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)

Fashion is already the largest single category online, but it also a sector that is developing rapidly. While the bulk of sales come from the leading malls, <a href="https://www.smartkarma.com/entities/409" target="_blank" data-smartkarma-citation="entities:409:1">Amazon.com Inc (AMZN US)</a>, <a href="https://www.smartkarma.com/entities/31" target="_blank" data-smartkarma-citation="entities:31:1">Rakuten (4755 JP)</a>, <a href="https://www.smartkarma.com/entities/19603" target="_blank" data-smartkarma-citation="entities:19603:1">Yahoo Japan (4689 JP)</a> and <a href="https://www.smartkarma.com/entities/18379" target="_blank" data-smartkarma-citation="entities:18379:1">ZOZO Inc (3092 JP)</a>, more competition is emerging from a growing number of smaller malls.There are clear signs of a 2-speed fashion e-commerce market emerging, with a small group of winners among malls and retailers (reviewed below) and the rest slowly catching up behind.At the same time, fashion retailers are increasingly looking to add their own, directly controlled online stores.For now, there is plenty of room for everyone to expand, but we will increasingly see a two-pronged system emerge, with brands still selling on malls, but also developing exclusive brand lines for their own stores.At the same time, they will adapt retail stores to become part of a full omnichannel experience, most likely expanding showrooming stores with big (positive) implications for profitability.

Fashion is already the largest single category online, but it also a sector that is developing rapidly. While the bulk of sales come from the leading malls, Amazon.com Inc (AMZN US), Rakuten (4755 JP), Yahoo Japan (4689 JP) and ZOZO Inc (3092 JP), more competition is emerging from a growing number of smaller malls.There are clear signs of a 2-speed fashion e-commerce market emerging, with a small group of winners among malls and retailers (reviewed below) and the rest slowly catching up behind.At the same time, fashion retailers are increasingly looking to add their own, directly controlled online stores.For now, there is plenty of room for everyone to expand, but we will increasingly see a two-pronged system emerge, with brands still selling on malls, but also developing exclusive brand lines for their own stores.At the same time, they will adapt retail stores to become part of a full omnichannel experience, most likely expanding showrooming stores with big (positive) implications for profitability.

Japan Fashion E-Commerce Review: More Competition Coming for ZOZO and Rakuten

'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. 

<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'

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

In this report, we highlight the key reports on Japan and Korea that have been published on Smartkarma in the past two weeks. We also provided a summary and a couple of surprises in the third summit between Moon Jae-In and Kim Jong-Un in Pyeongyang as well their trip to Mount Baektu. 
YTD, S&amp;P 500 is up 9.0%, TOPIX is up 0.3%, and KOSPI is down 5.2%. The US stock markets have been rebounding in the past few months surpass the previous peak in January 2018. KOSPI has been rebounding slightly since July. There have been some increasing concerns about a major "double-top" formations in many major stock markets indices including KOSPI. 
Please refer to <a href="https://www.smartkarma.com/profiles/381" target="_blank" data-smartkarma-citation="accounts:381">Thomas Schroeder</a>'s latest note <a href="https://www.smartkarma.com/insights/s-p-macro-peak-in-sight-on-projection-support-and-rotation-synergy" target="_blank" data-smartkarma-citation="insights:24454">S&amp;P Macro Peak in Sight on Projection, Support and Rotation Synergy</a>. Thomas is toning down his macro bull view made in early 2016 as breadth, rotation and projection synergy turn risk to reward less favorable and will turn negative in early 2019.
The top three reports (in terms of views) on Smartkarma that are relevant for Japan and Korea in the past two weeks were as follows:
<ul>
<li><a href="https://www.smartkarma.com/insights/asahi-intecc-7747-jp-tse1-finally-and-a-big-topix-inclusion" target="_blank" data-smartkarma-citation="insights:24389">Asahi Intecc (7747 JP) TSE1 (Finally) And a BIG TOPIX Inclusion</a></li>
<li><a href="https://www.smartkarma.com/insights/adeka-bid-for-control-of-nihon-nohyaku-runs-into-controversy" target="_blank" data-smartkarma-citation="insights:24264">ADEKA Bid for Control of Nihon Nohyaku Runs Into Controversy</a></li>
<li><a href="https://www.smartkarma.com/insights/samsung-c-t-placement-finally-first-step-towards-a-legit-holding-company" target="_blank" data-smartkarma-citation="insights:24330">Samsung C&amp;T Placement: Finally First Step Towards a Legit Holding Company</a></li>
</ul>

In this report, we highlight the key reports on Japan and Korea that have been published on Smartkarma in the past two weeks. We also provided a summary and a couple of surprises in the third summit between Moon Jae-In and Kim Jong-Un in Pyeongyang as well their trip to Mount Baektu. 
YTD, S&amp;P 500 is up 9.0%, TOPIX is up 0.3%, and KOSPI is down 5.2%. The US stock markets have been rebounding in the past few months surpass the previous peak in January 2018. KOSPI has been rebounding slightly since July. There have been some increasing concerns about a major "double-top" formations in many major stock markets indices including KOSPI. 
Please refer to Thomas Schroeder's latest note S&amp;P Macro Peak in Sight on Projection, Support and Rotation Synergy. Thomas is toning down his macro bull view made in early 2016 as breadth, rotation and projection synergy turn risk to reward less favorable and will turn negative in early 2019.
The top three reports (in terms of views) on Smartkarma that are relevant for Japan and Korea in the past two weeks were as follows:

Asahi Intecc (7747 JP) TSE1 (Finally) And a BIG TOPIX Inclusion
ADEKA Bid for Control of Nihon Nohyaku Runs Into Controversy
Samsung C&amp;T Placement: Finally First Step Towards a Legit Holding Company


Smartkarma’s Week That Was in JP/​​​KR: Photo Sessions on Mt. Baektu, Samsung C&T, and Asahi Intecc

<div class="content-highlight">Fashion retailers may want to preserve footfall in their physical stores, but most are also trying harder to increase e-commerce sales, especially at their own online stores. With as much as 60% of online sales initiated by blog posts by shop staff, they are optimistic about omnichannel retailing and the benefits that store infrastructure brings to their direct online sales at the expense of third-party malls. The biggest losers from this trend will be the main online fashion malls, notably …</div>

Fashion retailers may want to preserve footfall in their physical stores, but most are also trying harder to increase e-commerce sales, especially at their own online stores. With as much as 60% of online sales initiated by blog posts by shop staff, they are optimistic about omnichannel retailing and the benefits that store infrastructure brings to their direct online sales at the expense of third-party malls. The biggest losers from this trend will be the main online fashion malls, notably …

Fashion Retailers Fight Back Against the Dominance of Zozotown

<ul><li>Our recent post on e-commerce (<a href="https://www.smartkarma.com/insights/e-commerce-in-japan-2017-2022-relentless-expansion-means-upheaval-in-consumer-goods-distribution" target="_blank" data-smartkarma-citation="insights:19667">E-Commerce in Japan 2017-2022: Relentless Expansion Means Upheaval in Consumer Goods Distribution</a>) showed just how rapidly the channel is growing in Japan. One of the main drivers of this growth has been fashion, with apparel the biggest category overall by value and one of the top two fastest growing categories for the last five years.</li><li>Even then e-commerce still only accounts for around 11% of the total value of the apparel market, compared to around 30% for consumer electronics.</li><li>In addition, fashion retailers and brands have a very mixed record when it comes to grasping the opportunities and threats of what is already Japan’s biggest distribution channel, meaning most apparel firms sell through the big malls that dominate the market – a factor that has driven the growth in the share price of companies like <a href="https://www.smartkarma.com/entities/18379" target="_blank" data-smartkarma-citation="entities:18379:1">Start Today Co Ltd (3092 JP)</a> and <a href="https://www.smartkarma.com/entities/31" target="_blank" data-smartkarma-citation="entities:31:1">Rakuten Inc (4755 JP)</a> over the last decade. </li><li>Some retailers, though, are trying to wrest back control and share from the big malls, giving rise to some speculation that the latter will soon see their 55% share of the market start to fall.</li><li>At the same time, expanding direct online sales should help to boost the operating margins of leading fashion retailers like <a href="https://www.smartkarma.com/entities/751" target="_blank" data-smartkarma-citation="entities:751:1">Fast Retailing Co Ltd (9983 JP)</a>, <a href="https://www.smartkarma.com/entities/4887" target="_blank" data-smartkarma-citation="entities:4887:1">United Arrows Ltd (7606 JP)</a>, <a href="https://www.smartkarma.com/entities/11895" target="_blank" data-smartkarma-citation="entities:11895:1">Adastria Co Ltd (2685 JP)</a> and <a href="https://www.smartkarma.com/entities/23991" target="_blank" data-smartkarma-citation="entities:23991:1">Tokyo Base Co Ltd (3415 JP)</a>.</li></ul>

Our recent post on e-commerce (E-Commerce in Japan 2017-2022: Relentless Expansion Means Upheaval in Consumer Goods Distribution) showed just how rapidly the channel is growing in Japan. One of the main drivers of this growth has been fashion, with apparel the biggest category overall by value and one of the top two fastest growing categories for the last five years.Even then e-commerce still only accounts for around 11% of the total value of the apparel market, compared to around 30% for consumer electronics.In addition, fashion retailers and brands have a very mixed record when it comes to grasping the opportunities and threats of what is already Japan’s biggest distribution channel, meaning most apparel firms sell through the big malls that dominate the market – a factor that has driven the growth in the share price of companies like Start Today Co Ltd (3092 JP) and Rakuten Inc (4755 JP) over the last decade. Some retailers, though, are trying to wrest back control and share from the big malls, giving rise to some speculation that the latter will soon see their 55% share of the market start to fall.At the same time, expanding direct online sales should help to boost the operating margins of leading fashion retailers like Fast Retailing Co Ltd (9983 JP), United Arrows Ltd (7606 JP), Adastria Co Ltd (2685 JP) and Tokyo Base Co Ltd (3415 JP).

Fashion: Still the Biggest Japanese E-Commerce Category – and Still Growing Fast

Japan

CROOZ, Inc. provides online recruitment and outsourcing services for information technology and Internet companies.  The Company also operates a search engine website and offers entertainment content and advertising services for cellular phones.

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Crooz Inc (2138 JP)

Japan Fashion E-Commerce Review: More Competition Coming for ZOZO and Rakuten

Fashion is already the largest single category online, but it also a sector that is developing rapidly. While the bulk of sales come from the...

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

Smartkarma’s Week That Was in JP/KR: Photo Sessions on Mt. Baektu, Samsung C&T, and Asahi Intecc

In this report, we highlight the key reports on Japan and Korea that have been published on Smartkarma in the past two weeks. We also provided a...

Douglas Kim

Fashion Retailers Fight Back Against the Dominance of Zozotown

Fashion retailers may want to preserve footfall in their physical stores, but most are also trying harder to increase e-commerce sales, especially...

Michael Causton

Fashion: Still the Biggest Japanese E-Commerce Category – and Still Growing Fast

Our recent post on e-commerce (E-Commerce in Japan 2017-2022: Relentless Expansion Means Upheaval in Consumer Goods Distribution) showed just how...

Michael Causton

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Japan Fashion E-Commerce Review: More Competition Coming for ZOZO and Rakuten

Fashion is already the largest single category online, but it also a sector that is developing rapidly. While the bulk of sales come from the...

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

Smartkarma’s Week That Was in JP/​​​KR: Photo Sessions on Mt. Baektu, Samsung C&T, and Asahi Intecc

In this report, we highlight the key reports on Japan and Korea that have been published on Smartkarma in the past two weeks. We also provided a...

Douglas Kim

Fashion Retailers Fight Back Against the Dominance of Zozotown

Fashion retailers may want to preserve footfall in their physical stores, but most are also trying harder to increase e-commerce sales, especially...

Michael Causton

Fashion: Still the Biggest Japanese E-Commerce Category – and Still Growing Fast

Our recent post on e-commerce (E-Commerce in Japan 2017-2022: Relentless Expansion Means Upheaval in Consumer Goods Distribution) showed just how...

Michael Causton

Smartkarma’s Week That Was in JP/KR: Photo Sessions on Mt. Baektu, Samsung C&T, and Asahi Intecc