Major Japanese retailing group Aeon says it is going to integrate its management with Tokyo-based supermarket chain Inageya.

Aeon announced the merger on Tuesday, which the retailer says is aimed at boosting its earnings by enhancing business efficiency.

Aeon holds about 17 percent of Inageya's shares. The retailer says it will raise that to 51 percent by around November, making the supermarket chain a subsidiary.

Aeon plans to place Inageya under a parent company that manages three supermarket chains by around November next year, and Inageya is expected to be delisted.

Inageya runs about 270 shops in the Tokyo metropolitan area, including supermarkets and drugstores. But it has struggled as strong demand driven by the trend for people to stay home during the pandemic has weakened and soaring prices prompt consumers to spend less.

Aeon and Inageya plan to boost their earning power through joint procurement and development of more private label goods, as they are facing fierce competition with online retailers.

Aeon President Yoshida Akio said the merger will create a supermarket consortium with sales of more than 900 billion yen, or about 6.7 billion dollars, in the Kanto region. He said that to achieve a business model that went beyond what had been done before it needed to be on a certain scale.

Inageya President Motosugi Yoshikazu said he asked himself whether his company's efforts on its own were enough to satisfy customers. He said the merger will benefit his firm in a number of ways, including human resource development.