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

<a href="https://www.smartkarma.com/entities/izumi-co-ltd" target="_blank" data-smartkarma-citation="entities:13173:1" rel="noopener">Izumi Co Ltd (8273 JP)</a> is Japan’s largest retailer in the South and, at least until 2018, was the last GMS to maintain a growth trajectory. Now, with the popularity of the <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>  discount food chain eating into Izumi’s profits in Kyushu and the same lack of enthusiasm for the GMS format also spreading as it has elsewhere, Izumi last month announced a wide-ranging and ambitious plan to reinvent itself over the next five years. Izumi’s alliance with <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> will also grow in importance.
These plans include expansion online and investment in discount retailing. The problem with the former is that there are already many more and better organised competitors and in the latte, Izumi has no experience in the kind of supply chain expertise required to build a discount retail business of any scale.
While Izumi has been one of the few well-run GMS operators in the past five years, there is increasing concern that it will fall victim to pressures from discounters on one side and e-commerce competitors on the other.

Izumi Co Ltd (8273 JP) is Japan’s largest retailer in the South and, at least until 2018, was the last GMS to maintain a growth trajectory. Now, with the popularity of the Cosmos Pharmaceutical (3349 JP)  discount food chain eating into Izumi’s profits in Kyushu and the same lack of enthusiasm for the GMS format also spreading as it has elsewhere, Izumi last month announced a wide-ranging and ambitious plan to reinvent itself over the next five years. Izumi’s alliance with Seven &amp; I Holdings (3382 JP) will also grow in importance.
These plans include expansion online and investment in discount retailing. The problem with the former is that there are already many more and better organised competitors and in the latte, Izumi has no experience in the kind of supply chain expertise required to build a discount retail business of any scale.
While Izumi has been one of the few well-run GMS operators in the past five years, there is increasing concern that it will fall victim to pressures from discounters on one side and e-commerce competitors on the other.

Izumi Focus on Food and Online Should Improve Margins

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

<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> is Japan’s largest retail conglomerate by revenues but it struggles to make respectable profits.Now, as with Seven-Eleven at <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>, Aeon may have found the high margin star subsidiary it has been looking for: Welcia Holdings.Welcia is the country’s leading drugstore chain and is growing strongly, exceeding ¥1 trillion in sales for the first time and forecasting an increase to ¥1.8 trillion through 2023.Last year, it made almost as much profit as the whole of Aeon combined but there are plenty of opportunities to extract more profit from this sector.Like most Japanese drugstore stocks, Welcia is currently trading at historically high levels thanks to a surge in sales from March onwards (see below for details)  but with more consolidation coming in the sector led by the leaders, Welcia is a solid buy when dips in the market provide an opportunity.

Aeon Co Ltd (8267 JP) is Japan’s largest retail conglomerate by revenues but it struggles to make respectable profits.Now, as with Seven-Eleven at Seven &amp; I Holdings (3382 JP), Aeon may have found the high margin star subsidiary it has been looking for: Welcia Holdings.Welcia is the country’s leading drugstore chain and is growing strongly, exceeding ¥1 trillion in sales for the first time and forecasting an increase to ¥1.8 trillion through 2023.Last year, it made almost as much profit as the whole of Aeon combined but there are plenty of opportunities to extract more profit from this sector.Like most Japanese drugstore stocks, Welcia is currently trading at historically high levels thanks to a surge in sales from March onwards (see below for details)  but with more consolidation coming in the sector led by the leaders, Welcia is a solid buy when dips in the market provide an opportunity.

'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.

Thematic (Sector/Industry)

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/134/299/original/2020-05-19_06-46-49.png?1589838438" class="editor-image img-responsive" data-smartkarma-image-id="134299"></figure><div class="content-caption">Source • Japan Analytics</div><div>As this quarter's results and revisions announcements wind down, in the DETAIL below, we shall review Monday's updates:-</div><div><ul>
<li>The balance between positive/neutral/negative of the 50 results announcements was 23:2:25. </li>
<li>For the 24 revisions/initial forecasts, the split was 6:0:18, and the average Revision Score was -6.1. </li>
</ul></div>

Source • Japan AnalyticsAs this quarter's results and revisions announcements wind down, in the DETAIL below, we shall review Monday's updates:-
The balance between positive/neutral/negative of the 50 results announcements was 23:2:25. 
For the 24 revisions/initial forecasts, the split was 6:0:18, and the average Revision Score was -6.1. 


🇯🇵 JAPAN • Results & Revisions 18th May - Panasonic, Komatsu, Terumo, Sundrug & The Corona Valley

Japan

SUNDRUG CO., LTD. operates an outlet drug store chain primarily in the Tokyo area.  The Company sells mainly medicines, cosmetics, baby care products, and household utensils.  Sundrug supplies merchandise to franchise stores.  The Company also operates a real estate business.

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Sundrug Co Ltd (9989 JP)

Izumi Focus on Food and Online Should Improve Margins

Izumi has been one of the few decent performers among GMS retailers in the past five years but now looks under increasing pressure - despite new...

Michael Causton

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

Welcia: Aeon’s Profit Machine

Aeon Co Ltd (8267 JP) is Japan’s largest retail conglomerate by revenues but it struggles to make respectable profits.Now, as with Seven-Eleven at...

Michael Causton

🇯🇵 JAPAN • Results & Revisions 18th May - Panasonic, Komatsu, Terumo, Sundrug & The Corona Valley

As this quarter's results and revisions announcements wind down, in the DETAIL below, we shall review Monday's updates:- The balance between...

Campbell Gunn

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Market Cap (USDm)

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