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)

<p>Penetration (the share of total retail sales) of e-commerce in Japan increased sharply in the past few years but still varies significantly by category.</p>
<p>The following insight looks at each consumer product category and how penetration has grown in the last few years and provides estimates of trends to 2025.</p>
<p>Even with these relatively cautious rates of growth, penetration rates are set to expand significantly in apparel, household &amp; interior, books &amp; media, and stationery but only retailers with form in successful online marketing will benefit from this with major negative implications for the many retailers that have failed to tackle the threat from online. This includes even major retailers like <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> which lags behind <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/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a><a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">  and </a><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> in the race to lead the battle for leadership in online food retailing.</p>

Penetration (the share of total retail sales) of e-commerce in Japan increased sharply in the past few years but still varies significantly by category.
The following insight looks at each consumer product category and how penetration has grown in the last few years and provides estimates of trends to 2025.
Even with these relatively cautious rates of growth, penetration rates are set to expand significantly in apparel, household &amp; interior, books &amp; media, and stationery but only retailers with form in successful online marketing will benefit from this with major negative implications for the many retailers that have failed to tackle the threat from online. This includes even major retailers like Seven &amp; I Holdings (3382 JP) which lags behind Aeon Co Ltd (8267 JP), Rakuten Inc (4755 JP)  and Amazon.com Inc (AMZN US) in the race to lead the battle for leadership in online food retailing.

E-Commerce Penetration Increasing in All Retail Categories

<p><strong>The following is an in-depth review of the retail sector by format with a brief overview of incomes and consumption trends and metrics before that. For any investor looking at the Japanese consumer/retail space, this insight will provide a rapid overview of all the major trends.</strong></p><p>2020 was a year to remember, although not for good reasons. While the news was overwhelmingly negative given the devastation that the pandemic caused to so many lives, for Japan as a country the experience could become a catalyst to spur positive change.</p><p>No matter how much we might never wish to repeat the last 12 months, those governments and companies that learn from the experience will be better positioned whenever a new pandemic emerges.</p><p>Department stores, convenience stores, and most fashion chains had a horrible year as so many people stayed away from major shopping areas, but many other retailers actually had stellar years, with further upside still to come. </p>

The following is an in-depth review of the retail sector by format with a brief overview of incomes and consumption trends and metrics before that. For any investor looking at the Japanese consumer/retail space, this insight will provide a rapid overview of all the major trends.2020 was a year to remember, although not for good reasons. While the news was overwhelmingly negative given the devastation that the pandemic caused to so many lives, for Japan as a country the experience could become a catalyst to spur positive change.No matter how much we might never wish to repeat the last 12 months, those governments and companies that learn from the experience will be better positioned whenever a new pandemic emerges.Department stores, convenience stores, and most fashion chains had a horrible year as so many people stayed away from major shopping areas, but many other retailers actually had stellar years, with further upside still to come. 

Japan Retail Full Review 2020-2021: Some Retail Sectors Outperform in a Pandemic

Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP)</a>, one of Japan’s best performing retailers, plans to increase the pace of growth, with up to 200 new stores in the next three years.</p><p>The furniture chain will also invest around ¥200 billion in logistics to support the expansion, as well as rapidly grow its fashion chain, N+. The latter has been dismissed as a gimmick by some analysts but we think the project has serious potential. Nitori is clearly a world class retailer. While Nitori achieved gross margins of 56% last year and operating margins of 16.7%, Fast Retailing had a gross margin (based on 2019 numbers i.e. a more normal year) of 48.9% and operating margin of 11%. Inditex (for the year ending January 2019) had a gross margin of 56.7% and operating margins equal to Nitori.</p><p>Nitori has also just concluded its takeover of <a href="https://www.smartkarma.com/entities/shimachu-co-ltd" target="_blank" data-smartkarma-citation="entities:5235:1" rel="noopener">Shimachu Co Ltd (8184 JP)</a> with lots of promise for synergies.</p><p>With people forced to stay at home in 2020, the nesting instinct took hold and Nitori had a particularly good year. If all goes well, FY2020 will not only be its 34th consecutive year of record results, but also see the fastest profit growth so far.</p>

Nitori Holdings (9843 JP), one of Japan’s best performing retailers, plans to increase the pace of growth, with up to 200 new stores in the next three years.The furniture chain will also invest around ¥200 billion in logistics to support the expansion, as well as rapidly grow its fashion chain, N+. The latter has been dismissed as a gimmick by some analysts but we think the project has serious potential. Nitori is clearly a world class retailer. While Nitori achieved gross margins of 56% last year and operating margins of 16.7%, Fast Retailing had a gross margin (based on 2019 numbers i.e. a more normal year) of 48.9% and operating margin of 11%. Inditex (for the year ending January 2019) had a gross margin of 56.7% and operating margins equal to Nitori.Nitori has also just concluded its takeover of Shimachu Co Ltd (8184 JP) with lots of promise for synergies.With people forced to stay at home in 2020, the nesting instinct took hold and Nitori had a particularly good year. If all goes well, FY2020 will not only be its 34th consecutive year of record results, but also see the fastest profit growth so far.

Nitori: A New Pace of Expansion in Home and Now Apparel

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Man Wah Holdings / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/man-wah-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15846:1" rel="noopener">Man Wah Holdings (1999 HK)</a> plans to raise around US$260m to expand manufacturing facilities in China and open stores.</p><p>The stock has been doing well this year on the back of planned domestic retail expansion and analyst continue to remain bullish on the stock.</p>

Man Wah Holdings (1999 HK) plans to raise around US$260m to expand manufacturing facilities in China and open stores.The stock has been doing well this year on the back of planned domestic retail expansion and analyst continue to remain bullish on the stock.

Man Wah Placement - Riding High on Planned Store Expansion

'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><p style="text-align: center;"><strong>• BEST &amp; WORST • </strong></p></div><div>
<p>We resume our results &amp; revision updates after a Christmas break as the February/May/ August/November year-end cohort of companies kick off disclosure. Friday's best and worst pair are retailers <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori (9843 JP)</a> and <a href="https://www.smartkarma.com/entities/takashimaya-co-ltd" target="_blank" data-smartkarma-citation="entities:370:1" rel="noopener">Takashimaya (8233 JP) </a>although we would note that earnings momentum is fading for the former and bottoming out for the latter. With Nitori mean-reverting from being Overbought in August, Takashimaya has outperformed Nitori by 8% over the last three months. As the impact of COVID wanes by the Sroing, we expect this performance 'gap' to close further in 2021.</p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/180/167/original/2020-12-28_06-14-04.png?1609103740" class="editor-image img-responsive" data-smartkarma-image-id="180167"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/180/168/original/2020-12-28_06-16-21.png?1609103792" class="editor-image img-responsive" data-smartkarma-image-id="180168"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/180/169/original/2020-12-28_06-22-11.png?1609104143" class="editor-image img-responsive" data-smartkarma-image-id="180169"></figure></section><p></p>
</div>

• BEST &amp; WORST • 
We resume our results &amp; revision updates after a Christmas break as the February/May/ August/November year-end cohort of companies kick off disclosure. Friday's best and worst pair are retailers Nitori (9843 JP) and Takashimaya (8233 JP) although we would note that earnings momentum is fading for the former and bottoming out for the latter. With Nitori mean-reverting from being Overbought in August, Takashimaya has outperformed Nitori by 8% over the last three months. As the impact of COVID wanes by the Sroing, we expect this performance 'gap' to close further in 2021.



🇯🇵 JAPAN • Results & Revisions 12/​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​25 - Nitori & Takashimaya

Japan

Nitori Holdings Co., Ltd., is based in Hokkaido and operates a furniture retail chain.  The Company sells living room furniture, storage furniture, dining furniture, office furniture, beds, and interior goods.  Nitori Holdings also sells original brand merchandise and imported merchandise.

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Nitori Holdings (9843 JP)

E-Commerce Penetration Increasing in All Retail Categories

A review of online market share in all key consumer categories in Japan, with forecasts for e-commerce market share to 2025 –the sharp growth will...

Michael Causton

Japan Retail Full Review 2020-2021: Some Retail Sectors Outperform in a Pandemic

An in-depth update for investors in Japan's retail and consumer space on Japan's retail sector by retail type as well as a review of the impact of...

Michael Causton

Nitori: A New Pace of Expansion in Home and Now Apparel

Nitori is about to accelerate expansion in its core market while absorbing Shimachu and likely expanding that. It is also about to build out its...

Michael Causton

Man Wah Placement - Riding High on Planned Store Expansion

Man Wah Holdings (1999 HK) plans to raise around US$260m to expand manufacturing facilities in China and open new stores. The stock has nearly...

Sumeet Singh

🇯🇵 JAPAN • Results & Revisions 12/25 - Nitori & Takashimaya

We resume our results & revision updates after a Christmas break. Friday's best and worst pair are retailers Nitori (9843 JP) and Takashimaya...

Campbell Gunn

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

E-Commerce Penetration Increasing in All Retail Categories

A review of online market share in all key consumer categories in Japan, with forecasts for e-commerce market share to 2025 –the sharp growth will...

Michael Causton

Japan Retail Full Review 2020-2021: Some Retail Sectors Outperform in a Pandemic

An in-depth update for investors in Japan's retail and consumer space on Japan's retail sector by retail type as well as a review of the impact of...

Michael Causton

Nitori: A New Pace of Expansion in Home and Now Apparel

Nitori is about to accelerate expansion in its core market while absorbing Shimachu and likely expanding that. It is also about to build out its...

Michael Causton

Man Wah Placement - Riding High on Planned Store Expansion

Man Wah Holdings (1999 HK) plans to raise around US$260m to expand manufacturing facilities in China and open new stores. The stock has nearly...

Sumeet Singh

🇯🇵 JAPAN • Results & Revisions 12/​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​25 - Nitori & Takashimaya

We resume our results & revision updates after a Christmas break. Friday's best and worst pair are retailers Nitori (9843 JP) and Takashimaya...

Campbell Gunn

🇯🇵 JAPAN • Results & Revisions 12/25 - Nitori & Takashimaya