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Trial Holdings: Navigating Japan's digital transformation challenges and revolutionizing retail with smart store technology

Interview - January 26, 2024

The interview discusses Smart Store Technology, the world's most-used smart cart system, and its impact on the retail landscape. The technology optimizes product placements and store management through data analytics. The company aims to extend its use domestically before considering global expansion. It also explores collaborations and strategies to enhance the retail industry. Finally, the interview highlights the company's commitment to addressing Japan's economic challenges through diversification in real estate, logistics, agriculture, and health sectors, with a focus on preserving food culture and supporting global markets.


Japan has faced criticism for its relatively slow adoption of digital tools, ranking 29th in this year's IMD digital competitiveness ranking. The former Suga Administration initiated the digital agency while incentivizing private industries to enhance IoT and card-based solutions adoption. Why do you believe Japan has been slow in embracing digital technologies, and how would you rate the country's current overall adoption of digital tools?

The primary reason for Japan's delayed adoption of DX is its success with analog methods. Following World War II, Japan's economy experienced substantial growth, leading to an impressive industrial revolution from the 1950s to the 1990s. During this period, the appreciation of the yen supported the survival of many SMEs amid global turbulence, reducing the immediate need for digitalization.

When the yen was at its peak, businesses rode that momentum to thrive. However, the landscape shifted drastically due to the COVID-19 pandemic in 2020. It compelled us to adapt to remote work practices and, coupled with the yen's depreciation, necessitated significant changes in our approach.

Previously, our economy relied on robust individual companies acting as pillars. However, in today's landscape, fostering a well-integrated ecosystem and fostering collaborative networks among companies have taken precedence. This becomes particularly critical in the face of the digital revolution, the shift from the internet to mobile communications, and the emergence of AI. Establishing a closely connected network where companies consistently collaborate within an ecosystem is our goal, notably through our JBP initiative—the Musubu project. We aim to cultivate and nurture these interconnected ecosystems right here in Japan.


Your Smart Store Technology, developed through your subsidiary Retail AI, is heavily reliant on AI. Beyond individual AI systems for each retail store, Skip Cart stands out as the backbone of your smart core technology and is recognized as the world's most used smart cart system. Could you delve deeper into how you perceive the transformative impact of the Smart Store Technology you've developed on the retail landscape? Additionally, what do you envision as the next evolutionary step for this technology?

This narrative ties back to our company's growth and aligns with the essence of Skip Cart. Skip Cart operates through technology that collects crucial data, aiding retail stores in optimizing product placements and enhancing overall business management for increased revenue. Japan's retail surge occurred in the 2000s, following a trend established in the '60s with the proliferation of chain stores during the Industrial Revolution's standardization phase. Mass production dominated, emphasizing standardized approaches to reach consumers efficiently.

This pattern shifted in the 2000s when certain stores occupied excessive space, resulting in inefficiency. Our venture into real estate exposed opportunities for greater efficiency in smaller store formats. This sparked a trend toward diversified storefront sizes and retail layouts. More recently, we acquired a small store chain, Satocho.

Since our inception, our company has been centered on IT-driven, data-centric marketing solutions for our clients. We excel in aligning product positioning uniformly within stores of similar sizes. However, with varying store dimensions, our strength lies in implementing tailored data-driven marketing strategies to optimize each store's management. This involves precise and personalized data analytics to strategically position products and efficiently manage diverse store layouts.


In May of this year, the third Smart Store opened in Kagoshima Prefecture with 120 Skip Carts. This brings the total number of Skip cart in operation to approximately 15,000, the largest in the world. The store leverages pertinent data to yield further advancements and revolutionize the retail market. Could you provide more details about the inception of this smart store and highlight some key data points utilized to enhance the solutions you offer for retail?

The Kajiki store is the third Smart Store in Kagoshima Prefecture. Presently, our Skip Cart technology has been integrated into around 202 stores across the country, with a total of 19,000 operational units. Data contribution varies based on the maker's priorities and the specific values each client holds. Previously, data was aggregated from the entire shopping cart. Now, we're able to track the sequence in which customers place items into their carts.

This aids in comprehending our clients' decision-making patterns and establishing their clustering and profiles. By assessing the contents and sequence of items added to the cart, we gain insight into their priorities and interests. Often, the initial purchase choice reveals significant insights into their buying preferences, providing detailed information to understand the purchaser better. The ultimate goal is to increase the amount of customers coming to the store.


This groundbreaking technology is reshaping the shopping experience by tracking data and offering tailored recommendations. With Retail AI, a subsidiary focused on suggesting purchases based on consumer habits, are you considering exporting or licensing this technology overseas, particularly given the consistency of the global retail market?

No decisions have been finalized regarding exporting or licensing overseas. Our current focus remains on perfecting and enhancing the smart store technology, including Skip Cart, within our existing Trial Company stores. By optimizing its value and functionality, we aim to extend its use to other retail stores in the domestic market, catering to their diverse business requirements. Once we establish a strong foothold domestically, we'll consider exploring opportunities for overseas expansion. The retail industry is a consistently stable global market, and while it's in our future plans, we're taking a measured approach rather than rushing into the global arena.


Focusing on perfecting this technology in the domestic market before its global rollout is a clear R&D vision for Skip Cart. In terms of your R&D efforts, are there any specific products or technologies you're currently developing that you'd like to highlight for our international readers?

I'm unable to share details at this moment as our work involves collaborations with leading IT companies in Japan. We're currently in a trial phase and haven't finalized any decisions yet. My apologies for not being able to provide more information about this.


Collaborating with major IT firms like the JBP programs seems to be a significant aspect of your business strategy. Could you elaborate on the role of international collaborations in your operations? Additionally, are you actively seeking partnerships with other international companies at present?

At present, we aren't engaged in any concrete collaborations and aren't actively seeking partnerships overseas. However, next year, we'll be setting up a booth at NRF (National Retail Federation) in January to exhibit our company and showcase our products. Additionally, while we have communication channels with retail IT companies in China, we're not pursuing these connections aggressively at the moment.


During our interview with SoftBank, they highlighted their service robot, Pepper. Initially, there was an expectation that robotics would revolutionize the hospitality and retail sectors, potentially replacing many jobs. However, while Pepper gained significant attention as a marketing success, its commercial success fell short of expectations with only 3,000 units sold. As a company deeply immersed in retail IT, what do you believe contributed to the lackluster adoption of these service robots?

While we identify as an IT-based company, our primary focus isn't solely on cutting-edge technologies. Instead, we leverage IT and related technologies to thoroughly understand our clients' needs and address their challenges. This approach enables us to develop more efficient management strategies and business operations tailored to their requirements. For instance, the significant advantage of Skip Cart lies in its ability to eliminate the necessity for numerous cash registers. Cashiers, the focal point for payments, often present challenges and discomfort for both customers and staff. These issues, including privacy concerns and lengthy payment queues, have been effectively addressed through Skip Cart, contributing to its success.


Trial Holdings comprises a diverse ecosystem encompassing various companies such as Retail AI, Meijiya, Trial Real Estate, and Trial Development. Can you elaborate on the synergies created among these group members? Additionally, do you have plans to further expand your group?

Our group is dedicated to collective support and contribution, with a strong focus on enhancing our clients' overall experiences. This commitment involves improving their work quality and experiences through our products. In terms of the supply chain, our goal is to optimize its structure, ultimately reducing costs and boosting sales. Additionally, we aim to merge digital technologies with physical spaces, reimagining the value of these spaces. While some believe that the value of showrooms and physical storefronts may decline with the growth of e-commerce, we hold a different view. We see tremendous value in these physical spaces and believe in redefining their significance. By revolutionizing how physical spaces are perceived in Japan, we hope to convey a powerful message and significantly impact the global retail market.

We're prioritizing food experiences, emphasizing enhancements in dining quality and consumer engagement with culinary offerings. This focus aligns with our resort and real estate business, particularly in regions like Kyushu. Here, we leverage the richness of local cuisine, captivating scenery, and various other elements to enrich the overall experience.


Establishing operations in Yantai, China in 2003, as well as your operations with Trial Korea have marked significant expansions for your company. Looking ahead, have you identified specific countries or regions for potential future expansion? Moreover, what strategies do you plan to employ to achieve these expansion goals?

Our approach to technology aligns with our commitment to delivering optimal solutions to clients. We don't prioritize adopting the latest tech or global expansion for its own sake. Rather, we leverage our extensive global network and resources to cater to our clients' needs effectively. At Trial Holdings, our primary goal is to contribute to global prosperity, transcending borders. Technology serves as a tool to enhance lives, empowering individuals to harness digital advancements and IT to their advantage.

We expanded globally to Yantai for offshore development, specifically to recruit IT and system software engineers. Our aim was to revolutionize the retail industry, and the development of Retail AI required skilled engineers. In Japan, the retail market traditionally focuses on selling items like fish or vegetables, creating a mental barrier around the idea of involving IT software engineers in this industry. To overcome this challenge, we sought offshore development opportunities in China, where we found highly talented system engineers. Our global expansion serves as a means to acquire these resources, ultimately enhancing our ability to provide effective solutions for our clients.


As your holding structure approaches its 15th anniversary in 2030, if we were to return for another interview on that date, do you have any specific goals or personal ambitions for the business that you aim to achieve by then?

In 2030, our company will be expanding its current focus to address challenges in the Japanese economy arising from demographic shifts and population decline. Key industries, such as construction, logistics, and food (including agriculture and livestock fisheries), are grappling with a lack of labor. To support and safeguard Japan's vulnerable sectors, we have diversified our business activities. Our group companies are involved in real estate to counter rising construction costs, which pose a significant threat to the construction industry. Additionally, we address logistics challenges through our involvement with. Thirdly, we are actively engaged in preserving Japan's food culture by addressing the impact of demographic decline and labor shortages on the livestock, agriculture, and fisheries sectors. Enhancing the ecosystem for supply chain and manufacturing in this industry is a crucial focus, leading us to operate trial and contract farms as part of our business ventures.

The expansion focuses on safeguarding the dining and culinary experiences, particularly within the food and beverage sector, and restaurants. Given that dining out has become a luxury that's increasingly challenging to access, we've established Meijiya and the Michelin-starred restaurant, Sokatei. These ventures aim to provide broader access to top-tier culinary delights by enhancing food processing through advanced machinery for high-quality mass production. Our goal is to preserve Japan's entire spectrum of food culture and industries, spanning from upstream to downstream. Additionally, we're planning to venture into the health and beauty sector, an extension of our commitment to people's health. We aim to establish an efficient supply chain network to meet these needs. Our global initiatives align with our domestic efforts, aimed at supporting the global market with the expertise and solutions we've developed domestically.