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)

The average growth among the top 100 shopping centres (SCs) in Japan in 2017-18 was 2.6% compared to 2.3% for the shopping centre market overall.
The top 100 SCs had average sales densities of ¥86,230 per sqm per month, compared to ¥50,833 per sqm per month for the sector overall, showing the stark contrast in performance between the best SCs (and the better developers) and the rest.
The improvement in sales by outlet malls after a retreat in 2016-17 was the big story in SC retailing last year – among the top 30 SCs by sales growth, 10 were outlet malls and all posted growth of more than 5% compared to just a single SC in 2016.
A number of developers look set to continue to perform better compared to the SC sector overall, at least in terms of tenant revenues and shopping centre operating profits: <a href="https://www.smartkarma.com/entities/3" target="_blank" data-smartkarma-citation="entities:3:1">Aeon (8267 JP)</a>, <a href="https://www.smartkarma.com/entities/5262" target="_blank" data-smartkarma-citation="entities:5262:1">Aeon Mall (8905 JP)</a>, <a href="https://www.smartkarma.com/entities/565" target="_blank" data-smartkarma-citation="entities:565:1">Mitsui Fudosan (8801 JP)</a>, and <a href="https://www.smartkarma.com/entities/566" target="_blank" data-smartkarma-citation="entities:566:1">Mitsubishi Estate (8802 JP)</a> as well as <a href="https://www.smartkarma.com/entities/14271" target="_blank" data-smartkarma-citation="entities:14271:1">East Japan Railway (9020 JP)</a> – 12 of the top 30 most efficient SCs in the country are operated by <a href="https://www.smartkarma.com/entities/14271" target="_blank" data-smartkarma-citation="entities:14271:1">East Japan Railway</a>.

The average growth among the top 100 shopping centres (SCs) in Japan in 2017-18 was 2.6% compared to 2.3% for the shopping centre market overall.
The top 100 SCs had average sales densities of ¥86,230 per sqm per month, compared to ¥50,833 per sqm per month for the sector overall, showing the stark contrast in performance between the best SCs (and the better developers) and the rest.
The improvement in sales by outlet malls after a retreat in 2016-17 was the big story in SC retailing last year – among the top 30 SCs by sales growth, 10 were outlet malls and all posted growth of more than 5% compared to just a single SC in 2016.
A number of developers look set to continue to perform better compared to the SC sector overall, at least in terms of tenant revenues and shopping centre operating profits: Aeon (8267 JP), Aeon Mall (8905 JP), Mitsui Fudosan (8801 JP), and Mitsubishi Estate (8802 JP) as well as East Japan Railway (9020 JP) – 12 of the top 30 most efficient SCs in the country are operated by East Japan Railway.

Japan's Top 100 Shopping Centres Outperforming: Who Owns What

The shopping centre market expanded in FY2017-18, increasing sales by 2.3% despite jittery consumers. More investment in upgrading malls (both better tenant mix and new entertainment facilities), the boost from inbound tourists, and higher food prices all helped. 2017-18 was the year of the outlet mall, the source of most of the growth among top shopping centres.
While sales rose, benefiting both tenants and developers, investment has fallen sharply recently, and 2018 saw the lowest number of new malls in years, and the number will continue to fall.
Depopulation, lower sales densities, retailers’ reluctance to open more stores, and the high cost of construction are all giving developers cold feet, as is the quandary of e-commerce competition.
These trends are impacting some retailers, particularly the more traditional wholesaler-dependent retailers such as <a href="https://www.smartkarma.com/entities/16044" target="_blank" data-smartkarma-citation="entities:16044:1">Right On (7445 JP)</a>, <a href="https://www.smartkarma.com/entities/15421" target="_blank" data-smartkarma-citation="entities:15421:1">Mac House (7603 JP)</a>, <a href="https://www.smartkarma.com/entities/13375" target="_blank" data-smartkarma-citation="entities:13375:1">Nishimatsuya Chain (7545 JP)</a>, and, more recently, even <a href="https://www.smartkarma.com/entities/15213" target="_blank" data-smartkarma-citation="entities:15213:1">Shimamura (8227 JP)</a>.
Nevertheless, the outlook for shopping centres (SCs) in Japan is rosier than for the US in some respects. While analysts have suggested a 25% cull of SCs stateside, Japan has one SC per 390,000 people compared to one per 70,000 in the US. Japan may have witnessed an expansion of SC sales space of 1.64 times since 2000 but it remains significantly less developed suggesting that, despite depopulation, the better malls and developers will continue to trade strongly for as long as visiting the mall remains a staple Japanese leisure activity.

The shopping centre market expanded in FY2017-18, increasing sales by 2.3% despite jittery consumers. More investment in upgrading malls (both better tenant mix and new entertainment facilities), the boost from inbound tourists, and higher food prices all helped. 2017-18 was the year of the outlet mall, the source of most of the growth among top shopping centres.
While sales rose, benefiting both tenants and developers, investment has fallen sharply recently, and 2018 saw the lowest number of new malls in years, and the number will continue to fall.
Depopulation, lower sales densities, retailers’ reluctance to open more stores, and the high cost of construction are all giving developers cold feet, as is the quandary of e-commerce competition.
These trends are impacting some retailers, particularly the more traditional wholesaler-dependent retailers such as Right On (7445 JP), Mac House (7603 JP), Nishimatsuya Chain (7545 JP), and, more recently, even Shimamura (8227 JP).
Nevertheless, the outlook for shopping centres (SCs) in Japan is rosier than for the US in some respects. While analysts have suggested a 25% cull of SCs stateside, Japan has one SC per 390,000 people compared to one per 70,000 in the US. Japan may have witnessed an expansion of SC sales space of 1.64 times since 2000 but it remains significantly less developed suggesting that, despite depopulation, the better malls and developers will continue to trade strongly for as long as visiting the mall remains a staple Japanese leisure activity.

Japan Shopping Centres 2017-18: Sales Rise as Mall Development Slows Sharply

Average monthly savings rates and total savings stocks have long been high in Japan, but savings rates broke all records in June 2018.
In one sense, this was a sign that the government's six-year effort to increase wages – and thus consumption and inflation – was finally bearing fruit, albeit small not very sweet fruit.
However, anxiety about the future, coupled with a lack of incentive to spend, meant that most of the increases in wages and bonuses stayed in the bank.
At the same time, while the majority hoarded, brands and retailers at both the luxury and discount ends of the market are reporting a record year, and discount retailers, in particular, are worthy long-term investments.
This demonstrates the further polarisation of the retail market but inventive marketing and solid cost performance will still unlock those wallets in premium mass markets too.

Average monthly savings rates and total savings stocks have long been high in Japan, but savings rates broke all records in June 2018.
In one sense, this was a sign that the government's six-year effort to increase wages – and thus consumption and inflation – was finally bearing fruit, albeit small not very sweet fruit.
However, anxiety about the future, coupled with a lack of incentive to spend, meant that most of the increases in wages and bonuses stayed in the bank.
At the same time, while the majority hoarded, brands and retailers at both the luxury and discount ends of the market are reporting a record year, and discount retailers, in particular, are worthy long-term investments.
This demonstrates the further polarisation of the retail market but inventive marketing and solid cost performance will still unlock those wallets in premium mass markets too.

Japanese Savings Rates Soar in 2018: A Blow to Abe's Plans but a Boon for Discount Retailing

'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. 

Quantitative Analysis

<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/837/original/2019-01-18_11-35-42.png?1547778954" class="editor-image img-responsive" data-smartkarma-image-id="75837"></figure>
Source: Japan Analytics
</div>
RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are, as a result, on a comparable scale, 'overbought' and 'oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. This insight updates our list of overbought and oversold companies, reviews the best and worst performing companies by RPS over the last two months and adds some specific comments on stocks on each category.
RPS STATISTICS - The Company 'outlier' thresholds are set to "+4" for overbought and "-2" for oversold.  Currently, of the 3,686 listed companies for which monthly data is available, 91 companies are 'Overbought', and 120 are 'Oversold' - 2.5% and 3.2%, respectively of the total. For companies with a market capitalisation of over ¥100b, there are 35 'Overbought' and 24 'Oversold' companies. 
RPS 'TOPS' - In the last two years, 445 companies have achieved an RPS of '4' or more. 80% have seen their RPS fall to below '4' within the following two months. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 63% - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last two months have been <a href="https://www.smartkarma.com/entities/8225" target="_blank" data-smartkarma-citation="entities:8225:1">Descente (8114 JP)</a>,  <a href="https://www.smartkarma.com/entities/4908" target="_blank" data-smartkarma-citation="entities:4908:1">Ariake Japan (2815 JP)</a>, <a href="https://www.smartkarma.com/entities/15862" target="_blank" data-smartkarma-citation="entities:15862:1">Fancl (4921 JP)</a>, <a href="https://www.smartkarma.com/entities/13435" target="_blank" data-smartkarma-citation="entities:13435:1">Bandai Namco (7832 JP)</a>, <a href="https://www.smartkarma.com/entities/13475" target="_blank" data-smartkarma-citation="entities:13475:1">Don Quijote (7532 JP)</a>, and <a href="https://www.smartkarma.com/entities/1492" target="_blank" data-smartkarma-citation="entities:1492:1">Gmo Payment Gateway (3769 JP)</a>.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/838/original/2019-01-18_11-36-19.png?1547778995" class="editor-image img-responsive" data-smartkarma-image-id="75838"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/839/original/2019-01-18_11-37-01.png?1547779035" class="editor-image img-responsive" data-smartkarma-image-id="75839"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/840/original/2019-01-18_11-37-37.png?1547779070" class="editor-image img-responsive" data-smartkarma-image-id="75840"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/841/original/2019-01-18_11-38-07.png?1547779100" class="editor-image img-responsive" data-smartkarma-image-id="75841"></figure>
<div class="content-caption">
Source: Japan Analytics
</div>
RPS 'BOTTOMS' - 296 companies have seen their RPS fall to '-2' or below in the last two years. 58% have seen their RPS recover to above '-2' within three to six months. For larger capitalisation companies, the numbers are 72 companies and 67%. Some recent examples of positive RPS mean reversion in the last two months have been <a href="https://www.smartkarma.com/entities/22772" target="_blank" data-smartkarma-citation="entities:22772:1">LINE Corp (3938 JP)</a> - a 'contrarians only' selection in our last <a href="https://www.smartkarma.com/insights/japan-relative-price-score-update-overbought-and-oversold-companies" target="_blank" data-smartkarma-citation="insights:25849">Insight</a>, and <a href="https://www.smartkarma.com/entities/15457" target="_blank" data-smartkarma-citation="entities:15457:1">Tokyo Electric Power (9501 JP)</a>.
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/842/original/2019-01-18_11-39-56.png?1547779218" class="editor-image img-responsive" data-smartkarma-image-id="75842"></figure>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/075/843/original/2019-01-18_11-42-06.png?1547779350" class="editor-image img-responsive" data-smartkarma-image-id="75843"></figure>
<div class="content-caption">Source: Japan Analytics</div>
<div class="content-highlight">
In the DETAIL section below we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the largest two-month positive and negative changes in RPS.
NB - All data is as of January 17th close.
</div>



Source: Japan Analytics

RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the current deviation with the mean absolute deviation of monthly and daily relative share prices. As all companies are, as a result, on a comparable scale, 'overbought' and 'oversold' outliers and changes in scoring can reveal short-term and longer-term trading opportunities. This insight updates our list of overbought and oversold companies, reviews the best and worst performing companies by RPS over the last two months and adds some specific comments on stocks on each category.
RPS STATISTICS - The Company 'outlier' thresholds are set to "+4" for overbought and "-2" for oversold.  Currently, of the 3,686 listed companies for which monthly data is available, 91 companies are 'Overbought', and 120 are 'Oversold' - 2.5% and 3.2%, respectively of the total. For companies with a market capitalisation of over ¥100b, there are 35 'Overbought' and 24 'Oversold' companies. 
RPS 'TOPS' - In the last two years, 445 companies have achieved an RPS of '4' or more. 80% have seen their RPS fall to below '4' within the following two months. For companies with a market capitalisation higher than ¥100b, the numbers are 95 companies and 63% - demonstrating the superior persistence of large capitalisation companies in this regard. Some examples of RPS mean reversion in the last two months have been Descente (8114 JP),  Ariake Japan (2815 JP), Fancl (4921 JP), Bandai Namco (7832 JP), Don Quijote (7532 JP), and Gmo Payment Gateway (3769 JP).





Source: Japan Analytics

RPS 'BOTTOMS' - 296 companies have seen their RPS fall to '-2' or below in the last two years. 58% have seen their RPS recover to above '-2' within three to six months. For larger capitalisation companies, the numbers are 72 companies and 67%. Some recent examples of positive RPS mean reversion in the last two months have been LINE Corp (3938 JP) - a 'contrarians only' selection in our last Insight, and Tokyo Electric Power (9501 JP).


Source: Japan Analytics

In the DETAIL section below we list the current very overbought (RPS&gt;5), too late to buy (RPS &gt;4&lt;5) and oversold (RPS &lt;-2) stocks as well as the largest two-month positive and negative changes in RPS.
NB - All data is as of January 17th close.


Japan: Relative Price Scores - Overbought and Oversold Companies - Calling 'Tops' & 'Bottoms'

Leading Japanese retail chains across all the major formats had a strong 1H2018 with surprisingly few exceptions.
Although some saw operating profits fall, and most of those that did expect profits to be lower for the year as a whole, other results were particularly impressive given the difficult operating conditions this year due to weather and natural disasters.
The following is a quick snapshot of the state-of-play at major Japanese retailers.

Leading Japanese retail chains across all the major formats had a strong 1H2018 with surprisingly few exceptions.
Although some saw operating profits fall, and most of those that did expect profits to be lower for the year as a whole, other results were particularly impressive given the difficult operating conditions this year due to weather and natural disasters.
The following is a quick snapshot of the state-of-play at major Japanese retailers.

Japan Retail Review 1H2018: Top Retailers Outperform

Japan

J. FRONT RETAILING CO., Ltd. is a holding company established through the merger of Daimaru and Matsuzakaya.  J. FRONT RETAILING operates department stores and supermarkets. The Company also manages subsidiaries which operate in wholesale businesses.

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J Front Retailing (3086 JP)

Japan's Top 100 Shopping Centres Outperforming: Who Owns What

The average growth among the top 100 shopping centres (SCs) in Japan in 2017-18 was 2.6% compared to 2.3% for the shopping centre market...

Michael Causton

Japan Shopping Centres 2017-18: Sales Rise as Mall Development Slows Sharply

The shopping centre market expanded in FY2017-18, increasing sales by 2.3% despite jittery consumers. More investment in upgrading malls (both...

Michael Causton

Japanese Savings Rates Soar in 2018: A Blow to Abe's Plans but a Boon for Discount Retailing

Average monthly savings rates and total savings stocks have long been high in Japan, but savings rates broke all records in June 2018. In one...

Michael Causton

Japan: Relative Price Scores - Overbought and Oversold Companies - Calling 'Tops' & 'Bottoms'

RELATIVE PRICE SCORE - The Relative Price Score (RPS) measures stock price performance relative to TOPIX and is calculated by comparing the...

Campbell Gunn

Japan Retail Review 1H2018: Top Retailers Outperform

Leading Japanese retail chains across all the major formats had a strong 1H2018 with surprisingly few exceptions. Although some saw operating...

Michael Causton

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52-week Range

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