Source | Lianshang.com ID | lingshouzixun Author | Sima Zhengshu
After the pandemic in 2022, Japan gradually saw a wave of price increases, and entering 2025, a new round of price hikes surged. According to a survey released on August 29 by Japan's authoritative institution Teikoku Databank, covering 195 major food companies, approximately 20,034 products will see price increases (including those already increased) by November this year, with the overall increase significantly surpassing the 12,520 products for the entire year of 2024. It predicts that food price increases will become a long-term trend.
As early as July 16, the influential Japanese economic newspaper Nikkei's subsidiary, The Japan Distribution News, published the analysis report "FY2024 (58th) Japanese Retail Industry Survey Summary." In FY2024, the total sales of 1,434 mainstream retail companies in Japan increased by 6.4% compared to FY2023, with chain supermarket sales increasing by 5.2% year-on-year, but the growth rate was lower than the 6.6% in FY2023, indicating a slowdown in sales growth.
The Japan Supermarket Association disclosed an annual statistical survey of 932 food supermarkets nationwide. Affected by the price hike wave, although sales and average transaction value in FY2024 increased year-on-year, the average number of customer visits and purchase items both declined compared to FY2023 averages.
In June this year, 17 listed food supermarket companies in Japan disclosed their FY2024 financial results. Overall, listed companies experienced "revenue increase but profit decrease," with 15 companies seeing sales growth, 14 companies seeing profit deterioration, and 10 companies seeing a decline in gross margin. Many companies felt the "double hardship" of rising prices and high costs.
As of May 2025, Japan has seen real wages grow below price increases for five consecutive months, leading to predictions that "consumers will tighten their wallets," especially in daily necessities, where they will be more inclined to choose low-priced products, and the "saving tendency" will become increasingly strong.
In light of this, mainstream Japanese supermarket chains have begun to strengthen and integrate their product strategies and PB development strategies, accelerating PB product development. In addition to increasing the development of low-price traffic-driving products to stabilize customer groups and mitigate the impact of NB product price increases, they are also conducting deeper segmentation and insight into consumer groups, attempting to explore the life scenarios and potential needs (Wants) of segmented customer groups. They are continuously enriching and iterating new value content in PB development, reshaping product power together with NB products, enhancing overall store appeal, stimulating demand, and thereby improving corporate profitability.
Japanese mainstream supermarket chains are integrating and accelerating the development of private brands through three major initiatives to build a new product power system.
1. Integrate PB systems, use low-price bands as an entry point, develop traffic-driving products, and attract customer flow.
2. Redefine value, tap into potential consumer needs, launch new concept value-added PBs, and increase profitability.
3. Accelerate the SPA manufacturing retail process, building a new product power system based on "PB+SPA."
Integrating PB systems, using low-price band PBs as an entry point, developing traffic-driving products, and attracting customer flow.
Leading chain supermarket companies such as Aeon, 7&i, and YAOKO have begun to integrate their private brands, adjusting the multi-dimensional development strategies of the past, simplifying from complexity, and focusing the development center of private brands on a dual-track development strategy: the "price axis" pursuing high cost-performance and the "value axis" providing new concept value experiences.
For essential, high-frequency basic livelihood categories, they are expanding the development and market launch of low-price PB products. By improving production processes, increasing production line efficiency, and reducing packaging, printing, and logistics costs, they compress manufacturing costs and expenses. At the same time, they solidify product quality, making consumers feel that low-price band PBs have solid quality and are reassuring to buy, thereby "loosening their grip on their wallets," increasing store visits and purchase frequency, and increasing the number of items purchased.
Aeon is one of the earliest companies in Japan to develop private brand products, with a PB development history of over 50 years. As of the end of 2024, the total number of PB SKUs across the group has approached 8,000, and the PB product ratio is currently the highest among Japanese supermarkets.
Last year, Aeon began to organize its private brands into three main brand lines and launched a "dual-axis" development strategy. That is, using the low-price "price appeal" (yellow label PB) "TOPVALU BestPrice" as a lever to drive the steady sales of the "basic" (red label PB) "TOPVALU," while empowering the red label basic with new value, and raising consumer awareness and purchase rates of the "added value" (green label PB) "TOPVALU GreenEye" with organic, health, and environmental concepts.
Aeon's FY2024 PB sales exceeded 1 trillion yen (approximately RMB 48.3 billion), with a year-on-year growth rate of 8.3%. PB sales accounted for 10.8% of total revenue. The low-price appeal yellow label "BestPrice" saw an annual sales growth rate of over 110%, directly driving the overall growth of Aeon's PB products. On April 9 this year, Aeon announced a further reduction in the selling prices of 75 of its PB products in response to the significant price hikes by manufacturers. This practice of "raising prices while others lower them" was highly recognized and welcomed by consumers.
The image shows a POP poster in an Aeon supermarket about price reductions, informing consumers that the price cuts are due to "improved production efficiency and economies of scale." Source: Provided by the author.
"Communication" is an effective means for companies to maintain a good social image, shorten the distance with consumers, and increase intimacy and affinity. Price reductions are a double-edged sword, easily causing unnecessary suspicion and overinterpretation. Aeon promptly communicated and interacted with consumers, explaining the reasons, which was done with generosity and dignity, demonstrating marketing strength.
Entering 2025, Aeon set an annual goal of a 10% year-on-year increase in PB sales. From March to August this year, it launched 1,250 new items across the three major PB series, including increasing the number of Best Price items and adding high-value-added PB items such as RTH convenience foods that can be heated in a microwave and frozen foods. PB products are also being expanded to all retail businesses under Aeon, including supermarket and convenience store segments.
As of the end of July, it was reported that Aeon's private brand sales growth rate exceeded 10% year-on-year, and the FY2025 PB sales target is expected to exceed 1.2 trillion yen (approximately RMB 58 billion).
Image source: Provided by the author.
The image shows the PB products (left shelf) in the Kasumi store under Aeon's food supermarket cluster "U.S.M.H," where the low-price band "TOP VALU BEST PRICE" and the basic "TOPVALU" private brands are organically integrated with NB products (right shelf), technically controlling consumers' "psychological price points" (Price Point), price band width, and SKU depth, not only facilitating purchase but also increasing the fun of selection and comparison and the store's appeal.
The image shows the in-store display of Aeon's convenience store "MINISTOP," where TOPVALU series has been extensively deployed. Source: Provided by the author.
Japan's 7&i Group and Aeon Group are comparable, leading the development of Japanese chain supermarkets. In private brand development, 7&i, which has always believed in "good taste and high quality" and followed a high-price route, first added the price-appeal PB "Seven The Price" to its Premium series in September 2022. According to 7&i, the low-price band PB was well received by consumers upon launch, and as of the end of November 2024, cumulative sales of "Seven The Price" exceeded 20 billion yen (approximately RMB 967 million).
In 2025, 7&i began adjusting the proportion of its PB series: "Matsu" (high price), "Take" (medium price), and "Ume" (low price). For the first time, it raised the composition ratio of the low-price band Seven The Price to 30%, and among the new PB items launched in FY2025, it strongly introduced 300 low-price PB items. It also announced that within FY2025, it will redesign and refresh 1,800 of the existing 3,550 PB items (51%) in terms of product specifications, taste, and ingredients, expecting that under the integrated PB leadership, it will stimulate consumers' motivation to visit stores and increase repeat customers' purchase items and satisfaction.
The image shows the Premium product section in the 7&i food supermarket YORK BENIMARU. Source: Provided by the author.
PB products originally belonging to convenience stores are now occupying the YORK BENIMARU sales floor, giving the feeling of being in an enlarged 7-11 store.
Image source: Provided by the author.
The integrated PB product groups of the two major groups (see above) have clear logic and clear goals. In terms of sales scale, 7&i has an advantage, but in terms of PB item count, sales ratio, and rollout intensity, Aeon's tension and development speed are superior.
Currently, the vast majority of Japanese chain supermarkets have introduced PB products. According to a survey by the Japan Supermarket Association of 932 food supermarkets under its umbrella, as of 2024, PB penetration has increased to 82%, and PB sales as a share of total revenue has approached 10%.
In terms of PB development focus, as many as 78% of food supermarkets expressed strong interest in "low-price band PBs" for traffic-driving, followed by "high quality" (55%) and "safety and security" (52%). The two giants of Japanese chain supermarkets have taken the lead in integrating and continuously promoting private brands, driving a new round of PB development across the Japanese retail industry.
Redefining value, tapping into potential needs, Launching new concept value-oriented PBs
1. Deconstructing the connotation of cost-performance, redefining value
The premise for chain supermarkets to attract consumers is that, for consumers, there are many products in the store that they "want to buy" and can "afford." These products not only solve the three meals a day at home but also ideally help solve various explicit and implicit problems in home dining, such as the "inconvenience," "time-consuming," "labor-intensive," and "troublesome" aspects of home cooking.
What attracts consumers is not just price, but also many desires and expectations that they have thought of but never seen, or even never thought of, buried deep in their hearts, as well as the joy and excitement of each visit, discovering new life pleasures and satisfaction, activating neural circuits, and igniting enthusiasm and longing for a better life.
I recall Marx in Das Kapital discussing market economy, asserting that "this is a huge accumulation of commodities." Indeed, commodities are the basic cells of a market economy, and commerce is a business starting from commodities. The value attributes of commodities determine their exchangeability with money. But have we seriously deconstructed the value attributes of commodities themselves and the charm of monetary exchange extended from them? Have we sorted out their core and additional elements, thereby trying to empower and enhance the charm and exchange attributes of commodities, giving them new use value and mission?
The evolution of the cost-performance formula. Source: Provided by the author.
In an era where good taste is a given, the connotation of value and cost-performance has changed. The basic value connotation of food has gradually been iterated and extended by new value perceptions and attributes represented by "food safety and nutrition," "emotional value," "experiential value," and "social value." Similarly, the price that constitutes commodity value, i.e., cost factors, is also changing.
The various troubles and annoyances brought by "time-consuming," "troublesome," and "labor-intensive" aspects of home life have evolved into new cost factor elements that cannot be ignored. If these new explicit or implicit "cost (=problem) elements" are not ignored or merely observed at the cognitive level, but thoroughly traced to their roots, captured and purified as "problems" and "clues" in business, and attempts are made to solve them, by redefining the cost, value, and cost-performance of commodities, and launching "problem-solving products" with new value concepts, it is highly likely that new business spaces, opportunities, and domains will be born.
Opportunities determine the success or failure of competition. The opportunity here probably refers to who can discover and capture problems earliest, find solutions promptly, and quickly put them into practice, seizing the high ground of consumer mindshare. Manufacturers are looking for timing and opportunity gaps, and merchants need to control timing and complete precise placement.
2. Observing consumption changes, segmenting customer groups, and tapping into potential needs
One of the signs of an affluent society is the diversification and polarization of consumption life, marked by "one person, ten colors." If we add consumers' different choices and personalized pursuits in time, space, occasion, and lifestyle, i.e., TPOS (Time, Place, Occasion, Lifestyle), it becomes even more colorful and requires a vast array of personalized products to meet. Daily necessities also have such characteristics and attributes.
Japan's social consumption structure has transformed from a "jujube core" shape to a "dumbbell" shape, showing a "polarization of consumption." There are not only large groups of consumers who pursue high cost-performance, with price as the main line, and are willing to "make do" in daily life, but also groups who adhere to their own lifestyles and values, like to pursue "delicious" and mostly "know how to eat," value "nutrition and health" and "authenticity," and are unwilling to compromise. Among these "discerning" consumer groups, there are a number of highly educated, high-income dual-income "Power Couple Families."
The average annual income of Japanese salaried households is about 6 million yen (approximately RMB 290,000). These high-income "Power Couple Families" typically have an average annual income exceeding 15 million yen (approximately RMB 725,400), more than double the average salaried worker. According to a survey by the Japan Life Insurance Foundation, as of the end of 2024, in less than 10 years, the proportion of these "Power Couple Families" has jumped to 0.8%, more than doubling, and is expected to increase further after 2025. These power couple families generally show strong consumption desire, and in daily life, they place more importance on "convenience and time-saving" as well as "food quality and safety."
The term "kaiwai" (meaning "circle") has become very popular among young people, especially the Z generation, in Japan, giving rise to many "kaiwai" consumption phenomena, i.e., "circle culture." Young newlywed families and mothers, changing from past social customs, like to entertain friends, close female friends, or peers at home, where they can more freely express shared values, and communication is warmer and freer.
Coupled with the "digital natives" who grew up with the internet, who search for information on various engines before shopping and constantly share experiences on SNS social media, consumer groups have fragmented and segmented. Under the guidance of new values and lifestyles, many new consumer groups and consumption cultures have emerged, beginning to overturn the long-held development ideas and practices of private brands.
Using values and lifestyles as a handle Launching new concept value-oriented PBs
Leading companies such as Aeon, LIFE, and YAOKO have begun to adjust their development thinking in PB product development, abandoning the previous product development based on demographic data such as age, gender, annual income, and family composition, and shifting to emphasizing "values" and "lifestyles." In PB product development, they no longer focus on consumers' "purchase barriers" but instead work on building "mechanisms to eliminate purchase barriers."
Aeon, targeting consumers who dislike foods with various additives and flavor enhancers, and who do not want to increase the burden on the social environment for consumables such as detergents, has adopted a subtraction mindset, adding new concept PB products "free from" series to the "TOPVALU" and "TOPVALU GreenEye" series. In the "TOPVALU GreenEye" food series, the original 62 "no-additive contents" and "raw material ingredients" have been expanded to 109. Among them, the famous zero-saturated-fat bread "Pain de Mie" is a successful case of subtraction thinking, and this bread has become a star product in the staple bread category, often selling out.
The image shows the "free from" zero-saturated-fat bread "Pain de Mie" from "TOPVALU," with the packaging stating that "Pain de Mie" has three major features: "zero saturated fat," "lactic acid bacteria fermentation," and "the simple flavor of wheat." Source: Provided by the author.
The image shows chicken breast from the TOPVALU GreenEye series, raised without various antibiotics. Source: Provided by the author.
Frozen food will be an uncultivated new PB field. With advances in freezing technology and packaging materials, frozen foods can be made without or with fewer additives, are suitable for long-term storage, and have almost no food loss, offering high efficiency and cost-performance. It has become a new development hotspot for Japanese chain supermarkets.
Aeon, targeting new consumer groups and circle culture groups, in addition to the subtraction mindset, has also launched addition mindset and various "problem-solving" PB products, such as the newly launched "nutritionally balanced meal rich in 33 nutrients" and "Minna no Okazu" (home-style side dishes) new frozen food series.
The image shows the frozen rice bowl topping from the TOPVALU series rich in "33 nutrients." Source: Provided by the author.
Image source: Provided by the author.
The image above shows the "Broccoli and Green Bean Sesame Flavored Salad" from the newly launched TOPVALU frozen series "Home-style Dishes - Signature Item Cuisine." Note the four separate compartment photos printed in the center left of the packaging, with a slogan suggesting consumers can "break off as much as you want, eat as much as you want." This salad, in Japanese dietary habits, is often served as a side dish (okazu) alongside the main dish, with various eating scenarios: served with the main dish, added to bento boxes, or eaten alone.
Therefore, when developing this product, Aeon specifically designed this partitioned independent packaging to cater to consumers' eating habits and segmented usage scenarios, not only meeting different scenario needs but also alleviating concerns about storage after "not finishing" or "not using up."
In an era where "good taste is a given," the thinking of Japanese mainstream supermarket PB development has diversified, even considering the visual impact of packaging design elements such as sizzle effects and catchphrases on consumers. New marketing concepts such as "Sensory Marketing" and "Neuro Marketing" have been applied to PB development.
Targeting the consumption needs of young Z-generation families who currently follow the "Coron Cancel Kaiwai" (circle of not using gas stoves), especially during the sweltering summer when people are reluctant to cook, and addressing the various "troubles," "time-consuming," and "labor-intensive" issues, they have launched "stir-fry-free microwave Chinese sauce packs" TOPVALU series products, where you pour the sauce pack over prepared ingredients and microwave for 3 minutes to enjoy a delicious meal.
The image shows the stir-fry-free microwave-compatible sauce pack (for mapo tofu). Source: Provided by the author.
The packaging shows three steps: 1. Cut ingredients, 2. Open the sauce pack, 3. Microwave for 3 minutes and it's done. The top left corner has slogans like "New discovery in life, so convenient!" and "Tastes like stir-fried, simple and no mess."
The image shows Aeon's high-value-added PB "TOPVALU HOMECOODRY" series for daily miscellaneous goods, which, in addition to emphasizing functionality, also values emotional value such as color coordination. Source: Provided by the author.
The image shows the organic food PB "BIO-RAL" section of leading food supermarket LIFE. Source: Provided by the author.
LIFE is accelerating the development of high-value-added PB products such as health and organic foods, leveraging the high recognition and popularity of the "BIO-RAL" brand among urban consumers, and has begun to enter the casual apparel field, commercializing the PB business.
Accelerating the SPA manufacturing retail process, building a new product power system based on "PB+SPA."
The SPA manufacturing retail model was originally invented by casual apparel brand GAP in the early 1970s and later popularized by fast fashion companies like ZARA and Uniqlo. As the English acronym suggests: Specialty store retailer of Private label Apparel, it is a business model where the retailer (Store) takes the lead, controlling quality, cost, profit, and delivery time from the product planning stage through raw materials, manufacturing, processing, logistics, and sales, "end-to-end" across the entire supply chain.
Since products are fully designed by the retailer based on their own product sales strategy and customer characteristics, and from raw material selection, each stage is chosen and controlled for optimal quality and low cost (planned and mass-produced) and low expenses, products manufactured under the SPA model often achieve high quality at low prices with high turnover, and are more differentiated and unique. Especially in an era when PB products are becoming homogeneous, promoting the SPA model in private brand development is an effective means for companies to take control of products, escape homogeneous competition, and increase operating profits.
Mainstream supermarkets such as Aeon, YAOKO, YORKBENIMARU, discount supermarket LOPIA, and business supermarkets are all accelerating the SPA process of their PB products.
1. The business format characteristics of Japanese chain supermarkets lay the technical foundation and guarantee for advancing the SPA route
Japanese chain supermarkets generally have natural advantages and foundations for developing SPA. The growth of Japanese chain supermarkets has always been accompanied by continuous learning, research, and reference to American chain supermarket basic theories and development models, combined with local consumption habits and characteristics, continuously improving, optimizing, and innovating, resulting in today's Japanese-style supermarket business format and characteristics. For example, Japanese retailers have insisted from the beginning on not using Chinese characters for "Super Market" but using Japanese kana "スーパーマーケット" (supermarket), always first copying the American model and theory faithfully, then making local (Japanized) improvements.
Japanese retailers firmly believe that for this new business model of chain supermarkets, it is necessary to use entirely new theories (including specialized vocabulary) to guide practice. Simply using existing Chinese characters to name it is indeed simple, but it is easy to misinterpret due to "tunnel vision." Therefore, since the 1960s, they have spent heavily on flying to the United States for study tours, thoroughly understanding and researching the true practice of this unfamiliar new species and business theory. Many supermarket terms and proper nouns are directly used in English with Japanese kana annotations.
In hindsight, this "foolish" persistence and adherence to a theory-oriented orthodox route by Japanese retailers has indeed helped Japanese supermarkets avoid many detours.
The processing of in-store fresh food is a successful case of adhering to theory-led practice and promoting local improvement. In addition to foolishly adhering to the self-service sales route centered on manufacturer-processed groceries, Japanese retailers, targeting Japanese consumer habits and characteristics, integrated the traditional concept of various "trade stores" such as livestock, seafood, fruit and vegetable, and deli stores, technically incorporating them into the supermarket's fresh food department, Japanese-style daily products department, and in-store prepared food department, forming a unique Japanese food supermarket business format.
That is, a supermarket department and sales floor combination led by the three fresh food departments of livestock, seafood, and fruit and vegetables, plus in-store prepared food. In the management of the three fresh food departments, they have always adhered to the two-legged approach of combining in-store processing and out-store processing, with the support of upstream suppliers, wholesale companies, and trading companies, continuously making various commercialization processing attempts and innovations for different cooking uses of fresh ingredients and the purchasing habits, characteristics, and consumption scenarios of customers in their own chain store trade areas, continuously optimizing fresh food processing technology.
The long-term persistence of Japanese chain supermarkets has not only strengthened their risk resistance but, crucially, has accumulated a large amount of technical strength and technical talent. These technical reserves have laid the technical foundation and guarantee for the subsequent promotion of the SPA manufacturing retail route.
2. Using 4R as a handle is the successful path for Japanese chain supermarkets to SPA-ize
Sorting out home dining life, we find the following inconveniences, confusions, or troubles (issues):
- The trouble of "having to think about what to cook for dinner every day";
- The inconvenience and trouble of "purchasing ingredients";
- The trouble and annoyance of "having to prepare various dishes in advance, such as marinating";
- The trouble and annoyance of "various cooking methods like stewing, boiling, frying, and grilling";
- The various troubles and annoyances of "cleaning up after meals"...
The above 1 can be easily solved through Xiaohongshu, search engines, or short videos; 2 can also be solved through online shopping or instant delivery. The focus is on 3 (pre-processing, etc.), 4 (specific cooking process troubles and inconveniences), and 5 (post-meal cleanup).
The above is compiled by the author based on the presentation by Willard Bishop Consulting Ltd at the 1996 FMI (Food Marketing Institute) annual meeting in the United States.
In 1996, at the FMI Food Marketing annual meeting in the United States, regarding the above inconveniences and problems in home dining life, Willard Bishop Consulting proposed MS (Meal Solution) "dining solutions," which means by increasing the degree of processing of fresh ingredients, supermarkets can switch from simply "selling ingredients" to "providing meal solutions," solving the troubles and problems of home dining through four methods, namely the famous 4R concept.
- RTP (Ready to Prepare): Prepare all ingredients needed for a recipe in advance.
- RTC (Ready to Cook): Ingredients are seasoned and prepared, ready to cook.
- RTH (Ready to Heat): Only needs heating to eat.
- RTE (Ready to Eat): Can be eaten directly immediately.
Inspired by the MS and 4R concepts, Japanese chain supermarkets began to promote the 4R-ization of fresh ingredients from the late 1990s to the early 2000s, while increasing investment in back-end food processing centers (PC: Processing Center) and central kitchens (CK: Center Kitchen), integrating processing centers and central kitchens, and using in-store deli processing rooms as satellite kitchens (SK). With the support of the upstream supply chain, they opened up the entire chain of deli manufacturing, first implementing and promoting the SPA manufacturing retail model in their own deli manufacturing field.
The widespread application of SPA in supermarkets has not only increased the operational efficiency of in-store satellite kitchens, stabilized quality, and improved safety, but also increased the "wok gas" of in-store processed products, enhancing consumer experience and satisfaction, and driving up purchase items, average transaction value, and repurchase rates.
Currently, Japanese food supermarkets are accelerating the SPA-ization of RTE deli foods, and are gradually strengthening and expanding the SPA-ization of RTH microwave foods (including frozen foods) and fresh ingredients in RTP. RTP of fresh ingredients is an important measure for Japanese supermarkets to deeply process fresh ingredients, providing consumers with convenience and ease, saving cooking time, reducing troubles (enhancing experience = happiness index), increasing the depth of fresh ingredient assortment in stores, and improving the overall profitability of chain supermarkets.
The image above shows the "shabu-shabu" themed display section in the livestock department of YAOKO supermarket. Based on usage and scenarios, different SKU combinations of shabu-shabu meat are prepared, while also incorporating NB products used with shabu-shabu. Their own SPA products and manufacturer seasonings, especially well-known old-brand products, are displayed together, making it convenient for consumers to buy everything at once, creating a "strong magnet" sales floor that influences purposeful purchases. Source: Provided by the author.
The image shows TOPVALU's RTP product, deep-processed vegetables, ready to eat after pouring sauce. Source: Provided by the author.
The image shows the SPA-type RTE ready-to-eat series "SALAD" potato egg salad processed by Aeon's central kitchen. Source: Provided by the author.
The image shows the SPA-type RTH ready-to-heat series "with mon DELICA" teriyaki chicken skewers processed by 7&i's central kitchen. Source: Provided by the author.
3. Building a new product power system based on "PB+SPA," linked and supported with NB
Japanese manufacturers, wholesalers, and trading companies have long been driving the development of the Japanese retail industry. Manufacturers, wholesalers, and trading companies have long formed a close relationship with retail. The development of Japanese chain supermarkets cannot be separated from the support and contributions of these upstream enterprise clusters. To this day, in the development of private brands, they still maintain strong ties and high dependence on manufacturers (NB).
Using PB+SPA as a foundation, linking and supporting manufacturer NB, and based on this, exploring the construction of a new product power system can be said to be the basic consensus and development direction of Japanese mainstream chain supermarkets in private brand development.
The image shows a conceptual diagram of the NB-dependent and SPA-dependent states of major chain supermarkets. Source: Provided by the author.
From the diagram, it can be seen that Uniqlo and MUJI are SPA-type (PB rate 100%), Aldi is also SPA-type (PB rate 90%), and most Japanese chain supermarkets are still NB-dependent while promoting the SPA route with the support of upstream manufacturers, such as the well-known "Business Supermarket," "LOPIA," and "YAOKO." Business Supermarket is special because its business format is defined as a "life support auxiliary existence," which is essentially different from Aldi as a community food supermarket.
Worth noting is the trend of YAOKO, the leader in suburban food supermarkets. At the strategic briefing in March this year, YAOKO proposed to continue integrating and strengthening the PB product system, "strengthening fresh food," and increasing the development of SPA as a new policy.
The image shows the current status of YAOKO's private brand products and SPA products (custom specification products) (data from YAOKO official website).
YAOKO's "Deli/Fresh Food Processing Center" SPA-type products continue to grow (data from YAOKO official website).
The image shows the "sauce theme display" end cap in YAOKO's basic seasonings section. Source: Provided by the author.
From the diagram, it can be seen that by shifting from simply providing "single items" (Food) to providing "meal (Meal) scenarios," and according to Japanese dining habits, in product assortment, they highlight "main sauces used" and "toppings used simultaneously," as well as PB products with "non-daily attributes," organically combining low-price PB (star) and high-value PB (gold "YES!Premium") with high-recognition manufacturer NB products, forming a new concept product power combination where PB pulls NB, and NB and PB support each other. Such combinations have become the basic form of sales floor displays in mainstream chain supermarkets.
The image shows the YAOKO high-value-added PB gold label "Yes!Premium" products displayed on the above end cap themed display. Source: Provided by the author.
The image shows the in-store deli section of food chain supermarket Belc, with in-store prepared SPA products as the main focus and NB as a supplement. Source: Provided by the author.
This display form has also become the basic form of deli sections in Japanese mainstream chain supermarkets.
Competition among merchants is mostly reflected in product competition. The only way to escape product homogenization is to take the private brand route, building a new product power combination with PB as the handle, SPA as support, and then driving NB. This is the powerful weapon and the path for chain supermarkets to break through. Currently, domestic mainstream chain enterprises are setting off a new wave of development around private brands, which is a sign of the domestic retail industry escaping difficulties and moving toward maturity.
Japanese chain supermarkets have taken detours in private brand development. In the past, they unilaterally emphasized low prices in the PB development route, causing PB to become synonymous with cheap versions of NB products. The retail industry once ignored quality and simply emphasized price priority, which once made Japanese consumers doubt PB products, even losing confidence and trust in PB products, causing PB products to be lukewarm for a long time, becoming a dowry and appendage of NB.
From the development experience and lessons of Japanese companies, I feel there are four inspirations for domestic enterprises to develop PB.
Inspiration 1 - Consolidate the foundation and prerequisites for developing private brands
To develop PB products, first consolidate the basic conditions, especially clarify the company's business policy and philosophy, and formulate its own product strategy (MD: Merchandising) and sales strategy. At the product strategy level, especially design and build its own "product classification system." Product classification is not only a basic element of product strategy but also an important prerequisite for private brand development. The classification method of Japanese chain supermarkets, i.e., the "five-level classification method" designed according to the "use" of products, is worth referencing.
For example: Large classification (department: processed food), medium classification (product group: seasonings), small classification (category: low-salt soy sauce...), variety (use characteristics & item: MSG low-salt soy sauce, table MSG low-salt soy sauce...), single item (SKU: Kikkoman standard low-salt MSG soy sauce 1L, PB low-salt MSG soy sauce 1L, old-brand low-salt MSG soy sauce 1L...).
Unfortunately, most domestic enterprises still use the manufacturing industry classification standard (product attribute classification). Unclear classification will cause PB development to lose its foundation and go astray.
Inspiration 2 - Pay attention to POS and PI data, grasp psychological pricing, and make PB the "first thought" product for consumers
After having a clear product classification, refer to POS and PI data to decide the entry point for your PB: which "small classification" (category) to start from, which "variety" to cut into, which "use" (item) to take the price route, and which SKU to launch the value route (differentiating from NB), building a PB product portfolio. While attracting traffic, try to increase profitability.
Additionally, grasp and control the consumer's "psychological expected price point" (Price Point) for PB products, making PB products the star products in that small classification and variety and representative products occupying consumer mindshare, thereby becoming the "first thought" object for consumers in that category. For example, when people "mention" Pangdonglai, they naturally "first think" of Pangdonglai's "Jiugui Ziyouai" (white liquor) and the famous "DL mooncake."
- PI value (Purchase Incidence): PI = (total sales quantity of a product ÷ total store transactions) × 1000. For example, if a product sells 1,200 units in a week and the store has 10,000 transactions in the same period, PI = 0.12. POS data determines the sales scale and contribution ratio of that product; PI value determines the repurchase rate and trade area penetration rate. PI and POS are important reference indicators (including Price Point) that cannot be ignored in PB product development.
Inspiration 3 - Use 4R as a handle, try deep processing of fresh food, and explore accumulating SPA experience
For chain supermarkets, fresh ingredients are the starting point, not the end point. Fresh ingredients should revolve around consumers' "stove" and "dining table," providing "ingredients plus," and promoting the "re-commercialization" of fresh ingredients across departments and categories. The path of combining ingredients and deep processing of ingredients is the future direction for fresh food. This not only increases average transaction value but also boosts corporate profitability. If you only sell ingredients, it is difficult to achieve success and even harder to satisfy and bring new value experiences to consumers.
Domestic mainstream supermarkets have begun to introduce cut meat and chilled meat pre-packaged products in livestock product operations. Cut meat is just the starting point; it is necessary to continue productized deep processing according to different cooking uses and segmented scenarios, following the above five-level classification method, and try to explore and promote SPA, including RTP (Ready to Prepare), RTC (Ready to Cook), and RTH frozen foods and microwave foods.
Especially in-store RTE ready-to-eat deli processing, through the opportunity to develop and introduce high-popularity new foods such as Japanese, Korean, and Thai flavors, with the support of upstream enterprises, strive to connect upstream and downstream, build an "end-to-end" deli production system, stabilize quality and operational efficiency, and make PB products truly "what others don't have, I have; what others have, I have more; what others have more, I have better."
The reason Pangdonglai's products are welcomed by consumers is a perfect display of taking the SPA route. SPA can not only achieve product differentiation but is also an effective means to escape "price competition" and achieve "Only One."
Inspiration 4 - Build strategic cooperative relationships with upstream enterprises, leverage development in PB products and SPA, accumulate energy, and cultivate talent
Japanese chain supermarkets have had the presence of manufacturers, wholesalers, and trading companies since their birth. Upstream enterprises have always provided great support to chain supermarkets in resources, talent, technical strength, information, and even funds, especially in PB product development and promoting the SPA manufacturing retail development route, and this continues today.
There are many excellent food processing enterprises and groups in China, such as CP Group, which not only has meat, egg, poultry, aquatic, fruit, and vegetable breeding bases but also many food processing enterprises across the country. CP covers almost all fresh food fields, especially the antibiotic-free series products developed in recent years, which are very popular among consumers and have high popularity. There is also Zhejiang Blue Snow Food, which has strong productized deep processing strength, capability, and reputation in the chilled aquatic products field.
I hope domestic chain supermarkets can join hands with these upstream enterprises, establish strategic alliances with manufacturers, leverage development in PB products and SPA, accumulate energy, and cultivate talent to make up for the common lack of food processing technology and talent in domestic chain supermarkets.
Final Thoughts
"A small ball from point A to point B, a straight line is not the fastest; a cycloid is the fastest. The cycloid reaches the destination faster than a straight line because it has better acceleration." This is the famous quantum mechanics "Feynman curve theory."
The acceleration of the cycloid is to find the right learning method, master the theory and method, and then in the process of running to the destination, "release energy at high speed" and quickly reach the destination.
Can PB become the "high-speed energy release" acceleration factor for enterprises to build new product power? In fact, what is more needed is for domestic retail enterprises to find their own coordinate system and positioning origin, reshape and consolidate the trust relationship with consumers, and win consumer trust and support. Perhaps this is the most important acceleration factor for private brand development.