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

Last year saw the launch of a new netsuper by <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</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>. The combination of the leading e-commerce retailer and the country’s top supermarket chain makes this one of the strongest contenders in the race for online food sales, particularly as Life is under the control of <a href="https://www.smartkarma.com/entities/mitsubishi-corp" target="_blank" data-smartkarma-citation="entities:20668:1" rel="noopener">Mitsubishi Corp (8058 JP)</a> – although <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> and <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a> aren’t standing still.
Amazon is now expanding its tie-up with Life and plans to bring in Valor as a new partner later this year and is highly likely to add further partnerships going forward.

Last year saw the launch of a new netsuper by Amazon.com Inc (AMZN US) and Life Corp (8194 JP). The combination of the leading e-commerce retailer and the country’s top supermarket chain makes this one of the strongest contenders in the race for online food sales, particularly as Life is under the control of Mitsubishi Corp (8058 JP) – although Rakuten Inc (4755 JP) and Z Holdings (4689 JP) aren’t standing still.
Amazon is now expanding its tie-up with Life and plans to bring in Valor as a new partner later this year and is highly likely to add further partnerships going forward.

Amazon Adds Partnership with Valor in Race for Japan Online Food Retail Leadership

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<div>JPX-Nikkei 400 is composed of common stocks listed in the First Section, Second Section, MOTHERS Market, and the JASDAQ Market of the Tokyo Stock Exchange. This is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents that are selected based on several factors including market capitalization, trading value, operating profits, and ROE.</div><div>
A periodic review will be conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. This review will be conducted using the final business day of June as the base date. 
Quiddity provides quantitative research on pre-event basket strategies surrounding this Index Rebalance event. Below is a discussion on the latest adjustments required for the basket portfolio based on March-end data. 
</div>

JPX-Nikkei 400 is composed of common stocks listed in the First Section, Second Section, MOTHERS Market, and the JASDAQ Market of the Tokyo Stock Exchange. This is a free-float-adjusted market-value-weighted (capped) index composed of 400 constituents that are selected based on several factors including market capitalization, trading value, operating profits, and ROE.
A periodic review will be conducted by the Index providers, the JPX Group and Nikkei Inc, in August every year. This review will be conducted using the final business day of June as the base date. 
Quiddity provides quantitative research on pre-event basket strategies surrounding this Index Rebalance event. Below is a discussion on the latest adjustments required for the basket portfolio based on March-end data. 


JPX-Nikkei 400 Rebalance: Pre-Event Basket Adjustments for March-End

<a href="https://www.smartkarma.com/entities/yaoko-co-ltd" target="_blank" data-smartkarma-citation="entities:1419:1" rel="noopener">Yaoko Co Ltd (8279 JP)</a> will again post record revenues and profit for FY2020 to March next year, but the top supermarket is worried that FY2021 will see a reversal of its fortunes.A boom in fresh food retailing is one of the few positives to emerge out of the Covid crisis, but with no end in sight, shoppers are beginning to stay away.It is one of the few supermarkets with the financial strength to weather an extended downturn, but even Yaoko is preparing for harder times.Despite good financial performance so far this year, Yaoko’s caution is typical of the company and one reason why it leads the sector on so many measures. It has a breakeven point ratio of 84.9%, meaning that it can afford to see sales drop as much as 15.1% before it falls into the red in relation to operating costs.

Yaoko Co Ltd (8279 JP) will again post record revenues and profit for FY2020 to March next year, but the top supermarket is worried that FY2021 will see a reversal of its fortunes.A boom in fresh food retailing is one of the few positives to emerge out of the Covid crisis, but with no end in sight, shoppers are beginning to stay away.It is one of the few supermarkets with the financial strength to weather an extended downturn, but even Yaoko is preparing for harder times.Despite good financial performance so far this year, Yaoko’s caution is typical of the company and one reason why it leads the sector on so many measures. It has a breakeven point ratio of 84.9%, meaning that it can afford to see sales drop as much as 15.1% before it falls into the red in relation to operating costs.

Yaoko: A Difficult 2021 Coming for Japanese Supermarkets

Event-Driven

Walmart’s 18-year attempt to build a business in Japan ended last month when the US retailer announced it would sell 85% of its stake in Seiyu to KKR and Rakuten.Seiyu has been transformed under Walmart’s leadership although it is much smaller than when Walmart arrived.Now, with <a href="https://www.smartkarma.com/entities/kkr-co-inc" target="_blank" data-smartkarma-citation="entities:27333:1" rel="noopener">KKR &amp; Co Inc (KKR US)</a> and <a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a> taking over, the hope is Seiyu could re-emerge as a leader in food e-commerce under Rakuten.The Seiyu chain could transform Rakuten’s logistics capability, allowing it to offer a comprehensive click &amp; collect service as well as use redundant store space for dark store fulfilment.What the new partners cannot afford to do is dither. Japan may well have room for more than one major online food retailer but just a couple of leaders will command the lion’s share.  <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a>’s partnership with <a href="https://www.smartkarma.com/entities/life-corp" target="_blank" data-smartkarma-citation="entities:1743:1" rel="noopener">Life Corp (8194 JP)</a>, <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a>’s Lohaco, <a href="https://www.smartkarma.com/entities/oisix-ra-daichi-inc" target="_blank" data-smartkarma-citation="entities:10145:1" rel="noopener">Oisix ra daichi (3182 JP)</a>, and, at some point, <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><a href="https://www.smartkarma.com/entities/ocado-group-plc" target="_blank" data-smartkarma-citation="entities:22067:1" rel="noopener">Ocado Group PLC (OCDO LN)</a> are the ones to beat.Already the deal is causing a significant upset in supermarket and GMS retailing.

Walmart’s 18-year attempt to build a business in Japan ended last month when the US retailer announced it would sell 85% of its stake in Seiyu to KKR and Rakuten.Seiyu has been transformed under Walmart’s leadership although it is much smaller than when Walmart arrived.Now, with KKR &amp; Co Inc (KKR US) and Rakuten Inc (4755 JP) taking over, the hope is Seiyu could re-emerge as a leader in food e-commerce under Rakuten.The Seiyu chain could transform Rakuten’s logistics capability, allowing it to offer a comprehensive click &amp; collect service as well as use redundant store space for dark store fulfilment.What the new partners cannot afford to do is dither. Japan may well have room for more than one major online food retailer but just a couple of leaders will command the lion’s share.  Amazon.com Inc (AMZN US)’s partnership with Life Corp (8194 JP), Z Holdings (4689 JP)’s Lohaco, Oisix ra daichi (3182 JP), and, at some point, Aeon Co Ltd (8267 JP)/Ocado Group PLC (OCDO LN) are the ones to beat.Already the deal is causing a significant upset in supermarket and GMS retailing.

KKR & Rakuten Ignite Online Food Battle with Seiyu Purchase

Seven &amp; I had a dismal first half at almost all of its chains. On the plus side, e-commerce sales improved but, even here, results could have been better when compared to what some rivals have achieved online. At least Nissen, the acquired catalogue company, finally returned to profit.

Seven &amp; I had a dismal first half at almost all of its chains. On the plus side, e-commerce sales improved but, even here, results could have been better when compared to what some rivals have achieved online. At least Nissen, the acquired catalogue company, finally returned to profit.

Japan

LIFE CORPORATION operates a supermarket chain mainly in Kansai and Kanto areas. The Company sells mainly groceries, and also clothing, and household utensils.

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Life Corp (8194 JP)

Amazon Adds Partnership with Valor in Race for Japan Online Food Retail Leadership

Amazon is reaching out to the leading supermarkets in each region to create a network of supply and delivery points for its online supermarket in...

Michael Causton

JPX-Nikkei 400 Rebalance: Pre-Event Basket Adjustments for March-End

JPX Nikkei 400 Pre-Event Basket Bets - Every month-end we publish updated estimates for the August 2021 JPX Nikkei 400 Rebalance based on updated...

Janaghan Jeyakumar, CFA

Yaoko: A Difficult 2021 Coming for Japanese Supermarkets

Yaoko is one of the best managed supermarkets in Japan but even this leading retailer is worried about the outlook for Japanese supermarkets. If it...

Michael Causton

KKR & Rakuten Ignite Online Food Battle with Seiyu Purchase

E-commerce has less than 3% share of Japanese food retailing. This will change dramatically in the next 3 years, led by Amazon but also by Rakuten...

Michael Causton

Seven & I: Still Floundering

Seven & I has tried and failed to gain a foothold in digital markets but looks to be retreating from online food just at a time when competitors...

Michael Causton

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