in its own distribution and computer systems. The efforts failed to deliver a breakthrough, however, and its stores struggled to overcome consumer apathy and a saturated retail market. Walmart took Seiyu private in 2008.

KKR and Rakuten to buy 85% of Seiyu from Walmart – Nikkei Asia – 11/16/2020
Kazunori Takeda, Rakuten’s group executive vice president said: “By building on our successful partnership on Rakuten Seiyu Netsuper, and our deep experience in online retail and data-based marketing, we look forward to accelerating the digital transformation of Seiyu’s brick-and-mortar retail, and further merging the best of offline and online retail to offer Seiyu customers the best possible OMO [online merges with offline] customer experience. “

INFLUENCER PERSPECTIVE

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