FamilyMart Co. and Uny Group Holdings Co. have confirmed they are in merger talks and will decide the basic terms by August to form Japan’s second-largest convenience store chain in terms of sales.
Uny will probably be merged into FamilyMart, the companies said in a joint statement Wednesday. The two retailers aim to close the deal by September 2016.
The deal comes as the industry faces declining sales amid the shrinking and aging population.
FamilyMart’s biggest rivals, Seven & I Holdings Co.’s 7-Eleven, the country’s largest convenience store network, and Lawson Inc., are adding stores and expanding to keep prices down by raising volume.
“There are a lot of issues to overcome in the domestic retail market,” FamilyMart President Isamu Nakayama said in a joint briefing with Uny held in Tokyo, citing the population decline and increased competition.
The merger will combine the two companies’ convenience stores as well as Uny’s supermarkets “to create a new model for those businesses,” Nakayama said.
Tokyo-based FamilyMart has 11,271 convenience stores while the Aichi Prefecture-based Uny owns 6,328 stores in the Circle K and Sunkus chains, as well as supermarkets under the Apita and Piago brands.
The combined convenience store chain, which at the moment does not have a brand name, will aim to expand domestically as well as in emerging countries, particularly in Asia, according to the statement.
The supermarket business will expand centered in the Tokai and Kanto areas, it added.
“FamilyMart couldn’t find ways to grow on its own,” said Mikihiko Yamato, deputy head of research at JI Asia in Tokyo. “Given sluggish consumption in Japan, not only convenience store operators but also any other subsectors in the retail industry can’t survive by themselves.”
FamilyMart and the Circle K and Sunkus chains had combined revenues of about ¥2.7 trillion in the year ended February 2014, surpassing the ¥1.9 trillion racked up at Lawson, the nation’s No. 2 convenience store by sales.
Seven & I has 17,491 stores across the country, while Lawson has about 12,000.