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)

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

Equity Bottom-Up

The latest Aeon Style was unveiled in June. Despite the format being around for about a decade, this is the first Aeon Style in central Tokyo and is being seen as a new model of supermarket designed for city centres.
Although all the big General Merchandise Store (GMS) retailers have been suffering from falling footfall and sales for more than a decade, <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)'s</a> diligence in trying to revive the format with different models for suburban and city-centre locations may finally be paying off.
Combined with its investment in online supermarket ordering systems and BOPIS (Buy Online Pickup In Store), Aeon may finally have a solution for all those ageing big box stores.

The latest Aeon Style was unveiled in June. Despite the format being around for about a decade, this is the first Aeon Style in central Tokyo and is being seen as a new model of supermarket designed for city centres.
Although all the big General Merchandise Store (GMS) retailers have been suffering from falling footfall and sales for more than a decade, Aeon Co Ltd (8267 JP)'s diligence in trying to revive the format with different models for suburban and city-centre locations may finally be paying off.
Combined with its investment in online supermarket ordering systems and BOPIS (Buy Online Pickup In Store), Aeon may finally have a solution for all those ageing big box stores.

New Aeon Style Format Shows Hope for Aeon's Core Business

'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.

<div>• BEST &amp; WORST •</div>Our best and worst pair from Tuesday's announcements is consumer electronics retailer <a href="https://www.smartkarma.com/entities/bic-camera-inc" target="_blank" data-smartkarma-citation="entities:11328:1" rel="noopener">Bic Camera (3048 JP)</a> and Japan's largest mall operator <a href="https://www.smartkarma.com/entities/aeon-mall-co-ltd" target="_blank" data-smartkarma-citation="entities:5262:1" rel="noopener">AEON Mall (8905 JP)</a>.<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/781/original/2020-10-07_06-18-08.png?1602019101" class="editor-image img-responsive" data-smartkarma-image-id="163781"></figure><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/163/782/original/2020-10-07_06-18-56.png?1602019156" class="editor-image img-responsive" data-smartkarma-image-id="163782"></figure><div class="content-caption">Source for all charts &amp; tables: Japan Analytics</div><div><hr></div><div>DAILY STATS</div><hr><div>16 Quarterly Results</div><div><ul style="list-style-type: disc;">
<li>Results Score: 63% Positive / 0% Neutral / 37% Negative</li>
<li>Average Results Score Change: +3.4 points</li>
<li>Average % Change in Revenue: +3.4% Quarter YoY / -0.5% Rolling TTM YoY </li>
<li>Average Operating Profit Margin Change: +0.3ppt</li>
<li>Percentage Making Quarterly Losses: 25%</li>
</ul></div><hr><div>11 Annual • 3 Interim Forecasts/Revisions</div><div><ul style="list-style-type: disc;">
<li>Annual Forecast/Revision Score: 45% Positive /18% Neutral / 37% Negative</li>
<li>Interim Forecast/Revision Score Change: 33% Positive / 0% Neutral / 67% Negative</li>
<li>Average Forecast/Revision Score Change: -0.3 point</li>
</ul></div>

• BEST &amp; WORST •Our best and worst pair from Tuesday's announcements is consumer electronics retailer Bic Camera (3048 JP) and Japan's largest mall operator AEON Mall (8905 JP).Source for all charts &amp; tables: Japan AnalyticsDAILY STATS16 Quarterly Results
Results Score: 63% Positive / 0% Neutral / 37% Negative
Average Results Score Change: +3.4 points
Average % Change in Revenue: +3.4% Quarter YoY / -0.5% Rolling TTM YoY 
Average Operating Profit Margin Change: +0.3ppt
Percentage Making Quarterly Losses: 25%
11 Annual • 3 Interim Forecasts/Revisions
Annual Forecast/Revision Score: 45% Positive /18% Neutral / 37% Negative
Interim Forecast/Revision Score Change: 33% Positive / 0% Neutral / 67% Negative
Average Forecast/Revision Score Change: -0.3 point


🇯🇵 JAPAN • Results & Revisions - 10/​​​​​​​06 -  SAN-A, AEON Mall, Consumer Electronics Retailers

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of financial results for FY2019-20.
Even with the crisis, results were generally better than for FY2018 – although there are big variations by sector.
Those differences are more or less what we’ve come to expect, with traditional formats like department stores continuing to struggle, while those formats that have adopted modern management are doing well.
The following is an in-depth review of Japan's retail sector, providing:
<ul>
<li>An overview of consumer demand and retail performance</li>
<li>Format by format reviews showing growth and profit performance across all the main formats: convenience stores, supermarkets, GMS, consumer electronics, drugstores, homecentres, department stores, apparel, home and other specialty  formats.</li>
<li>Rankings:
<ul>
<li>Market share and size by sector/format</li>
<li>By sales for all retailers with sales over ¥250 billion</li>
<li>By gross and operating margins, split by format and category.</li>
</ul>
</li>
</ul>
As this is an in-depth insight, the review is split into two parts to make it easier to read.  This is Part II which provides snapshot reviews of each format/sector. <a href="https://www.smartkarma.com/insights/the-japan-retail-review-winners-and-losers-in-japanese-retailing-part-i" target="_blank" rel="noopener">Part I, which provides a quick overview of all retailing, can be read here</a>.

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of financial results for FY2019-20.
Even with the crisis, results were generally better than for FY2018 – although there are big variations by sector.
Those differences are more or less what we’ve come to expect, with traditional formats like department stores continuing to struggle, while those formats that have adopted modern management are doing well.
The following is an in-depth review of Japan's retail sector, providing:

An overview of consumer demand and retail performance
Format by format reviews showing growth and profit performance across all the main formats: convenience stores, supermarkets, GMS, consumer electronics, drugstores, homecentres, department stores, apparel, home and other specialty  formats.
Rankings:

Market share and size by sector/format
By sales for all retailers with sales over ¥250 billion
By gross and operating margins, split by format and category.



As this is an in-depth insight, the review is split into two parts to make it easier to read.  This is Part II which provides snapshot reviews of each format/sector. Part I, which provides a quick overview of all retailing, can be read here.

Japan Retail Review 2019-20 Part II: A Sector by Sector Review of Winners and Losers

Event-Driven

<a href="https://www.smartkarma.com/entities/itochu-corp" target="_blank" data-smartkarma-citation="entities:18448:1" rel="noopener">Itochu Corp (8001 JP)</a> has completed its buyout of Familymart (see <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy's</a> insights <a href="https://www.smartkarma.com/insights/itochu-gets-the-famima-hunnypot-and-now-things-get-funky" target="_blank" rel="noopener">here</a>, <a href="https://www.smartkarma.com/insights/itochu-haz-opinionz-about-familymart" target="_blank" rel="noopener">here</a>, <a href="https://www.smartkarma.com/insights/japan-needs-more-cowbell" target="_blank" rel="noopener">here</a> and <a href="https://www.smartkarma.com/insights/the-amended-familymart-document-is-a-must-read-for-investor-stewards" target="_blank" rel="noopener">here</a>). Itochu has clearly taken full advantage of a depressed Familymart share price and an opportunity for the trading house to begin more adventurous diversification of the convenience store business.
This will include moving into more types of food format, including its nascent hybrid store collaborations with supermarkets and drugstores and an upcoming push into e-commerce, but will also mean more integration with Itochu's food wholesale business – which when combined is bigger than that of its arch rival, <a href="https://www.smartkarma.com/entities/mitsubishi-corp" target="_blank" data-smartkarma-citation="entities:20668:1" rel="noopener">Mitsubishi Corp (8058 JP).</a>
Mitsubishi and Itochu have been playing catch-up with each other for the last two decades in a race to build Japan's first integrated food wholesale-retail businesses.
Now that Itochu has succeeded in its bid, the question remains whether Mitsubishi will now look to consolidate its own food retail assets like <a href="https://www.smartkarma.com/entities/lawson-inc" target="_blank" data-smartkarma-citation="entities:1040:1" rel="noopener">Lawson Inc (2651 JP)</a> and <a href="https://www.smartkarma.com/entities/life-corp" target="_blank" data-smartkarma-citation="entities:1743:1" rel="noopener">Life Corp (8194 JP).</a>

Itochu Corp (8001 JP) has completed its buyout of Familymart (see Travis Lundy's insights here, here, here and here). Itochu has clearly taken full advantage of a depressed Familymart share price and an opportunity for the trading house to begin more adventurous diversification of the convenience store business.
This will include moving into more types of food format, including its nascent hybrid store collaborations with supermarkets and drugstores and an upcoming push into e-commerce, but will also mean more integration with Itochu's food wholesale business – which when combined is bigger than that of its arch rival, Mitsubishi Corp (8058 JP).
Mitsubishi and Itochu have been playing catch-up with each other for the last two decades in a race to build Japan's first integrated food wholesale-retail businesses.
Now that Itochu has succeeded in its bid, the question remains whether Mitsubishi will now look to consolidate its own food retail assets like Lawson Inc (2651 JP) and Life Corp (8194 JP).

Familymart: What's Next? And Will Mitsubishi React?

Japan

AEON CO., LTD. operates general merchandise stores, supermarkets, and convenience stores throughout Japan. The Company is also engaged in women's and casual clothing store business, development business of commercial property, and financing service through the subsidiaries.

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Aeon Co Ltd (8267 JP)

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

New Aeon Style Format Shows Hope for Aeon's Core Business

Aeon has seen a gradual improvement in its share price in the last nine months. Despite historically poor returns, Aeon has become more innovative...

Michael Causton

🇯🇵 JAPAN • Results & Revisions - 10/06 - SAN-A, AEON Mall, Consumer Electronics Retailers

• BEST WORST • Our best and worst pair from Tuesday's announcements is

Campbell Gunn

Japan Retail Review 2019-20 Part II: A Sector by Sector Review of Winners and Losers

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of...

Michael Causton

Familymart: What's Next? And Will Mitsubishi React?

Itochu initiated a buyout for an additional 10% of Familymart shares over the summer. The move is widely seen as Itochu taking full advantage of a...

Michael Causton

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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

New Aeon Style Format Shows Hope for Aeon's Core Business

Aeon has seen a gradual improvement in its share price in the last nine months. Despite historically poor returns, Aeon has become more innovative...

Michael Causton

🇯🇵 JAPAN • Results & Revisions - 10/​​​​​​​06 - SAN-A, AEON Mall, Consumer Electronics Retailers

• BEST WORST • Our best and worst pair from Tuesday's announcements is

Campbell Gunn

Japan Retail Review 2019-20 Part II: A Sector by Sector Review of Winners and Losers

At least until the Covid-19 crisis hit Japan in January, the majority of retailers were gearing up to announce yet another really good year of...

Michael Causton

Familymart: What's Next? And Will Mitsubishi React?

Itochu initiated a buyout for an additional 10% of Familymart shares over the summer. The move is widely seen as Itochu taking full advantage of a...

Michael Causton

🇯🇵 JAPAN • Results & Revisions - 10/06 - SAN-A, AEON Mall, Consumer Electronics Retailers