Japan’s largest retailer AEON has plans to cut out the middle man and increase direct buying from food producers in order to cut costs.
Japanese supermarket operators usually purchase items via wholesale firms, with prices determined through negotiations between the two sides.
However, as an answer to surging food costs, Aeon said it will ramp up direct purchases from manufacturers fivefold to JPY500bn (US$4.8bn) in the next three years.
Surging grain and crude oil prices are hurting retailers by pushing up wholesale prices while also cutting into household disposable income.
“It is regrettable but it is difficult to increase prices because consumers’ disposable incomes are falling due to rising prices of fuel and other products, I hope our wholesalers will understand this,” a spokesperson for Aeon told just-food.
Aeon aims to slash costs by JPY30bn by raising direct purchases to 15% of total purchasing. These savings will be passed to consumers, the company said.
