With the widespread adoption of online shopping and the increasing diversification of our purchasing behavior, the digital transformation (DX) of the retail industry is progressing rapidly. Companies in the retail industry that embrace DX will not only improve their operational efficiency but also gain the ability to develop more precisely targeted products and services that meet the needs of diverse customer segments.

However, as the adoption of DX advances, some businesses might feel uncertain or troubled about what actions they should take. This article explains the importance, benefits, and key considerations of digital transformation in Japan’s retail industry, along with case studies of companies that have successfully implemented it.

What’s in this article?

• What is digital transformation (DX)?
  
• The current state of the retail industry and the importance of DX
  
• Examples of DX initiatives in the retail industry
  
• Benefits for retailers embracing DX
  
• Key steps in implementing DX in retail
  
• Examples of successful DX in the retail industry
  
• How Stripe Terminal can help
  

What is digital transformation (DX)?

You might have seen the term DX while reading a business magazine or newspaper. DX is short for “digital transformation.” Put simply, it means using digital technology to transform people’s lives for the better.

The ecommerce market has experienced significant growth in recent years. Accelerated by the COVID-19 pandemic, many people’s lifestyles have undergone major changes, impacting their purchasing behavior. DX is gaining attention in the retail industry as a way to respond to these changes and enhance the customer shopping experience.

While DX is a single term, it encompasses a wide variety of concepts and initiatives. Common examples include subscriptions, internet banking, and cashless payments.

The current state of the retail industry and the importance of DX

The retail industry is undergoing rapid change every day, making it all the more important to embrace DX. The value of DX can be seen, for instance, in the diversification of purchasing behavior that’s accompanied people’s changing lifestyles, as well as in the shift in values away from product consumption and toward experience consumption. One example of DX is paying a monthly subscription fee to watch content via streaming services instead of purchasing DVDs.

In terms of the current state of the retail industry, labor shortages due to Japan’s declining population and rising prices are impacting retail business operations. According to the nationwide corporate bankruptcy survey released in 2025 by Tokyo Shoko Research, the number of retail businesses that went bankrupt in 2024 was 1,090, a 9.7% increase compared to the previous year. Furthermore, data released in 2024 shows that there were 939 bankruptcies in 2023, a 30.77% increase compared to 2022 (718 bankruptcies), indicating a year-on-year increase in bankruptcies within the retail sector. Against this backdrop, in order to solve the problems facing the retail industry and overcome the current situation, businesses must embrace DX.

Furthermore, within the retail sector, there’s growing interest in promoting digital transformation in the apparel industry, with companies such as UNIQLO and Adastria working to address problems facing the apparel industry. For example, to address one of the challenges faced by many apparel companies—labor shortages—an increasing number of companies in the industry are actively adopting omnichannel strategies. This has led to improved operational efficiency, including better inventory management.

Examples of DX initiatives in the retail industry

The following are examples of two DX initiatives being implemented in the retail industry.

OMO strategy

OMO (online-merge-offline) is a strategy that integrates physical stores with online shops to break down the barriers between online and offline, thereby enhancing overall service convenience. For example, a system that allows customers to pick up online orders at physical stores qualifies as an OMO strategy. OMO is being implemented by various retailers with the goal of maximizing the strengths of both online and offline channels to provide an enjoyable and fulfilling shopping experience.

Implementation and integration of systems to optimize operations

In the retail industry, failing to fully understand customer needs can lead to poor sales and negatively impact revenue. That said, even when collecting data and analyzing needs, it’s difficult to formulate sales strategies that meet consumer demands if you’re struggling to keep pace due to a shortage of personnel.

Consequently, some retailers are implementing systems to optimize management of sales and customer operations, or integrating with existing systems to address challenges faced by their retail stores.

For example, one approach is to integrate payment functions with a CRM system. CRM stands for “customer relationship management,” which includes functions for building, maintaining, and nurturing positive relationships with customers. Using a CRM system allows a business to centrally manage customer attributes and historical behavior data such as searches and purchases. By integrating your CRM system with payment platforms, sales data and customer information becomes centralized, which can help improve operational efficiency. Not only that, but it can also facilitate customer analysis, allowing you to provide a highly satisfying customer experience.

Benefits for retailers embracing DX

Implementing DX can offer retailers many benefits, such as:

Cost reduction and alleviation of labor shortages

DX can streamline and simplify various retail operations, significantly reducing the workload associated with tasks such as inventory management and sales management. This enables store staff to focus on providing higher-quality customer service, which means smoother operations even with a small team. And when operations run smoothly, this creates cost savings for the company and reduces the physical and mental stress caused to staff by things like excessive overtime.

Accurate data collection

Using DX to collect precise, detailed data, such as purchase and search histories, makes it possible to develop products tailored to customer tastes and needs, while implementing effective marketing strategies. Additionally, you can meet customer demand by conducting live commerce activities and distributing information on social media and ecommerce sites. Improving customer satisfaction in this way could boost customer acquisition rates and lead to increased sales.

Furthermore, by using data to accurately understand customer needs and then managing inventory and placing orders accordingly, companies can reduce waste and losses caused by excess inventory.

Key steps in implementing DX in retail

To lay the foundation for successful DX, retailers should take the following steps:

Define DX goals, and elicit the support of staff and customers

For a successful DX initiative, it's key that all staff members work together and actively participate. This requires listening to the voices of frontline staff, understanding their concerns and needs, and clearly defining the objectives of DX, such as improving operational efficiency and customer satisfaction.

Holding workshops and other events to provide the opportunity for deeper knowledge about DX is a good way to gain the cooperation and understanding of frontline staff. Additionally, it’s important to explain upcoming DX initiatives to external business partners and customers to ensure their understanding and support.

Secure and train DX specialists

You’ll want to train and develop staff who are specialists in DX, establish dedicated departments, and build the necessary infrastructure.

It’s also important to implement regular training programs for onsite staff to help them acquire the knowledge and skills related to DX and improve their digital literacy. As DX is introduced into your business, put time and resources into education and training, develop manuals for business procedures, and aim for sustainable growth for your company through DX.

Establish rules

Establish clear rules regarding data collection methods, retention periods, access permissions, and other related matters. Data should be collected and analyzed regularly, and any erroneous information eliminated.

Additionally, regularly review the efficiency and results of the implementation of DX. If areas for improvement are identified, revise your business processes accordingly.

Ensure security

When handling vast amounts of data, robust security measures are necessary. Therefore, when adopting DX, ensure you use strong information leak prevention measures such as data encryption and access control. If information is leaked and misused by malicious third parties, it can not only damage social credibility but also cause significant harm to customers. Therefore, to ensure security alongside the advancement of DX, make sure to verify beforehand whether the systems under consideration incorporate the latest security features.

Examples of successful DX in the retail industry

Next, let’s take a look at some companies that have done DX successfully.

Aeon Mall

Aeon Mall, a leading Japanese ecommerce mall, is actively pursuing DX within the retail industry. Guided by the slogan “Creating new value through digital transformation centered on human aspirations,” Aeon Mall aims to create and deliver value for the regions where it operates, the businesses that open stores there, and its customers.

Aeon Mall’s DX initiatives have been recognized by the government, and the company is listed as a DX Certified Business by the Ministry of Economy, Trade and Industry.

The DX initiatives implemented by Aeon Mall are detailed below.

• App: The Aeon Mall app can deliver customized, relevant information to each customer based on their app usage history and purchase information.

• Facility guide robots: Using AI-powered autonomous driving technology, robots navigate the mall independently, providing visitors to Aeon Mall with facility information and details about specialty stores.

• Large LED screen kiosks: These screens can display a variety of things, such as interactive games where images react in real time to users' movements, information about the facility’s events and shops, and emergency evacuation announcements during disasters like earthquakes. The digital signage can also provide timely or topical information, such as recommended menus from each restaurant tailored to the weather and season.

• Tablet loan program: To streamline operations for specialty stores opening in the mall, each store is provided with a business tablet called Aeon Mall Works. This allows the company to electronically complete various administrative tasks, such as submitting notifications to the mall regarding newly hired staff. The tablet also features functions such as sales tracking and health checks, helping to create an environment where staff can focus on customer service.

Bic Camera

Bic Camera, a major Japanese electronics retailer, formally announced its DX initiative in 2022, with the goal of becoming “a company that supports customers’ lifestyles.”

Bic Camera’s primary DX initiatives include providing an enjoyable and seamless customer experience through the integration of physical stores and ecommerce (OMO strategy), as well as the streamlining of its contact center through DX.

For example, previously, when an email was received, a supervisor would assign the case to an operator based on their skills and experience level. Now, because AI has been trained on the content of previous emails, the routing to operators is automated. Additionally, for telephone support, the company has successfully reduced the workload associated with manual data entry by enabling the simultaneous retention of voice data and automatically transcribed text data.

Lawson

Since 2015, Lawson has been a leader in Japan's convenience store industry for its semiautomated ordering system. Through the use of AI learning, this forecast system boasts prediction accuracy that fully meets the expectations of convenience store owners and enables semiautomated ordering and planned procurement tailored to each store’s unique sales data and circumstances. This reduces the workload associated with ordering for store staff. The system also includes recommendation features such as the timing for discounting daily items like rice balls and prepared foods delivered daily, as well as recommended discount rates.

In addition, Lawson is steadily rolling out point-of-sale (POS) registers with automatic change dispensers, self-checkout registers, and smartphone registers, thereby reducing the labor required for register operations and addressing labor shortages.

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