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Zhu Wenqian

Japanese retailers are scaling back in north China as fierce competition and weak pricing power erode profitability, forcing store closures in major cities and prompting calls for a sharper localisation strategy.
Groups such as Aeon and Ito-Yokado have closed outlets in Chinese cities in recent years, highlighting mounting pressure from domestic rivals and shifting consumer habits in the region.
Aeon said it closed three supermarkets in Tianjin and one in neighbouring Hebei province after March 23. The move leaves the group with just one store in Tianjin, after it exited Beijing last year with the closure of its final outlet in the capital.
“Deflation and intense competition are weighing on the profitability of Japanese retailers in north China and coastal regions,” said Kei Ishikawa, associate director at S&P Global Ratings. “Performance tends to be stronger in south China and inland areas, where competition is less intense.”

He added that while food sales remained relatively resilient, apparel and other non-food segments are under pressure, facing stiff competition from fast-fashion players such as Uniqlo.
Analysts said Japanese retailers must adapt more quickly to China’s evolving retail landscape, particularly by expanding “instant retail” services – rapid, on-demand delivery that has become a key battleground among local players.
Aeon has already rolled out fast-delivery options in parts of China, including three-kilometre delivery services in some markets.
At the same time, local competitors are moving to capture vacated space. Beijing-based Wumart said it would take over Aeon’s former sites in core residential areas and upgrade them with artificial intelligence-powered retail solutions.
Despite facing operational headwinds in north China, Aeon is continuing to expand elsewhere.
The company plans to open 23 new stores this year across Hong Kong and the southern and central provinces of Guangdong, Hubei and Hunan, with formats tailored to local consumption patterns. Its Hong Kong supermarket business, however, has remained loss-making in recent years.
To stay competitive, Japanese retailers are being urged to lean into their strengths, including differentiated Japanese food offerings, private-label development and more experience-driven formats.
“Consumers in China are placing greater emphasis on experiences and services, rather than retail alone,” Ishikawa said, pointing to Aeon Mall’s increased focus on dining and entertainment.

Fu Yifu, a researcher at Su Merchants Bank, said demand for instant retail was particularly strong among younger consumers, making it a critical area for foreign players to localise their strategies.
Ito-Yokado, one of the earliest Japanese entrants to China – which opened its first mainland mall in Chengdu, Sichuan province in 1997, and its first in Beijing in 1998 – has also been steadily retreating.
After peaking at 11 stores in Beijing, the chain has reduced its presence to a single outlet, following a wave of closures since 2014.
Earlier this year, it sold a 90 per cent stake in its Beijing subsidiary to local firm Beijing Xinchen Supermarket Development, retaining a 10 per cent stake and brand licence while exiting direct operations, according to China’s business information platform Tianyancha.
The pullback comes as consumption patterns in China’s fast-moving consumer goods sector shift towards smaller, more frequent purchases – a trend driven by shrinking household sizes and a growing number of single consumers.
“Young singles are becoming more cautious in their spending,” said Rachel Lee, general manager of Worldpanel China. “And they’re placing greater emphasis on immediate enjoyment and convenience.”


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Japanese chains Aeon, Ito-Yokado retreat in north China as instant retail race heats up

Analysts say Japanese retailers must adapt more quickly to China’s evolving retail landscape. Photo: Shutterstock

While food sales have remained relatively resilient, apparel and other non-food segments are under pressure. Photo: Xinhua

Despite facing operational headwinds in north China, Aeon is continuing to expand elsewhere. Photo: Shutterstock

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Uniqlo’s store in City Plaza in Taikoo Shing on Hong Kong Island. Photo: Handout

Tomoyuki Ota, chief operating officer of Uniqlo Hong Kong and Macau. Photo: Handout

People pass Uniqlo’s branch at Mira Place in Tsim Sha Tsui, which is set to reopen in October. Photo: Sun Yeung

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The 3Coins outlet in Causeway Bay, expected to open by mid-July. Photo: Handout 

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Japan’s new Agriculture, Forestry and Fisheries Minister Shinjiro Koizumi visits the rice section at a supermarket in Tokyo on Friday. Photo: Kyodo

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Business

Store closures in Beijing and Tianjin highlight mounting pressure from domestic rivals amid shifting consumer habits


Store closures in Beijing and Tianjin highlight mounting pressure from domestic rivals amid shifting consumer habits.


Japanese chains Aeon, Ito-Yokado retreat in north China as instant retail race heats up

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Store closures in Beijing and Tianjin highlight mounting pressure from domestic rivals amid shifting consumer habits

Store closures in Beijing and Tianjin highlight mounting pressure from domestic rivals amid shifting consumer habits