NAFCO

Basic Information

Stock Code
2790
Industry
Retail
Category Detail
Specialty Stores & Drugstores
Prefecture
Fukuoka Prefecture
Establishment Year
August 1970
Listing Year
December 2003
Official Website
http://www.nafco.tv/
TSE Information
TSE Information
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Overview

NAFCO is a major home center chain established in 1970, centered in the Kyushu and Chugoku regions, offering a wide range of daily necessities with furniture and DIY materials as its dual pillars.

Current Situation

NAFCO recorded standalone net sales of approximately 234.6 billion yen and operating profit of approximately 18.2 billion yen in the fiscal year ended March 2021. Headquartered in Kitakyushu City, Fukuoka Prefecture, it is a key player in the home center industry. Its main businesses consist of daily necessities, materials/DIY/gardening products, and furniture/home fashion. With a base in Kyushu and Chugoku, it has expanded widely to the Kinki, Chubu, Hokuriku, and Koshinetsu regions. It operates approximately 370 directly managed stores, with about 53% in the Kyushu area and about 23% in the Chugoku area. In recent years, it has curbed investments in large stores while strengthening openings of mid-sized stores, focusing on attracting customers via the points card 'Nadepo Card' and electronic money functions. In 2023, it received a recommendation from the Fair Trade Commission regarding violations of the Subcontract Act, necessitating a review of business operations. Moving forward, it aims for sustainable growth through regionally rooted store expansion and strengthened private brands.

Trivia

Interesting Facts

  • Company name derives from initials of National Furnishing Corporation
  • Operates approximately 370 stores centered in Kyushu and Chugoku
  • Points card features electronic money functionality
  • Many stores combine furniture sales and home center formats
  • No relation to NAFCO Chain in Aichi
  • Approximately 53% of stores in Kyushu, 23% in Chugoku
  • Received Fair Trade Commission recommendation in 2023 for Subcontract Act violation
  • Focus on mid-sized store expansion while curbing large store investments
  • Strengthening proprietary private brands since founding
  • Some regional withdrawals and closures due to furniture industry trends
  • President Takumi Ishida since 2010
  • Points card carryover system for forgotten cards ended March 2021
  • Transaction history with Fujii Denkoh, MK Seiko, etc.
  • Approximately 87 stores are combination type
  • Headquarters in Kokura Kita-ku, Kitakyushu City, Fukuoka Prefecture

Hidden Connections

  • No capital or business ties to Aichi Prefecture's food supermarket 'NAFCO Chain'
  • NAFCO stores sometimes occupy furniture sections in Edion
  • Origins in Fukumachi Furniture founding, with over 70 years of history
  • Kyushu Nippon Shihan handles points card operations on commission
  • NAFCO furniture departments in former Midori Denk series stores
  • Deep ties with related companies Kyushu Nippon Shihan and Sun Life Holdings
  • Collaborating with Saga Prefecture on regional disaster prevention agreements
  • Family-run aspect as parent company president is son-in-law of Fukumachi

Future Outlook

Growth Drivers

  • Strengthening customer base through regionally rooted stores
  • Improved margins via PB product expansion
  • Enhanced customer convenience with e-money etc.
  • Growing DIY trend and home fashion demand
  • Elevated corporate value through strengthened disaster support
  • New customer acquisition via online-physical store linkage
  • Expanding demand for eco-friendly products
  • Strengthened business foundation through store consolidation and efficiency
  • Business expansion contributing to regional economic revitalization
  • Market diversification via new store formats
  • Improved service quality through employee training and better work environment
  • Cost reduction via logistics network improvements

Strategic Goals

  • Raise PB product sales ratio to over 30%
  • Strengthen nationwide rollout by expanding beyond Kyushu-Chugoku
  • Equip all stores with electronic payments for maximum convenience
  • Enrich sustainable product lineup
  • Significantly reduce store environmental impact
  • Deepen CSR activities coexisting with local communities
  • Improve operational efficiency through DX
  • Accelerate product/service development for diverse customers
  • Make strict Subcontract Act compliance a pillar of operations
  • Nationwide rollout of new store format models

Business Segments

Building Materials Supply

Overview
Stably supplies materials and tools for construction sites, supporting construction efficiency.
Competitiveness
Regional proximity for rapid supply and wide product range
Customers
  • Construction companies
  • Remodeling contractors
  • Carpentry shops
  • Design offices
  • Real estate developers
  • Local governments
Products
  • Lumber & Plywood
  • Building Hardware
  • Insulation Materials
  • Interior Materials
  • Exterior Materials
  • Paints & Repair Materials
  • Power Tools

Corporate Furniture Sales

Overview
Proposes and sells furniture to corporate customers, contributing to comfortable spaces.
Competitiveness
Extensive furniture lineup and installation support
Customers
  • Office operators
  • Commercial facilities
  • Public facilities
  • Hospitals & Welfare facilities
  • Educational institutions
Products
  • Office Desks & Chairs
  • Storage Furniture
  • Break Area Furniture
  • Fixtures & Fittings

Fixtures for Retail Stores & Commercial Facilities

Overview
Supplies materials to optimize store layouts for the retail industry.
Competitiveness
Flexible response tailored to store operations
Customers
  • Retail chains
  • Shopping malls
  • Trade show planners
Products
  • Store Fixtures
  • Decorative Materials
  • Display Products

Gardening Supplies Wholesale

Overview
Supplies high-quality products to garden centers and agricultural businesses.
Competitiveness
Product planning and response to regional needs
Customers
  • Garden centers
  • Agricultural corporations
  • Local governments
Products
  • Fertilizers & Pesticides
  • Gardening Soil
  • Garden Tools

Industrial Cleaning Supplies Supply

Overview
Stably supplies industrial cleaning products to support clean environments.
Competitiveness
Extensive inventory and delivery network
Customers
  • Cleaning companies
  • Facility management companies
  • Food service industry
Products
  • Mops & Brushes
  • Detergents
  • Cleaning Tools

Equipment Materials for Public Facilities

Overview
Provides supplies to support infrastructure development and operations of public facilities.
Competitiveness
Extensive track record in public procurement
Customers
  • Municipal offices
  • Schools
  • Hospitals
Products
  • Facility Furniture
  • Lighting Equipment
  • Safety Gear

Promotional Supplies for Retail Stores

Overview
Provides promotional materials to support retail store sales growth.
Competitiveness
Proposals informed by store operation expertise
Customers
  • Retail stores
  • Sales agents
Products
  • POP Ads
  • Display Fixtures
  • Shelving Supplies

E-commerce Support Supplies

Overview
Supports logistics and packaging amid growing EC sales.
Competitiveness
Diverse inventory meeting varied needs
Customers
  • EC operators
  • Logistics companies
Products
  • Packaging Materials
  • Shipping Equipment

Agricultural Materials Sales

Overview
Provides materials to improve agricultural productivity.
Competitiveness
Sales team with deep agricultural knowledge
Customers
  • Farmers
  • Agricultural associations
Products
  • Farm Equipment
  • Greenhouse Materials

Corporate Cleaning & Hygiene Supplies

Overview
Supplies various consumables to maintain hygiene environments.
Competitiveness
Reliability and rapid response
Customers
  • Restaurants
  • Factories
  • Office buildings
Products
  • Disposable Hygiene Products
  • Deodorizers

Industrial Machinery Related Supplies

Overview
Handles a wide range of parts and tools for industrial machinery.
Competitiveness
Specialized knowledge and inventory
Customers
  • Manufacturers
  • Machinery factories
Products
  • Machine Parts
  • Tools

Store Construction Services

Overview
Provides total support from store construction to renovation.
Competitiveness
Regional construction network
Customers
  • Retail stores
  • Franchise outlets
Products
  • Store Interior Work
  • Fixture Installation Services

Competitive Advantage

Strengths

  • Balance of wide-area expansion and regional closeness
  • Diverse store formats and high direct operation ratio
  • Well-developed private brands
  • Overwhelming brand recognition in Kyushu and Chugoku
  • Extensive product lineup
  • Customer retention via points program
  • Efficient logistics network
  • Stable capital and financial base
  • Strengthened quality control
  • Competitive edge through unique store strategies
  • Promotion of physical and online integration
  • Focus on employee training
  • Rapid regional response capability
  • Acquisition of diverse customer segments
  • Secured stable supply system

Competitive Advantages

  • Good balance of regional large stores and mid-sized stores
  • Strong market base in Kyushu and Chugoku
  • NAFCO's unique PB products gain household support
  • High direct store ratio for efficient sales management
  • Improved customer satisfaction with points card and e-money
  • Flexible response to regional characteristics via multifaceted store rollout
  • Broader and deeper product range than competitors
  • Superior cost control via proprietary logistics
  • High employee operational understanding and customer service
  • Strong trust relationships with local communities
  • Differentiation through local products
  • Advanced appeal via eco-friendly products
  • Efficient operations through store renovations and consolidations
  • Market expansion via new formats like 'Feel Sky'
  • Supply stability leveraging geographic advantages

Threats

  • Profit margin erosion from intensifying competition
  • Impact of population decline and regional economic contraction
  • Decline in physical store sales due to e-commerce growth
  • Need for strengthened compliance and risk management
  • Rising raw material prices and logistics costs
  • Risk of new entrants from other industries
  • Supply instability from climate change impacts
  • Delays in responding to changing consumer preferences
  • Supply chain risks during disasters
  • Reputation damage from subcontractor law violations
  • Challenges in talent acquisition and development
  • Intensifying inter-regional competition

Innovations

2023: Launch of new format 'Feel Sky'

Overview
Opened workstyle casual specialty store to develop new markets.
Impact
Diversification of regional customer base and new sales acquisition

2021: Introduction of Smart Nadepo Card

Overview
Renewed points card with electronic money functionality.
Impact
Enhanced customer convenience and purchase frequency

2022: Promotion of store enlargement and consolidation

Overview
Implemented efficient rollout centered on closing old stores and mid-sized stores.
Impact
Improved operational efficiency and cost reduction

2024: Strengthening and development of PB products

Overview
Accelerated rollout of proprietary brand products for quality improvement and differentiation.
Impact
Enhanced customer loyalty and profit margins

2020: Development of multi-channel sales system

Overview
Focused on strengthening integration of online and store sales.
Impact
Sales growth through expanded purchase channels

Sustainability

  • Contributing to regional economy through local resource utilization
  • Introduction of energy-saving equipment in stores and reduced environmental impact
  • Strengthened safety and health management and employee training
  • Promotion of waste reduction and recycling activities
  • Conclusion of disaster support agreements with local communities
  • Expansion of eco-product offerings
  • Thorough compliance in supply chain
  • Active disclosure of CSR activities
  • Implementation of customer-participating environmental campaigns
  • Formulation of sustainable procurement policies