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 convenience store sector (CVS) is Japan’s most successful retail format and one that has now enjoyed almost 50 years of growth. So the sudden and unprecedented sales declines in 2020, caused by so many people staying away from city centres during the pandemic, are an entirely new test for the sector.Temporary blips aside, this leading position is likely to endure a little longer. Even with e-commerce growing faster and likely to over take CVS as the biggest channel by 2025, CVS will take on a prominent role in the fulfilment model used by many e-commerce companies.In the CVS sector itself, Familymart's delisting and new role spearheading Itochu's retail interests will cause ructions in a sector that has reached saturation and where increased competition will force more change and differentiation.The following is an in-depth review of the state of play in Japan's convenience store sector following the absorption of <a href="https://www.smartkarma.com/entities/familymart-co-ltd" target="_blank" data-smartkarma-citation="entities:320:1" rel="noopener">FamilyMart Co Ltd (8028 JP)</a> by <a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a>. The review includes:<ul>
<li>Full rankings of all convenience stores including sales, stores, market share, key metrics like sales per store per day etc.</li>
<li>Analysis of the current and future prospects of the big three and the outlook for the smaller players – as much targets for the big three than anything else.</li>
<li>Details on e-commerce initiatives (or the lack of them), store coverage, diversification strategies etc.</li>
<li>Updates on the pressure points of the labour shortage and franchisee rebellions.</li>
</ul>This insight provides a complete review of the sector and a clear picture of where convenience stores are headed in the next three years.

The convenience store sector (CVS) is Japan’s most successful retail format and one that has now enjoyed almost 50 years of growth. So the sudden and unprecedented sales declines in 2020, caused by so many people staying away from city centres during the pandemic, are an entirely new test for the sector.Temporary blips aside, this leading position is likely to endure a little longer. Even with e-commerce growing faster and likely to over take CVS as the biggest channel by 2025, CVS will take on a prominent role in the fulfilment model used by many e-commerce companies.In the CVS sector itself, Familymart's delisting and new role spearheading Itochu's retail interests will cause ructions in a sector that has reached saturation and where increased competition will force more change and differentiation.The following is an in-depth review of the state of play in Japan's convenience store sector following the absorption of FamilyMart Co Ltd (8028 JP) by Itochu Corp (8001 JP). The review includes:
Full rankings of all convenience stores including sales, stores, market share, key metrics like sales per store per day etc.
Analysis of the current and future prospects of the big three and the outlook for the smaller players – as much targets for the big three than anything else.
Details on e-commerce initiatives (or the lack of them), store coverage, diversification strategies etc.
Updates on the pressure points of the labour shortage and franchisee rebellions.
This insight provides a complete review of the sector and a clear picture of where convenience stores are headed in the next three years.

Convenience Stores: Diversification and a Fight for Share as Familymart Delists

Thematic (Sector/Industry)

With Japanese shoppers still reluctant to visit stores too often, more are turning to online food shopping.This trend was already building gradually before the pandemic, but demand has grown massively in the past nine months and large and small food retailers alike are rushing to add more online capacity.The winners will be the ones able to solve the last mile problem and add some customer-centric innovations. The sector is currently led by <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> in its partnership with <a href="https://www.smartkarma.com/entities/mitsubishi-corp" target="_blank" data-smartkarma-citation="entities:20668:1" rel="noopener">Mitsubishi Corp (8058 JP)'s </a>supermarket affiliate, <a href="https://www.smartkarma.com/entities/life-corp" target="_blank" data-smartkarma-citation="entities:1743:1" rel="noopener">Life Corp (8194 JP).</a> Others like <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> and <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> are also investing for the long-term and even <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> is having another go and we review the current status of all the main players below the fold.What is certain is that, with online penetration of the food retail sector still below 3%, there is plenty of share to mop up for all concerned.

With Japanese shoppers still reluctant to visit stores too often, more are turning to online food shopping.This trend was already building gradually before the pandemic, but demand has grown massively in the past nine months and large and small food retailers alike are rushing to add more online capacity.The winners will be the ones able to solve the last mile problem and add some customer-centric innovations. The sector is currently led by Amazon.com Inc (AMZN US) in its partnership with Mitsubishi Corp (8058 JP)'s supermarket affiliate, Life Corp (8194 JP). Others like Aeon Co Ltd (8267 JP) and Rakuten Inc (4755 JP) are also investing for the long-term and even Seven &amp; I Holdings (3382 JP) is having another go and we review the current status of all the main players below the fold.What is certain is that, with online penetration of the food retail sector still below 3%, there is plenty of share to mop up for all concerned.

Online Food Demand Brings New Ideas and Innovations

Event-Driven

Direct marketing firms (the former catalogue-based vendors) have had a terrible five years in the face of competition from e-commerce, high catalogue printing costs and legacy supply chains that make product out of date even before catalogues are posted in letter boxes.Senshukai was once the leader of the sector but is now barely half its former size and will now seek protection in the arms of JR East. There are only superficial synergies for the two firms.

Direct marketing firms (the former catalogue-based vendors) have had a terrible five years in the face of competition from e-commerce, high catalogue printing costs and legacy supply chains that make product out of date even before catalogues are posted in letter boxes.Senshukai was once the leader of the sector but is now barely half its former size and will now seek protection in the arms of JR East. There are only superficial synergies for the two firms.

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

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.

Japanese convenience store chain <a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson Inc (2651 JP)</a> holds the lead among foreign-owned convenience store chains and the fifth place overall in the Chinese convenience store market. As of August 2020, Lawson had around 2,854 convenience stores in China.It was <a href="https://asia.nikkei.com/Business/Retail/Lawson-tests-next-step-of-convenience-store-evolution-in-China" target="_blank" rel="noopener">reported</a> yesterday that Lawson’s Chinese business is on track to post its first operating profit this fiscal year after a string of losses.

Japanese convenience store chain Lawson Inc (2651 JP) holds the lead among foreign-owned convenience store chains and the fifth place overall in the Chinese convenience store market. As of August 2020, Lawson had around 2,854 convenience stores in China.It was reported yesterday that Lawson’s Chinese business is on track to post its first operating profit this fiscal year after a string of losses.

Lawson’s China Business: Turning Profitable, Though Years Away From a Significant Contribution

Last month’s confirmation that Sogo Seibu is closing five more stores ends a terrible six months for department store chains.
Things started to look bad for the sector well before the lockdown as falling tourist numbers from South Korea, the impact of the consumption tax hike, and cautious consumers at home stole the gains made in the previous year.
A survey of 10,000 consumers earlier this year between the ages of 20 and 70 and 65% replied that they rarely visited department stores, if at all. This is up from 53.4% in 2011.
That the sector is in trouble is well-known but the shake out will be both accelerated and intensified by the current crisis, meaning that even fewer stores will survive, leaving just 100 or so true department stores, 50% less than now.
The good news is that the survivors will likely thrive, particularly <a href="https://www.smartkarma.com/entities/j-front-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:8947:1" rel="noopener">J Front Retailing (3086 JP)</a> and <a href="https://www.smartkarma.com/entities/takashimaya-co-ltd" target="_blank" data-smartkarma-citation="entities:370:1" rel="noopener">Takashimaya (8233 JP)</a>. While the entire sector is currently a sell, investors looking at the long-term may see value in a few of the leading firms.
The following is an in-depth review of the sector with the following sections:
<ol>
<li>Summary of key trends</li>
<li>Overview of Sales and analysis of strong and weak categories now and in the future</li>
<li>Rankings of chains and stores by category sales</li>
<li>Analysis of regional differences</li>
<li>Ranking of Top 30 firms by Sales and OPM and analysis of strong vs weak chains</li>
<li>Ranking of Top 50 stores and analysis of sales density performance</li>
<li>Review of solutions to decline and which firms will survive and thrive.</li>
</ol>
This insight is labelled bearish because the sector will continue to decline but a small number of firms will have a sustained future and see higher growth in operating margins once the current crisis is over.

Last month’s confirmation that Sogo Seibu is closing five more stores ends a terrible six months for department store chains.
Things started to look bad for the sector well before the lockdown as falling tourist numbers from South Korea, the impact of the consumption tax hike, and cautious consumers at home stole the gains made in the previous year.
A survey of 10,000 consumers earlier this year between the ages of 20 and 70 and 65% replied that they rarely visited department stores, if at all. This is up from 53.4% in 2011.
That the sector is in trouble is well-known but the shake out will be both accelerated and intensified by the current crisis, meaning that even fewer stores will survive, leaving just 100 or so true department stores, 50% less than now.
The good news is that the survivors will likely thrive, particularly J Front Retailing (3086 JP) and Takashimaya (8233 JP). While the entire sector is currently a sell, investors looking at the long-term may see value in a few of the leading firms.
The following is an in-depth review of the sector with the following sections:

Summary of key trends
Overview of Sales and analysis of strong and weak categories now and in the future
Rankings of chains and stores by category sales
Analysis of regional differences
Ranking of Top 30 firms by Sales and OPM and analysis of strong vs weak chains
Ranking of Top 50 stores and analysis of sales density performance
Review of solutions to decline and which firms will survive and thrive.

This insight is labelled bearish because the sector will continue to decline but a small number of firms will have a sustained future and see higher growth in operating margins once the current crisis is over.

Japan's Department Stores in 2020: The Biggest Crisis Since World War II

Japan

Seven & i Holdings Co., Ltd. is a holding company which was established through the merger of Ito-Yokado Co., Seven Eleven Japan Co., and Denny's Japan. The Company plans, manages, and operates mainly convenience stores, supermarkets, and department stores.

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Seven & I Holdings (3382 JP)

Online Food Demand Brings New Ideas and Innovations

E-commerce has less than 3% share of food retailing in Japan but this is about to change and fast. Amazon/Life is leading but Aeon, Rakuten and...

Michael Causton

Senshukai Hopes for Rebirth with JR East

Senshukai has sought patrons before to help restructure, including J Front, but these have failed. It is trying again with JR East which is taking...

Michael Causton

Lawson’s China Business: Turning Profitable, Though Years Away From a Significant Contribution

Japanese convenience store chain Lawson holds the lead among foreign-owned convenience store chains and the fifth place overall in the Chinese...

Oshadhi Kumarasiri

Japan's Department Stores in 2020: The Biggest Crisis Since World War II

Japan's department store sector will continue to contract so it is right to be bearish on the sector. However, the clear out will allow some firms...

Michael Causton

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52-week Range

Market Cap (USDm)

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Convenience Stores: Diversification and a Fight for Share as Familymart Delists

If you are looking for a full in-depth review and analysis of Japan's convenience stores sector and how things will shape up now that Familymart is...

Michael Causton

Online Food Demand Brings New Ideas and Innovations

E-commerce has less than 3% share of food retailing in Japan but this is about to change and fast. Amazon/Life is leading but Aeon, Rakuten and...

Michael Causton

Senshukai Hopes for Rebirth with JR East

Senshukai has sought patrons before to help restructure, including J Front, but these have failed. It is trying again with JR East which is taking...

Michael Causton

Lawson’s China Business: Turning Profitable, Though Years Away From a Significant Contribution

Japanese convenience store chain Lawson holds the lead among foreign-owned convenience store chains and the fifth place overall in the Chinese...

Oshadhi Kumarasiri

Japan's Department Stores in 2020: The Biggest Crisis Since World War II

Japan's department store sector will continue to contract so it is right to be bearish on the sector. However, the clear out will allow some firms...

Michael Causton