Founder Of AI-Driven Japanese Discount Supermarket Chain Becomes A Billionaire

Last week’s listing of discount supermarket chain Trial Holdings, which raised $258 million, was Japan’s largest IPO so far this year. Shares of the retailer have jumped 41% since their debut on Tokyo’s Growth bourse, making founder Hisao Nagata, 67, a billionaire. Nagata’s estimated net worth of $1.2 billion is based largely on his 78% stake in the company.

Fukuoka-headquartered Trial Holdings operates more than 300 supermarkets across Japan that sell food, clothing, and other household goods at low prices. Its retail formats range from warehouse-like Trial Supercenters, where customers can buy in bulk, to smaller convenience stores called Trial Go. The company logged a 9.7% increase in sales to ¥653.1 billion ($4.3 billion) in the year ending June 2023, while net profit increased 13.2% to ¥125.2 billion in the same period.

An early adopter of AI, Nagata has led efforts to use it to analyze customers’ shopping patterns and to monitor inventory. Under its subsidiary, Retail AI–helmed by Nagata’s 41-year-old son, Hiroyuki, a graduate of Colorado State University–Trial Holdings also develops Internet of Things (IoT) software and devices. These include AI cameras and smart shopping carts with attached tablets that have an integrated card scanner and barcode reader. So far, nearly two-thirds of Trial’s supermarkets have been converted into tech-embedded “Smart Stores”.

“Not using AI in retail is not an option,” Nagata said in a rare interview with local media in 2019. “Right now, I think Japan will truly sink if it doesn’t focus on the field of retail AI.

With the rise of cheaper and more advanced sensor technologies, Nagata is making an even bigger bet on AI. In January, Trial Holdings announced it would collaborate with Japanese tech giant NEC Corp to pilot an AI-powered facial recognition system at checkout counters, allowing customers to link their payment details with a digital image of their face. The company says it’s also considering integrating generative AI into a staff communication platform at its stores.

Nagata hails from retailing roots. In 1974, his father opened Asahiya, a thrift store in Fukuoka, which Nagata took charge of in 1981 at the age of 25. Three years later, he established Trial Company and also started a software developer focusing on retail digital transformation (DX) technology. The first Trial discount store opened in 1992. In 2018, Trial debuted its first 24-hour supermarket called “Trial Quick.” which the company said was Japan’s first unmanned supermarket.

“Through the failures of my 20s, I came to realize what business should be about: doing business for the customers, not for personal gain,” Nagata wrote for his company’s website. “I have never doubted this faith.”

Nagata, who is famously media-shy, has written books on retail AI and digitization, including one in 2022 titled How to Win the Retail Digital Transformation, which chronicles Trial Holdings’ history. Beyond supermarkets, Nagata has expanded into real estate, restaurants and resorts.

Over the past year, Japan has been minting new billionaires on the back of its rising stock market. Recent entrants to the three-comma club include Takaya Awata, founder and CEO of Tokyo-listed Toridoll Holdings–best known for its popular udon noodle restaurants–and Shunsaku Sagami, the 33-year-old founder and CEO of Tokyo-listed dealmaker M&A Research Institute Holdings.

—With assistance by James Simms