Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Event-Driven

After more than a year of negotiations and preparation, <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co., Ltd. (3088 JP)</a> and <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> finally confirmed their agreement to merge in October this year. The new company will be by far the largest in the drugstore sector.A lot of work has been done already to consolidate operations and the aim is to complete integration by 2023. The combined company will target sales of ¥1.5 trillion by 2026.Private brands will be a crucial competitive weapon for the merged chain and also provide opportunities to offer wholesale toiletries and cosmetics floors at supermarkets.The growing competitiveness in the sector amidst increased saturation demands greater scale and will spur the leading players like <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a> and <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> to make further acquisitions to catch up with the new leader.

After more than a year of negotiations and preparation, Matsumotokiyoshi Holdings Co., Ltd. (3088 JP) and Cocokara Fine (3098 JP) finally confirmed their agreement to merge in October this year. The new company will be by far the largest in the drugstore sector.A lot of work has been done already to consolidate operations and the aim is to complete integration by 2023. The combined company will target sales of ¥1.5 trillion by 2026.Private brands will be a crucial competitive weapon for the merged chain and also provide opportunities to offer wholesale toiletries and cosmetics floors at supermarkets.The growing competitiveness in the sector amidst increased saturation demands greater scale and will spur the leading players like Welcia Holdings (3141 JP) and Tsuruha Holdings (3391 JP) to make further acquisitions to catch up with the new leader. 

Matsukiyo-Cocokara Merger Heralds New Era for Drugstores

Thematic (Sector/Industry)

The following is an in-depth review of the retail sector by format with a brief overview of incomes and consumption trends and metrics before that. For any investor looking at the Japanese consumer/retail space, this insight will provide a rapid overview of all the major trends.2020 was a year to remember, although not for good reasons. While the news was overwhelmingly negative given the devastation that the pandemic caused to so many lives, for Japan as a country the experience could become a catalyst to spur positive change.No matter how much we might never wish to repeat the last 12 months, those governments and companies that learn from the experience will be better positioned whenever a new pandemic emerges.Department stores, convenience stores, and most fashion chains had a horrible year as so many people stayed away from major shopping areas, but many other retailers actually had stellar years, with further upside still to come.

The following is an in-depth review of the retail sector by format with a brief overview of incomes and consumption trends and metrics before that. For any investor looking at the Japanese consumer/retail space, this insight will provide a rapid overview of all the major trends.2020 was a year to remember, although not for good reasons. While the news was overwhelmingly negative given the devastation that the pandemic caused to so many lives, for Japan as a country the experience could become a catalyst to spur positive change.No matter how much we might never wish to repeat the last 12 months, those governments and companies that learn from the experience will be better positioned whenever a new pandemic emerges.Department stores, convenience stores, and most fashion chains had a horrible year as so many people stayed away from major shopping areas, but many other retailers actually had stellar years, with further upside still to come. 

Japan Retail Full Review 2020-2021: Some Retail Sectors Outperform in a Pandemic

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of financial results for FY2019-20.
Even with the crisis, results were generally better than for FY2018 – although there are big variations by sector.
Those differences are more or less what we’ve come to expect, with traditional formats like department stores continuing to struggle, while those formats that have adopted modern management are doing well.
The following is an in-depth review of Japan's retail sector, providing:
<ul>
<li>An overview of consumer demand and retail performance</li>
<li>Format by format reviews showing growth and profit performance across all the main formats: convenience stores, supermarkets, GMS, consumer electronics, drugstores, homecentres, department stores, apparel, home and other specialty  formats.</li>
<li>Rankings:
<ul>
<li>Market share and size by sector/format</li>
<li>By sales for all retailers with sales over ¥250 billion</li>
<li>By gross and operating margins, split by format and category.</li>
</ul>
</li>
</ul>
As this is an in-depth insight, the review is split into two parts to make it easier to read.  This is Part II which provides snapshot reviews of each format/sector. <a href="https://www.smartkarma.com/insights/the-japan-retail-review-winners-and-losers-in-japanese-retailing-part-i" target="_blank" rel="noopener">Part I, which provides a quick overview of all retailing, can be read here</a>.

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of financial results for FY2019-20.
Even with the crisis, results were generally better than for FY2018 – although there are big variations by sector.
Those differences are more or less what we’ve come to expect, with traditional formats like department stores continuing to struggle, while those formats that have adopted modern management are doing well.
The following is an in-depth review of Japan's retail sector, providing:

An overview of consumer demand and retail performance
Format by format reviews showing growth and profit performance across all the main formats: convenience stores, supermarkets, GMS, consumer electronics, drugstores, homecentres, department stores, apparel, home and other specialty  formats.
Rankings:

Market share and size by sector/format
By sales for all retailers with sales over ¥250 billion
By gross and operating margins, split by format and category.



As this is an in-depth insight, the review is split into two parts to make it easier to read.  This is Part II which provides snapshot reviews of each format/sector. Part I, which provides a quick overview of all retailing, can be read here.

Japan Retail Review 2019-20 Part II: A Sector by Sector Review of Winners and Losers

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/485/original/2020-09-01_16-17-11.png?1598992358" class="editor-image img-responsive" data-smartkarma-image-id="156485"></figure>
<div class="content-caption">Source for all charts: Japan Analytics</div>
DAILY RESULTS &amp; REVISIONS REVIEW - We resume our series of daily Insights reviewing the results and revisions released by Japanese companies in the last 24 hours. Our purpose is to provide brief commentary on notable changes in trends in earnings for individual companies as well as offering an early warning system on any sector and peer group trends. Where relevant, we shall also comment on valuation and relative price outliers using our proprietary models. Our coverage covers all listed companies until the number of reporting companies precludes it. Since our last 'R&amp;R' Insight covering 14th August, both our aggregate Results Score and Revision Score have continued to set new lows, the latter driven mostly by interim revisions. The companies currently reporting are mainly those with January, April, July, and October year-ends. Accordingly, the results reflect the period of greatest COVID-19 economic dislocation.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/486/original/2020-09-01_18-43-01.png?1598993171" class="editor-image img-responsive" data-smartkarma-image-id="156486"></figure>
SECTOR TIMELINES - The significant Sector changes since our last Insight have been declines in the Commercial Services<a href="https://www.smartkarma.com/entities/funai-soken-holdings-inc" target="_blank" data-smartkarma-citation="entities:4622:1" rel="noopener">Funai Soken (9757 JP)</a> and <a href="https://www.smartkarma.com/entities/recruit-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15070:1" rel="noopener">Recruit (6098 JP)</a>) and Other Commercial Products (<a href="https://www.smartkarma.com/entities/toppan-printing-co-ltd" target="_blank" data-smartkarma-citation="entities:11875:1" rel="noopener">Toppan Printing (7911 JP)</a>) Sectors.  Only three Sectors -  Internet, Information Technology, and Non-Bank Finance have positive Scores. The Energy Sector has the strongest positive earnings momentum, while Transportation &amp; Logistics has the worst negative trend.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/487/original/2020-09-02_06-40-13.png?1598996429" class="editor-image img-responsive" data-smartkarma-image-id="156487"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/489/original/2020-09-02_06-41-01.png?1598996496" class="editor-image img-responsive" data-smartkarma-image-id="156489"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/490/original/2020-09-02_06-42-02.png?1598996538" class="editor-image img-responsive" data-smartkarma-image-id="156490"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/491/original/2020-09-02_06-44-36.png?1598996694" class="editor-image img-responsive" data-smartkarma-image-id="156491"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/492/original/2020-09-02_06-46-39.png?1598996814" class="editor-image img-responsive" data-smartkarma-image-id="156492"></figure>

DAILY STATS - With only nine announcements, our statistics section is brief. All four results scored negatively with an average Results Score of -6.0. The average year-on-year quarterly revenue change was -12%, and OPM declined by 2.7 percentage points. Only one of the five revisions scored positively - the average Forecast/Revision Score was -15.6.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/156/493/original/2020-09-01_16-10-30.png?1598997263" class="editor-image img-responsive" data-smartkarma-image-id="156493"></figure>
MEANWHILE - The Bank of Japan appears content with current market levels and has only intervened once in the last twenty trading sessions and for 20% less than the previous sixteen occasions.


Source for all charts: Japan Analytics
DAILY RESULTS &amp; REVISIONS REVIEW - We resume our series of daily Insights reviewing the results and revisions released by Japanese companies in the last 24 hours. Our purpose is to provide brief commentary on notable changes in trends in earnings for individual companies as well as offering an early warning system on any sector and peer group trends. Where relevant, we shall also comment on valuation and relative price outliers using our proprietary models. Our coverage covers all listed companies until the number of reporting companies precludes it. Since our last 'R&amp;R' Insight covering 14th August, both our aggregate Results Score and Revision Score have continued to set new lows, the latter driven mostly by interim revisions. The companies currently reporting are mainly those with January, April, July, and October year-ends. Accordingly, the results reflect the period of greatest COVID-19 economic dislocation.

SECTOR TIMELINES - The significant Sector changes since our last Insight have been declines in the Commercial ServicesFunai Soken (9757 JP) and Recruit (6098 JP)) and Other Commercial Products (Toppan Printing (7911 JP)) Sectors.  Only three Sectors -  Internet, Information Technology, and Non-Bank Finance have positive Scores. The Energy Sector has the strongest positive earnings momentum, while Transportation &amp; Logistics has the worst negative trend.






DAILY STATS - With only nine announcements, our statistics section is brief. All four results scored negatively with an average Results Score of -6.0. The average year-on-year quarterly revenue change was -12%, and OPM declined by 2.7 percentage points. Only one of the five revisions scored positively - the average Forecast/Revision Score was -15.6.

MEANWHILE - The Bank of Japan appears content with current market levels and has only intervened once in the last twenty trading sessions and for 20% less than the previous sixteen occasions. 

🇯🇵 JAPAN • Results & Revisions 09/01 - Ito En, Ain, Ride On Express

The following is an in-depth review of the drugstore sector and the impact of the Cocokara Fine and Matsukiyo merger on other key drugstore stocks, highlighting the likely winners and losers in the next 3-5 years.
The drugstore sector is about to consolidate more rapidly than at any time in its history, with big implications for the cosmetics, medicines, food and toiletries industries and, among retailers, worries for supermarkets and convenience stores.
The imminent merger of <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co (3088 JP)</a> and <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> will trigger a wave of other mergers among competitors big and small, creating a modernised sector with huge buying power across many product categories.
In food, in particular, this buying power is already causing headaches for retailers in regions like Kyushu where drugstore discounters are strong and this trend will play out across Japan over the next few years.  While the drugstore market may not grow, its leaders will.

The following is an in-depth review of the drugstore sector and the impact of the Cocokara Fine and Matsukiyo merger on other key drugstore stocks, highlighting the likely winners and losers in the next 3-5 years.
The drugstore sector is about to consolidate more rapidly than at any time in its history, with big implications for the cosmetics, medicines, food and toiletries industries and, among retailers, worries for supermarkets and convenience stores.
The imminent merger of Matsumotokiyoshi Holdings Co (3088 JP) and Cocokara Fine (3098 JP) will trigger a wave of other mergers among competitors big and small, creating a modernised sector with huge buying power across many product categories.
In food, in particular, this buying power is already causing headaches for retailers in regions like Kyushu where drugstore discounters are strong and this trend will play out across Japan over the next few years.  While the drugstore market may not grow, its leaders will.

Japanese Drugstores: With Maturity Comes Marriage

Japan

AIN HOLDINGS INC. operates and franchises pharmacies in Japan.  The Company primarily sells medicines, external-use medicine, cosmetics, and food products. AIN Pharmaciez also conducts clinical tests for medical institutions.

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Ain Holdings Inc (9627 JP)

Matsukiyo-Cocokara Merger Heralds New Era for Drugstores

The merger of Matsukiyo and Cocokara will force further consolidation through M&A in the drugstore sector as regional powerhouses begin to clash as...

Michael Causton

Japan Retail Full Review 2020-2021: Some Retail Sectors Outperform in a Pandemic

An in-depth update for investors in Japan's retail and consumer space on Japan's retail sector by retail type as well as a review of the impact of...

Michael Causton

Japan Retail Review 2019-20 Part II: A Sector by Sector Review of Winners and Losers

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of...

Michael Causton

🇯🇵 JAPAN • Results & Revisions 09/01 - Ito En, Ain, Ride On Express

DAILY RESULTS & REVISIONS REVIEW - We resume our series of daily Insights reviewing the results and revisions released by Japanese companies...

Campbell Gunn

Japanese Drugstores: With Maturity Comes Marriage

The following is an in-depth review of the drugstore sector and the impact of the Cocokara Fine and Matsukiyo merger on other key drugstore stocks,...

Michael Causton

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