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/26993" target="_blank" data-smartkarma-citation="entities:26993:1">Locondo (3558 JP)</a> has for long talked up its plans to become a major player in the fashion e-commerce market and a rival to <a href="https://www.smartkarma.com/entities/18379" target="_blank" data-smartkarma-citation="entities:18379:1">ZOZO (3092 JP)</a>.This hasn’t happened yet, but the e-commerce firm hasn’t given up and now plans to create a chain of franchised Locondo stores to build its name.Locondo posted GMV growth of 48.4% in FY2018 ending February to ¥14.1 billion and sales rose 68.9% to ¥6.7 billion.Like Zozo, Locondo is also launching its own private brands and to differentiate from Zozo is introducing a high-end online mall called Locondo Department.Last month, Locondo acquired a mobile fashion mall called Mobakore from Senshukai and says it has ¥5 billion set aside for more acquisitions to help build scale.

Locondo (3558 JP) has for long talked up its plans to become a major player in the fashion e-commerce market and a rival to ZOZO (3092 JP).This hasn’t happened yet, but the e-commerce firm hasn’t given up and now plans to create a chain of franchised Locondo stores to build its name.Locondo posted GMV growth of 48.4% in FY2018 ending February to ¥14.1 billion and sales rose 68.9% to ¥6.7 billion.Like Zozo, Locondo is also launching its own private brands and to differentiate from Zozo is introducing a high-end online mall called Locondo Department.Last month, Locondo acquired a mobile fashion mall called Mobakore from Senshukai and says it has ¥5 billion set aside for more acquisitions to help build scale.

Zozo Competition: Locondo up 48%, Unveils Store Franchise, Adds Higher End Brands

In January, <a href="https://www.smartkarma.com/entities/4887" target="_blank" data-smartkarma-citation="entities:4887:1">United Arrows (7606 JP)</a> announced it would take back control of its own e-commerce operations from <a href="https://www.smartkarma.com/entities/18379" target="_blank" data-smartkarma-citation="entities:18379:1">ZOZO (3092 JP)</a> but stipulated it would continue to sell through the online mall. This was a clear break in a long-standing relationship but there was at least confirmation of a continuing link.Now, however, United Arrows has announced a new mobile fashion platform called Fitom that is in many ways a competitor to one of Zozo’s key products, its Wear app.Like the Wear app, Fitom lets users upload fashion looks and discuss trends but also adds more incentives for users to check out product in stores on behalf of other users to confirm sizing and quality.As well as targeting Zozo's Wear app, the service encourages more store visits by online fashion consumers and allow participating merchants to get access to key data on Japanese fashion trends.

In January, United Arrows (7606 JP) announced it would take back control of its own e-commerce operations from ZOZO (3092 JP) but stipulated it would continue to sell through the online mall. This was a clear break in a long-standing relationship but there was at least confirmation of a continuing link.Now, however, United Arrows has announced a new mobile fashion platform called Fitom that is in many ways a competitor to one of Zozo’s key products, its Wear app.Like the Wear app, Fitom lets users upload fashion looks and discuss trends but also adds more incentives for users to check out product in stores on behalf of other users to confirm sizing and quality.As well as targeting Zozo's Wear app, the service encourages more store visits by online fashion consumers and allow participating merchants to get access to key data on Japanese fashion trends.

Zozo Competition: United Arrows Launches Rival to Zozo’s Wear App

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Thematic (Sector/Industry)

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/132/original/2019-03-25_18-58-11.png?1553507902" class="editor-image img-responsive" data-smartkarma-image-id="83132"></figure>Source: Japan Analytics
</div>There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">S</a><a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">oftbank Group (9984 JP)</a>) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/083/206/original/2019-03-25_17-46-58.png?1553565764" class="editor-image img-responsive" data-smartkarma-image-id="83206"></figure><div class="content-caption">Source: Japan Analytics</div>OVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - <a href="https://www.smartkarma.com/entities/315" target="_blank" data-smartkarma-citation="entities:315:1">Softbank Group (9984 JP)</a>'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'.


Source: Japan Analytics
There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33 Information &amp; Communication sub-Sector but is broader in that it encompasses all companies listed on all sections and exchanges but is also narrower in that we have excluded Telecommunications (including Softbank Group (9984 JP)) and Information Technology companies. We have adopted a 'quantamental' approach which covers the long-term and current trends for Japan's Internet Sector as a whole, as well as eight sub-Sectors or Peer Groups and the Sectors' leading companies by market capitalisation.  Our focus is exclusively on the locally-listed universe and is based on disclosed financial and market data. We do not provide any forecasts, other than the companies' own forecasts and we do not attempt to make any business model or strategic judgments. Our focus is purely on financial and market performance. We do not cover unlisted and defunct companies such as Livedoor and, therefore, there is implicit survivor bias in the data. The broad themes that are developed in DETAIL below are grouped into six topics as follows: - • SUMMARY •  • FUNDAMENTAL OVERVIEW •  • SCORING - RESULTS &amp; REVISIONS / RELATIVE PRICE •  • RESULTS TRENDS •  • VALUATION • • RECOMMENDATIONS •Source: Japan AnalyticsOVERVIEW - As will be covered in greater DETAIL below, Japan has failed to evolve a substantial Internet Sector and, in many business models, has been passed by global competitors including in the home market. Although Internet Sector revenues have grown steadily and now account for close to 1% of the total for all listed companies, operating margins have declined by half in the last seven years and are now only four percentage points higher than the market average. Accordingly, as measured by our Results &amp; Revision Score, the Sector is close to a twelve-year low. The market's response is an unchanged Sector weight in the market composite despite the addition of 111 new companies in the last six years, and a Relative Price Score that has moved in a narrow range over that period. The Sector averages disguise the weak business and market performance of a handful of Sector leaders as well as the overvaluation of the Sector's more successful business models, which is partly a result of a lack of alternatives. Despite the world's most significant Internet investor - Softbank Group (9984 JP)'s Vision Fund - being based in Japan, this fund and other global investors in Internet business have been right to give Japan a 'pass'. 

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

E-commerce is set to account for 15% of retail sales in 2025, double the size of any other channel, and become the biggest channel for physical merchandise by 2023.
However, recent research, which considers online sales in a store context, suggests that already in 2016-17, 35.3% of all retail sales were at least partly a result of online interactions through an omnichannel process.
By 2024, total EC sales including omnichannel transactions are expected to hit 44.6% of all retail sales or approximately ¥76.4 trillion.

E-commerce is set to account for 15% of retail sales in 2025, double the size of any other channel, and become the biggest channel for physical merchandise by 2023.
However, recent research, which considers online sales in a store context, suggests that already in 2016-17, 35.3% of all retail sales were at least partly a result of online interactions through an omnichannel process.
By 2024, total EC sales including omnichannel transactions are expected to hit 44.6% of all retail sales or approximately ¥76.4 trillion.

Japan E-Commerce: Digital to Influence 45% of All Retail Sales by 2025

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

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.

Yusaku Maezawa is once again in the news. This time due to <a href="https://www.mag2.com/p/news/391173" target="_blank">speculation that he is auctioning off at least part of his art collection at Sotheby's in Hong Kong on April 1st</a>.Following on from the share buyback that was conducted in May last year which:<ul>
<li>Allowed Maezawa to sell 6m out of his then 118.227m shares into a buyback that totalled just 6.35m shares.</li>
<li>Led to a ¥38.3bn swing in net cash from +¥24.6bn to -¥13.8bn (the buyback totaled ¥24.4bn)</li>
<li>Was conducted at the same time that share options for up to 31m shares were issued, of which Maezawa could have been allocated more than 90%.</li>
</ul>this looks a lot like a sudden need to raise cash.

Yusaku Maezawa is once again in the news. This time due to speculation that he is auctioning off at least part of his art collection at Sotheby's in Hong Kong on April 1st.Following on from the share buyback that was conducted in May last year which:
Allowed Maezawa to sell 6m out of his then 118.227m shares into a buyback that totalled just 6.35m shares.
Led to a ¥38.3bn swing in net cash from +¥24.6bn to -¥13.8bn (the buyback totaled ¥24.4bn)
Was conducted at the same time that share options for up to 31m shares were issued, of which Maezawa could have been allocated more than 90%.
this looks a lot like a sudden need to raise cash.

Japan

ZOZO Inc operates internet shopping sites for apparel.  The Company also provides communication services relating to apparel such as blogs by fashion moguls and internet chat room for users.

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ZOZO Inc (3092 JP)

Zozo Competition: Locondo up 48%, Unveils Store Franchise, Adds Higher End Brands

Locondo (3558 JP) has for long talked up its plans to become a major player in the fashion e-commerce market and a rival to ZOZO (3092 JP).This...

Michael Causton

Zozo Competition: United Arrows Launches Rival to Zozo’s Wear App

In January, United Arrows (7606 JP) announced it would take back control of its own e-commerce operations from ZOZO (3092 JP) but stipulated it...

Michael Causton

🇯🇵 Japan • Internet Sector Review - 'Japan Passing'

There are currently 241 listed Japanese companies that can be categorised as Internet businesses. Our classification overlaps with the TOPIX-33...

Campbell Gunn

Japan E-Commerce: Digital to Influence 45% of All Retail Sales by 2025

E-commerce is set to account for 15% of retail sales in 2025, double the size of any other channel, and become the biggest channel for physical...

Michael Causton

Zozo: Never Meet a Margin Call

Yusaku Maezawa is once again in the news. This time due to speculation that he is auctioning off at least part of his art collection at Sotheby's...

Mio Kato

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