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. 

Equity Bottom-Up

The merger of <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> is just one symptom of the growing concentration of market share in the drugstore sector.But the sector's leaders are no longer just battling for dominance in drugstore retailing; increasingly drugstores are evolving far behind this niche sector.Drugstore retailing is growing faster than any sector other than e-commerce because drugstores are positioned to meet customer needs for well-being, health and, nowadays, a broad range of daily necessities including food, and so becoming ever more integrated into consumers’ daily shopping experience.Their eclectic ranges also mean they perform well in the middle of natural disasters and crises of various forms and many chains have seen good results thanks to earthquakes, extreme weather and especially thanks to Covid, but this doesn’t fully explain the sector’s success.Crises may have helped, but Japan’s top drugstores are today some of the country’s best retailers in their own right.The following is a complete, in-depth review of the drugstore sector, including rankings, KPIs, and future trends on the sector and the potential winners.Jun Tsuruha, the current <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> CEO, was widely quoted last year as saying the sector would soon be dominated by just “four or five” major firms. This is far from fantasy, with Tsuruha, <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>, Matsukiyo-Cocokara, <a href="https://www.smartkarma.com/entities/cosmos-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:3797:1" rel="noopener">Cosmos Pharmaceutical (3349 JP)</a> and <a href="https://www.smartkarma.com/entities/sugi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:9255:1" rel="noopener">Sugi Holdings (7649 JP)</a> the most likely contenders.

The merger of Matsumotokiyoshi Holdings Co., Ltd. (3088 JP) and Cocokara Fine (3098 JP) is just one symptom of the growing concentration of market share in the drugstore sector.But the sector's leaders are no longer just battling for dominance in drugstore retailing; increasingly drugstores are evolving far behind this niche sector.Drugstore retailing is growing faster than any sector other than e-commerce because drugstores are positioned to meet customer needs for well-being, health and, nowadays, a broad range of daily necessities including food, and so becoming ever more integrated into consumers’ daily shopping experience.Their eclectic ranges also mean they perform well in the middle of natural disasters and crises of various forms and many chains have seen good results thanks to earthquakes, extreme weather and especially thanks to Covid, but this doesn’t fully explain the sector’s success.Crises may have helped, but Japan’s top drugstores are today some of the country’s best retailers in their own right.The following is a complete, in-depth review of the drugstore sector, including rankings, KPIs, and future trends on the sector and the potential winners.Jun Tsuruha, the current Tsuruha Holdings (3391 JP) CEO, was widely quoted last year as saying the sector would soon be dominated by just “four or five” major firms. This is far from fantasy, with Tsuruha, Welcia Holdings (3141 JP), Matsukiyo-Cocokara, Cosmos Pharmaceutical (3349 JP) and Sugi Holdings (7649 JP) the most likely contenders.

Japan Drugstores: Growing Leadership in Food, Household, Cosmetics – and the Odd Medicine Too

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

Lopia is a small unlisted supermarket chain but we cover this here to demonstrate the following that discount supermarkets have in Japan, pointing to further growth for listed companies in this sector such as <a href="https://www.smartkarma.com/entities/kobe-bussan-co-ltd" target="_blank" data-smartkarma-citation="entities:4701:1" rel="noopener">Kobe Bussan (3038 JP),</a> <a href="https://www.smartkarma.com/entities/pan-pacific-international-holdings-corporation" target="_blank" data-smartkarma-citation="entities:13475:1" rel="noopener">Pan Pacific International Holdings (7532 JP),</a> and <a href="https://www.smartkarma.com/entities/cosmos-pharmaceutical-corp" target="_blank" data-smartkarma-citation="entities:3797:1" rel="noopener">Cosmos Pharmaceutical (3349 JP).</a>
With average sales growth of 18% a year since 2011, Lopia is a rising star. Alongside OK Super, another unlisted chain, Lopia has proven that aggressive and consistent low prices work in Japan, and that careful cost control can provide profits even at low margins. It is a chain to watch as it is likely to list at some point, with a target of ¥1 trillion sales by the end of the next decade.
Its success is also a worry for <a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP)</a>. Aeon has seen its share of food sales in the greater Tokyo region fall from 10.8% to 9.7%, overtaken by OK Super which increased from 8% to 10.9%, a jump of 2.9 points. Lopia is half the size of OK Super but has also grown from 1.2% to 2.9% in the same period, more than doubling its effective share. Aeon is <a href="https://www.smartkarma.com/insights/new-aeon-style-format-shows-hope-for-aeon-s-core-business" target="_blank" rel="noopener">fighting back</a> but still does not compete on price.

Lopia is a small unlisted supermarket chain but we cover this here to demonstrate the following that discount supermarkets have in Japan, pointing to further growth for listed companies in this sector such as Kobe Bussan (3038 JP), Pan Pacific International Holdings (7532 JP), and Cosmos Pharmaceutical (3349 JP).
With average sales growth of 18% a year since 2011, Lopia is a rising star. Alongside OK Super, another unlisted chain, Lopia has proven that aggressive and consistent low prices work in Japan, and that careful cost control can provide profits even at low margins. It is a chain to watch as it is likely to list at some point, with a target of ¥1 trillion sales by the end of the next decade.
Its success is also a worry for Aeon Co Ltd (8267 JP). Aeon has seen its share of food sales in the greater Tokyo region fall from 10.8% to 9.7%, overtaken by OK Super which increased from 8% to 10.9%, a jump of 2.9 points. Lopia is half the size of OK Super but has also grown from 1.2% to 2.9% in the same period, more than doubling its effective share. Aeon is fighting back but still does not compete on price.

Why Discount Works in Japan: Lopia, Tokyo’s ‘Low Price Utopia’ Triples Sales Since 2011

'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.

• BEST &amp; WORST •The best and worst pair from yesterday's announcements is home centre <a href="https://www.smartkarma.com/entities/kohnan-shoji-co-ltd" target="_blank" data-smartkarma-citation="entities:5662:1" rel="noopener">Kohnan Shoji (7516 JP)</a> and image sensor testing equipment maker and erstwhile gaijin favourite <a href="https://www.smartkarma.com/entities/inter-action-corp" target="_blank" data-smartkarma-citation="entities:7578:1" rel="noopener">Inter Action (7725 JP)</a>.  <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/164/830/original/2020-10-13_06-15-09.png?1602537360" class="editor-image img-responsive" data-smartkarma-image-id="164830"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/164/831/original/2020-10-13_06-17-29.png?1602537468" class="editor-image img-responsive" data-smartkarma-image-id="164831"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div></section><div>
<hr>
DAILY STATS 
Results continue to improve, but Revisions are net negative.
</div><hr><div>35 Quarterly Results</div><div><ul style="list-style-type: disc;">
<li>Results Score: 51% Positive / 17% Neutral / 31% Negative</li>
<li>Average Results Score Change: +1.6 points</li>
<li>Average % Change in Revenue: -3.8% Quarter YoY / -2.2% Rolling TTM YoY </li>
<li>Average Operating Profit Margin Change: -2.2ppt</li>
<li>Percentage Making Quarterly Losses: 20%</li>
</ul></div><hr><div>20 Annual • 12 Interim Forecasts/Revisions</div><div><ul style="list-style-type: disc;">
<li>Annual Forecast/Revision Score: 30% Positive / 5% Neutral / 65% Negative</li>
<li>Interim Forecast/Revision Score Change: 33% Positive / 17% Neutral / 50% Negative</li>
<li>Average Forecast/Revision Score Change: -6.3 point</li>
</ul></div>

• BEST &amp; WORST •The best and worst pair from yesterday's announcements is home centre Kohnan Shoji (7516 JP) and image sensor testing equipment maker and erstwhile gaijin favourite Inter Action (7725 JP).  Source for all charts &amp; tables: Japan Analytics

DAILY STATS 
Results continue to improve, but Revisions are net negative.
35 Quarterly Results
Results Score: 51% Positive / 17% Neutral / 31% Negative
Average Results Score Change: +1.6 points
Average % Change in Revenue: -3.8% Quarter YoY / -2.2% Rolling TTM YoY 
Average Operating Profit Margin Change: -2.2ppt
Percentage Making Quarterly Losses: 20%
20 Annual • 12 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 30% Positive / 5% Neutral / 65% Negative
Interim Forecast/Revision Score Change: 33% Positive / 17% Neutral / 50% Negative
Average Forecast/Revision Score Change: -6.3 point


🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​​12 - Cosmos, Kohnan Shoji, Hogy Medical, Inter Action

Japan

COSMOS Pharmaceutical Corporation operates drug stores based in Kyushu. The Company sells daily necessities such as drug medicines, foodstuffs, and alcoholic beverages.

Price Gauge
52-week Range	0.00 - 0.00
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Cosmos Pharmaceutical (3349 JP)

Japan Drugstores: Growing Leadership in Food, Household, Cosmetics – and the Odd Medicine Too

The Japanese drugstore sector has seen a big merger but there will be more as the sector not only consolidates down to a few leaders but also...

Michael Causton

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

Why Discount Works in Japan: Lopia, Tokyo’s ‘Low Price Utopia’ Triples Sales Since 2011

The low price food market is booming in Japan but still doesn't get the recognition it deserves. As well as listed firms, we highlight the unlisted...

Michael Causton

🇯🇵 JAPAN • Results & Revisions 10/12 - Cosmos, Kohnan Shoji, Hogy Medical, Inter Action

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Campbell Gunn

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Japan Drugstores: Growing Leadership in Food, Household, Cosmetics – and the Odd Medicine Too

The Japanese drugstore sector has seen a big merger but there will be more as the sector not only consolidates down to a few leaders but also...

Michael Causton

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

Why Discount Works in Japan: Lopia, Tokyo’s ‘Low Price Utopia’ Triples Sales Since 2011

The low price food market is booming in Japan but still doesn't get the recognition it deserves. As well as listed firms, we highlight the unlisted...

Michael Causton

🇯🇵 JAPAN • Results & Revisions 10/​​​​​​​​​​​12 - Cosmos, Kohnan Shoji, Hogy Medical, Inter Action

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Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 10/12 - Cosmos, Kohnan Shoji, Hogy Medical, Inter Action