Why M&A in the Food Supermarket Industry Is Difficult to Succeed

On October 1, 2025, major supermarket chain Blue Zone Holdings (formerly Yaoko) shocked the retail industry by announcing the acquisitions of Bunkado (Shinagawa, Tokyo) and Delight Holdings (Toyohashi, Aichi Prefecture; store name: Cook Mart).

Cook Mart is a highly dynamic local supermarket that has achieved 20 consecutive years of revenue growth under the management philosophy of "DELIGHT! (Enjoy, and make others enjoy!)."

In the food supermarket industry, the harsh business environment is expected to continue, characterized by intensifying competition, the persistence of consumer price-consciousness, and soaring labor and raw material costs. To address these challenges, industry consolidation through M&A is expected to accelerate further.

Blue Zone President Sumito Kawano himself has publicly stated regarding Cook Mart (Delight Holdings) that he wants to "learn how to build small, thriving stores." Yaoko has always valued "individual store management" and has a corporate culture that gives discretion to the front lines. The company has announced a policy of preserving Cook Mart's individuality even after the acquisition, seeking reverse importation of know-how and stimulation at the front-line level by having store managers and staff from both sides visit each other's stores.

Blue Zone seems to have been actively incorporating strengths it lacks from previous acquisitions such as "Avail." Utilizing Avail's know-how, it established and operates "Fucot," a new discount-format company centered in Saitama Prefecture. While the new "Fucot" format has posted a net loss (deficit) of approximately 1.8 billion yen and cannot yet be called a success, this interaction with Cook Mart, based on a stance of "learning together" rather than "teaching," is likely to boost the motivation of Cook Mart employees and generate synergy effects.

On the other hand, the Fushimiya Group, which had been acquiring struggling local supermarkets (such as Sanmari and Honma Bussan) one after another, transferred its business of 46 stores to major drugstore chain "Kusuri no Aoki," effectively withdrawing from the supermarket business. Until now, the Fushimiya Group was known as a champion of M&A, but in recent years, due to soaring raw material costs, rising utility expenses, and increased logistics costs, it has been proven that rebuilding local supermarkets is difficult through M&A that does not generate synergy effects.

Similarly, Daikoku Distribution Chain (now Tomioka Management) had long suffered from deteriorating profits due to rising labor costs and fierce price competition with rivals. It was acquired in a rescue deal by Takara MC of Shizuoka in 2019, but the group's total debt at the time amounted to approximately 5.5 billion yen, which continued to put pressure on management.

Ultimately, it was judged that a fundamental turnaround was difficult even under the Takara MC umbrella, and a de facto "redo of the M&A" was carried out. Daikoku Distribution Chain began special liquidation in 2020 for debt settlement. Between 2024 and 2025, some of its businesses were further transferred to Ozam Co., Ltd.

Thus, the case of Daikoku Distribution Chain can be said to be a typical example where, although a struggling company was taken over through M&A, the speed of "debt settlement" and "front-line profit improvement" could not keep up.

Through M&A, everyone expects: (1) reduction of management costs such as recruitment, training, and accounting; (2) reduction of back-office work through the integration of IT and logistics systems; and (3) profit improvement through the introduction of private brands.

However, when companies with different corporate philosophies and recruitment and training policies are forced to consolidate indirect operations, employees of the seller (the acquired company) become anxious, and their motivation drops. With the adoption of automated ordering, some employees may lose the fun and joy of the individual store philosophy of buying and selling for themselves. Many employees also rebel and lose motivation when a chain-store style of "just do what you're told" is forced upon them.

The key to successful M&A in food supermarkets lies in boosting the motivation of the seller's (acquired company's) employees rather than short-term efficiency.

Synergy is not just about efficiency; it is about the reverse importation of know-how and stimulation at the front-line level. It is the worst case for the buyer (acquiring company) to be arrogant and colonize the seller (acquired company) like an occupying army. Respecting each other's individuality and positions, acknowledging differences, and humbly learning from each other—that is what provides stimulation, and by working on new attempts day and night, asking "Is there anything we can do?" or "Is there anything we can imitate?", motivation is heightened.