In Japan, independent small retailers used to dominate the retail industry. Since the second half of the 1970s, small grocery retailers have been losing market share partly attributed to the growth of the large grocery retailers. Although there has been considerable research into policies to address this issue, the trend has not changed. Japan has seen a steady decrease in the number of small shops. For the most part these are food retailers. Recently a new approach to improve their competitive position has achieved success in the Retail Grocery Market (RGM) in Japan. This paper deals with the case of AKR which is a co-operative buying group targeting firms operating in this institution. This paper describes the AKR business model and examines its success factors. Through the research, it is revealed that a guarantee system for buying debts has a critical role in the AKR model, and also it is shown that the key factors for the development of AKR model are: 1) Removal of reservations felt by the members, 2) A consistent competitive strategy aimed at low cost and high effectiveness, and 3) Focus on the customer value. AKR provides a business model to address the declining competitiveness of small retailers not only in Japan but also in other countries. The paper concludes with some suggestions for the further research.