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. 

Thematic (Sector/Industry)

<ul>
<li>Japanese are developing a growing love for frozen foods, creating new opportunities for food brands and retailers.  </li>
<li>Frozen foods were long overlooked within the supply chain because of a traditional emphasis on fresh foods but frozen </li>
<li>As supply has increased, consumer demand has grown to match and now, with the growth of e-commerce and home delivery, frozen foods offer key advantages to both consumers and retailers.</li>
</ul>


Japanese are developing a growing love for frozen foods, creating new opportunities for food brands and retailers.  
Frozen foods were long overlooked within the supply chain because of a traditional emphasis on fresh foods but frozen 
As supply has increased, consumer demand has grown to match and now, with the growth of e-commerce and home delivery, frozen foods offer key advantages to both consumers and retailers.


Event-Driven

<a href="https://www.smartkarma.com/entities/h2o-retailing-corp" target="_blank" data-smartkarma-citation="entities:17562:1" rel="noopener">H2 O Retailing (8242 JP)</a>, the biggest retail group in Kansai, announced in late August that it would expand its share in <a href="https://www.smartkarma.com/entities/kansai-super-market-ltd" target="_blank" data-smartkarma-citation="entities:15519:1" rel="noopener">Kansai Super Market (9919 JP)</a> to take a majority stake. As is usual, the announcement was made with full understanding and acceptance by Kansai Supermarket’s board and CEO, but things have not gone according to plan. We now face another situation where existing shareholders object to a cosy, pre-agreed takeover. In this case, the company objecting is OK Super, the perennially successful Tokyo-based discount supermarket.OK Super would, in our opinion, offer the best growth longer term given its operational excellence, low price positioning and massive pent-up Japanese consumer demand for lower prices. Last year, OK Super broke ¥508 billion in sales for the first time, making it a top four chain, and achieved operating profits of ¥37.8 billion. In contrast, Kansai Super sales were ¥130.9 billion, with operating profits of ¥2.7 billion.Whereas Kansai Super largely represents past supermarket success, OK is the present and future and the prospect of OK entering the Kansai market would represent a serious threat to existing chains, not least H2O’s own.

H2 O Retailing (8242 JP), the biggest retail group in Kansai, announced in late August that it would expand its share in Kansai Super Market (9919 JP) to take a majority stake. As is usual, the announcement was made with full understanding and acceptance by Kansai Supermarket’s board and CEO, but things have not gone according to plan. We now face another situation where existing shareholders object to a cosy, pre-agreed takeover. In this case, the company objecting is OK Super, the perennially successful Tokyo-based discount supermarket.OK Super would, in our opinion, offer the best growth longer term given its operational excellence, low price positioning and massive pent-up Japanese consumer demand for lower prices. Last year, OK Super broke ¥508 billion in sales for the first time, making it a top four chain, and achieved operating profits of ¥37.8 billion. In contrast, Kansai Super sales were ¥130.9 billion, with operating profits of ¥2.7 billion.Whereas Kansai Super largely represents past supermarket success, OK is the present and future and the prospect of OK entering the Kansai market would represent a serious threat to existing chains, not least H2O’s own.

H2O Retailing and OK Super: Which Is the Better Owner of Kansai Supermarket?

Equity Bottom-Up

There are few discount supermarkets in Japan and the largest by far is Kobe Bussan’s Gyomu Super franchise chain.
Despite its no frills presentation and reliance on frozen foods, over the past 12 months, prices that are up to half that charged at mainstream chains have drawn in more customers and across a wider age range.
The company is now expecting yet another record performance this year.
When we first recommend Kobe Bussan in October 2018, the share price stood at around ¥780 and has risen to ¥4,080 since. This isn't cheap but given the five year growth potential, we remain bullish about the fundamentals long-term.

There are few discount supermarkets in Japan and the largest by far is Kobe Bussan’s Gyomu Super franchise chain.
Despite its no frills presentation and reliance on frozen foods, over the past 12 months, prices that are up to half that charged at mainstream chains have drawn in more customers and across a wider age range.
The company is now expecting yet another record performance this year.
When we first recommend Kobe Bussan in October 2018, the share price stood at around ¥780 and has risen to ¥4,080 since. This isn't cheap but given the five year growth potential, we remain bullish about the fundamentals long-term.

The following is an in-depth review of Japanese retail in the last 18 months covering all the main formats and categories, providing a quick way to see an overview of all the key trends and winners and losers in Japanese retailing now and going forward.FY2020 was an anomaly and one that businesses everywhere will want to forget and never repeat. There was more than enough pain among Japan’s top retailers last year, but equally some formats did surprisingly well given the circumstances.For most, work-from-home was the single most important factor in determining a chain’s fortunes. City-centre stores and shopping centres offering mostly discretionary shopping have been hit hard, as have convenience stores.But those chains selling essentials, healthcare, electronics and, most importantly, food, all saw their fortunes improve. The pandemic has also revealed the strong, dynamic players and exposed the weaker ones. Oh, and everyone needs to be online.

The following is an in-depth review of Japanese retail in the last 18 months covering all the main formats and categories, providing a quick way to see an overview of all the key trends and winners and losers in Japanese retailing now and going forward.FY2020 was an anomaly and one that businesses everywhere will want to forget and never repeat. There was more than enough pain among Japan’s top retailers last year, but equally some formats did surprisingly well given the circumstances.For most, work-from-home was the single most important factor in determining a chain’s fortunes. City-centre stores and shopping centres offering mostly discretionary shopping have been hit hard, as have convenience stores.But those chains selling essentials, healthcare, electronics and, most importantly, food, all saw their fortunes improve. The pandemic has also revealed the strong, dynamic players and exposed the weaker ones. Oh, and everyone needs to be online.

The Polarising Pandemic in Japanese Retail

All leading supermarkets saw sales improve in FY2020 as shoppers stayed away from competing formats and profits also surged.However, while the changes confirmed stability among the largest companies and a handful of medium-sized chains, the sudden surge in profits among low-margin chains could be short-lived once shoppers become more mobile again and return to other options for their food needs.The gap between the best and rest will widen, spurring consolidation as the leaders grab more market share in new territories.

All leading supermarkets saw sales improve in FY2020 as shoppers stayed away from competing formats and profits also surged.However, while the changes confirmed stability among the largest companies and a handful of medium-sized chains, the sudden surge in profits among low-margin chains could be short-lived once shoppers become more mobile again and return to other options for their food needs.The gap between the best and rest will widen, spurring consolidation as the leaders grab more market share in new territories.

Leading Supermarkets Have a Great Year but Gap Widens Between Best and Rest

Japan

Yaoko Co., Ltd. operates local supermarkets in the Saitama Prefecture. The Company handles fresh food products, daily-use sundry products, and other various goods in local area.

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Yaoko Co Ltd (8279 JP)

Japan's New Food Boom: Frozen Food

Frozen food sales have boomed during the pandemic but the new enthusiasm for all things frozen is a long-term trend and some retailers and...

Michael Causton

H2O Retailing and OK Super: Which Is the Better Owner of Kansai Supermarket?

Kansai Super is the prize in a bidding war between H2O Retailing and OK Super. While the former would use Kansai to consolidate market share, a...

Michael Causton

Kobe Bussan: Achieving New Records

Japan's discount food market is booming. The biggest discount supermarket operator is Kobe Bussan. The share price has around 6-fold since we first...

Michael Causton

The Polarising Pandemic in Japanese Retail

A complete review of the Japanese retail sector in the last 18 months, format by format, category by category, providing key trends and winners &...

Michael Causton

Leading Supermarkets Have a Great Year but Gap Widens Between Best and Rest

Japanese supermarkets had a great year in 2020 thanks to Covid. However, the gap in performance is widening and more consolidation can be expected.

Michael Causton

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