Last update: May 28, 2021
The Company strives to appropriately manage various risks related to business continuity in order to maintain and advance the Group in perpetuity while ensuring sound management and business efficiency. Among the risks identified through these efforts, those that may have a significant influence on the decisions of investors—based on the likelihood of the risk materializing, the timing of the risk, and the degree of impact—are described below. However, these do not cover all risks related to the Group; there are risks other than those listed that are difficult to foresee. Also, these risks are not independent of each other, and certain events may lead to an increase in various other risks. This section includes forward-looking statements and future expectations of the Group as of the submission date of the Group’s Securities Report.
Under the Group’s risk management process, risks to be managed are divided into four major categories: governance risk, operational risk, B/S risk, and business risk. For the purpose of disclosing information that helps investors make decisions, the Group’s Securities Report classifies risk into strategic risk and operational risk, each of which is defined as follows.
Strategic risks: Risks that may affect business strategies significantly, including risks that the Group dares to take within an affordable range in consideration of the degree to which results achieved by planning and executing business strategies are above or below expectations, as well as the possibility of such occurrence.
Operational risks: Risks that should be avoided or reduced in consideration of the potential for losses arising from operations that support the execution of strategies, as well as the possibility of such occurrence.
The Company and its operating companies have established a Risk Management Committee, with the departments that oversee the overall risk management of the respective companies as the secretariat. As a general rule, the Risk Management Committee meets once every six months to receive reports on the risk management status of the respective companies from the departments responsible for the management of risks, to comprehensively determine, assess, and analyse risks and discuss measures, and to determine the future direction going forward.
Meanwhile, with regard to individual risks, Group policies related to such risks, initiatives to mitigate risks undertaken by each company, and various internal and external examples illustrating signs of materializing risks, etc., are shared through a group-wide meeting body, etc., headed by the Company’s departments responsible for the management of risks.
The Group conducts risk management through the comprehensive identification and quantification of risks based on the shared Group risk assessment sheets, “risk assessment and proposal of improvement measures,” “prioritization of risks,” and “improvement activities and monitoring.”
In addition, the Auditing Office of each company verifies whether risk management is being conducted effectively, from an independent perspective, through periodic internal audits of the departments in charge of overall risk management and the departments responsible for the management of risks of the respective companies, and provides each department with the necessary advice for improving risk management, as required.
The Group has defined five business strategies.
(1) Business Strategy of Overseas convenience store operations
(2) Business Strategy of Domestic convenience store operations
(3) Group food strategy
(4) Large-scale commercial base strategy
(5) Digital transformation (DX) and Financial Strategy
For each of the risks listed below, the relevant strategies are indicated by numbers ranging from (1) to (5).
[Product procurement and price fluctuation risks]To effectively conduct its business activities, it is essential for the Group to procure products and raw materials of sufficiently good quality in a timely manner. The Group is diversifying its procurement sources to prevent excessive dependence on specific regions, business partners, products, technologies, and the like. In particular, temperature increases, changing weather patterns, and other aspects of climate change may lead to unexpected changes in agricultural product cultivation areas and fishing grounds over the medium and long terms. In response, the Group emphasizes decentralized procurement and collaborates with primary producers to improve yields. However, any breakdown of purchasing channels stemming from temperature increases, changing weather patterns, and other aspects of climate change may affect the Group’s business performance.
[Business model risk]The Group conducts its main businesses in Japan and also operates around the world. As a result, any deterioration in economic conditions in Japan and other regions where the Group does business, or in personal consumption trends and the like, may lead to a decline in customers’ purchasing power and/or consumer confidence, which could affect the Group’s operating results. The Group is also strengthening its development and lineup of products with an emphasis on regional characteristics. We also develop products through team merchandising in cooperation with manufacturers and vendors in various fields based on sales strategies designed to accurately address customer needs. In addition, we collect and analyse various data related to purchases made by customers who have registered for the Group’s common 7iD platform through our operating companies’ respective software apps, and we use this data to enhance the effectiveness of our sales promotion activities.
[Store opening/closure risk]The Group’s opening of stores is subject to various laws and regulations, such as the Large-Scale Retail Stores Location Law, the City Planning Law, and the Building Standards Law. When opening new stores, therefore, our Group companies gather information on relevant laws and regulations, market potential, and store location candidates. However, in the event that those laws are amended or local authorities change related regulations, it may become difficult to open stores in accordance with initially prepared store-opening plans or remodel existing stores. Also, there may be a decline in potential candidate locations for future store openings, and costs related to legal or regulatory compliance may be incurred. Any of these events may affect the Group’s operating results and financial position.