Struggling supermarket chain Seiyu Ltd. said Wednesday that five representatives of Wal-Mart Store Inc. have joined its board of directors, formalizing the U.S. retail giant's involvement in Seiyu's management.
But consumers in Japan are unlikely to see Wal-Mart signboards in the near future as the company cautiously tests the water in the world's second largest economy.
In the Seiyu management shakeup, approved at an extraordinary shareholders' meeting earlier in the day, five Wal-Mart officials assumed seats on Seiyu's now 13-member board. They include John Menzer, president and CEO of Wal-Mart International.
The world's largest retailer became the largest shareholder in Seiyu in December, when it acquired a blocking stake of about 37.7 percent. In the three-phase deal, Wal-Mart has options to purchase up to 66.7 percent of Seiyu shares by the end of 2007.
On Wednesday, Seiyu and Wal-Mart officials emphasized that even if it is not clearly visible to outsiders, Seiyu is undergoing rapid changes to adopt Wal-Mart's low-cost and low-price strategies, as well as its corporate culture.
"We expect to see tangible effects of the alliance from the second half of this fiscal year," said Seiyu President Masao Kiuchi.
The firm announced late last month that its group net loss for the year that ended Feb. 28. is likely to increase to 83 billion yen due to weak sales and the write-down of its shareholdings in Seibu Department Stores Ltd.
Seiyu will introduce Wal-Mart's "retail link" system of sharing inventory information with suppliers, starting at three stores in August, the officials said.
They also said that since December, Seiyu has seen brisk sales of some selected items -- ranging from clothing to potato chips -- in discount campaigns that have run for longer than usual, generally 90 days.
Takayuki Suzuki, an independent retail analyst and former Seiyu official, said he expects Wal-Mart to keep a relatively low profile for a while, as it focuses attention on building up its infrastructure, such as inventory information and logistics.
"The biggest interest among the media here is when they will open the first Wal-Mart store in Japan," Suzuki said. "But they will be disappointed, because Wal-Mart is more interested in boosting the bottom lines by efficient operations than increasing the top lines."
Indeed, Seiyu's Kiuchi said all the planned new store openings had already been decided before Wal-Mart became involved. It is also too early to discuss the possibility of large "super center" stores, which could carry the Wal-Mart name, he said.
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