Small appliance retail chains sinking / Realignment of industry expected as competition may wipe out all but large firms
Even although the market for home electronic products, especially flat-screen TV sets, has been shrinking, economists predict large electrical appliance retail companies will continue to expand.
Yamada Denki will make Best Denki a subsidiary afterwards acquiring new shares the smaller firm will allocate to a third party at once month to increase its capital. The larger firm will in the end hold more than 50 percent of shares in an investment that will cost more than 10 billion yen.
Best Denki's sales as of the end of the business year through February were 261.7 billion yen, about 20 percent down from the previous business year.
In 2007, Yamada Denki purchased a large number of Best Denki's shares without the consent of the smaller firm. In response, Best Denki formed an equity and business partnership with Bic Camera.
But the Best Denki-Bic Camera business ties failed to flourish. For instance, the two companies did not work at the same time to jointly purchase products from manufacturers on a large scale.
Best Denki aims to use about 10 billion yen acquired from Yamada Denki to open new stores and take other measures to rebuild its management.
The previous business year
Even Yamada Denki's consolidated sales as of March 2012 fell about 15 percent from the previous business year, dropping to below 2 trillion yen for the first time in three years.
"The industry's market size, which was about 10 trillion yen at the peak in 2010, will shrink to 8 trillion yen hereafter," said Hajime Ikeuchi, an analyst of Nomura Securities Co.
The more TV sets
The more TV sets and other products retail chains purchase from manufacturers, the lower their wholesale prices will be. This means the larger the business the greater the profit.