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 following is an in-depth review of Japanese retail in the last 18 months covering all the main formats and categories, providing a quick way to see an overview of all the key trends and winners and losers in Japanese retailing now and going forward.FY2020 was an anomaly and one that businesses everywhere will want to forget and never repeat. There was more than enough pain among Japan’s top retailers last year, but equally some formats did surprisingly well given the circumstances.For most, work-from-home was the single most important factor in determining a chain’s fortunes. City-centre stores and shopping centres offering mostly discretionary shopping have been hit hard, as have convenience stores.But those chains selling essentials, healthcare, electronics and, most importantly, food, all saw their fortunes improve. The pandemic has also revealed the strong, dynamic players and exposed the weaker ones. Oh, and everyone needs to be online.

The following is an in-depth review of Japanese retail in the last 18 months covering all the main formats and categories, providing a quick way to see an overview of all the key trends and winners and losers in Japanese retailing now and going forward.FY2020 was an anomaly and one that businesses everywhere will want to forget and never repeat. There was more than enough pain among Japan’s top retailers last year, but equally some formats did surprisingly well given the circumstances.For most, work-from-home was the single most important factor in determining a chain’s fortunes. City-centre stores and shopping centres offering mostly discretionary shopping have been hit hard, as have convenience stores.But those chains selling essentials, healthcare, electronics and, most importantly, food, all saw their fortunes improve. The pandemic has also revealed the strong, dynamic players and exposed the weaker ones. Oh, and everyone needs to be online.

The Polarising Pandemic in Japanese Retail

Equity Bottom-Up

Japan requires retail developers to submit copious amounts of documentation to open any store over 1,000 sqm. In the past five years, there have been 2,505 applications for these larger developments, 750 of them anchored by drugstores, and more than 400 by <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> alone. The figures show that it is drugstores that are expanding more than any other retail sector.

Japan requires retail developers to submit copious amounts of documentation to open any store over 1,000 sqm. In the past five years, there have been 2,505 applications for these larger developments, 750 of them anchored by drugstores, and more than 400 by Cosmos Pharmaceutical (3349 JP) alone. The figures show that it is drugstores that are expanding more than any other retail sector.

Drugstores Leads Large Store Openings in Japan Led by Cosmos Pharma

Inevitably, there were widespread problems throughout the Japanese retail sector in 2020, and with drugstores and supermarkets suffering a relative decline in the first quarter of 2021, things are still yet to improve. Department stores were hit hardest, with convenience stores also suffering their worst year on record but, in contrast, big specialty formats and supermarkets had a good year. The three big specialty sectors, electronics, drugstores and home centres, all had excellent years in 2020, as did supermarkets.Although incomes were robust, consumption declined, meaning that savings accounts are fuller than ever before, promising a surge in spending once confidence returns.

Inevitably, there were widespread problems throughout the Japanese retail sector in 2020, and with drugstores and supermarkets suffering a relative decline in the first quarter of 2021, things are still yet to improve. Department stores were hit hardest, with convenience stores also suffering their worst year on record but, in contrast, big specialty formats and supermarkets had a good year. The three big specialty sectors, electronics, drugstores and home centres, all had excellent years in 2020, as did supermarkets.Although incomes were robust, consumption declined, meaning that savings accounts are fuller than ever before, promising a surge in spending once confidence returns.

FY2020 Proves Better than Expected for Japan Retail but Savings Surge

The merger of <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co., Ltd. (3088 JP)</a> and <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> is just one symptom of the growing concentration of market share in the drugstore sector.But the sector's leaders are no longer just battling for dominance in drugstore retailing; increasingly drugstores are evolving far behind this niche sector.Drugstore retailing is growing faster than any sector other than e-commerce because drugstores are positioned to meet customer needs for well-being, health and, nowadays, a broad range of daily necessities including food, and so becoming ever more integrated into consumers’ daily shopping experience.Their eclectic ranges also mean they perform well in the middle of natural disasters and crises of various forms and many chains have seen good results thanks to earthquakes, extreme weather and especially thanks to Covid, but this doesn’t fully explain the sector’s success.Crises may have helped, but Japan’s top drugstores are today some of the country’s best retailers in their own right.The following is a complete, in-depth review of the drugstore sector, including rankings, KPIs, and future trends on the sector and the potential winners.Jun Tsuruha, the current <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> CEO, was widely quoted last year as saying the sector would soon be dominated by just “four or five” major firms. This is far from fantasy, with Tsuruha, <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a>, Matsukiyo-Cocokara, <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> and <a href="https://www.smartkarma.com/entities/sugi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:9255:1" rel="noopener">Sugi Holdings (7649 JP)</a> the most likely contenders.

The merger of Matsumotokiyoshi Holdings Co., Ltd. (3088 JP) and Cocokara Fine (3098 JP) is just one symptom of the growing concentration of market share in the drugstore sector.But the sector's leaders are no longer just battling for dominance in drugstore retailing; increasingly drugstores are evolving far behind this niche sector.Drugstore retailing is growing faster than any sector other than e-commerce because drugstores are positioned to meet customer needs for well-being, health and, nowadays, a broad range of daily necessities including food, and so becoming ever more integrated into consumers’ daily shopping experience.Their eclectic ranges also mean they perform well in the middle of natural disasters and crises of various forms and many chains have seen good results thanks to earthquakes, extreme weather and especially thanks to Covid, but this doesn’t fully explain the sector’s success.Crises may have helped, but Japan’s top drugstores are today some of the country’s best retailers in their own right.The following is a complete, in-depth review of the drugstore sector, including rankings, KPIs, and future trends on the sector and the potential winners.Jun Tsuruha, the current Tsuruha Holdings (3391 JP) CEO, was widely quoted last year as saying the sector would soon be dominated by just “four or five” major firms. This is far from fantasy, with Tsuruha, Welcia Holdings (3141 JP), Matsukiyo-Cocokara, Cosmos Pharmaceutical (3349 JP) and Sugi Holdings (7649 JP) the most likely contenders.

Japan Drugstores: Growing Leadership in Food, Household, Cosmetics – and the Odd Medicine Too

Event-Driven

After more than a year of negotiations and preparation, <a href="https://www.smartkarma.com/entities/matsumotokiyoshi-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:2259:1" rel="noopener">Matsumotokiyoshi Holdings Co., Ltd. (3088 JP)</a> and <a href="https://www.smartkarma.com/entities/cocokara-fine-inc" target="_blank" data-smartkarma-citation="entities:15447:1" rel="noopener">Cocokara Fine (3098 JP)</a> finally confirmed their agreement to merge in October this year. The new company will be by far the largest in the drugstore sector.A lot of work has been done already to consolidate operations and the aim is to complete integration by 2023. The combined company will target sales of ¥1.5 trillion by 2026.Private brands will be a crucial competitive weapon for the merged chain and also provide opportunities to offer wholesale toiletries and cosmetics floors at supermarkets.The growing competitiveness in the sector amidst increased saturation demands greater scale and will spur the leading players like <a href="https://www.smartkarma.com/entities/welcia-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20895:1" rel="noopener">Welcia Holdings (3141 JP)</a> and <a href="https://www.smartkarma.com/entities/tsuruha-holdings-inc" target="_blank" data-smartkarma-citation="entities:9536:1" rel="noopener">Tsuruha Holdings (3391 JP)</a> to make further acquisitions to catch up with the new leader.

After more than a year of negotiations and preparation, Matsumotokiyoshi Holdings Co., Ltd. (3088 JP) and Cocokara Fine (3098 JP) finally confirmed their agreement to merge in October this year. The new company will be by far the largest in the drugstore sector.A lot of work has been done already to consolidate operations and the aim is to complete integration by 2023. The combined company will target sales of ¥1.5 trillion by 2026.Private brands will be a crucial competitive weapon for the merged chain and also provide opportunities to offer wholesale toiletries and cosmetics floors at supermarkets.The growing competitiveness in the sector amidst increased saturation demands greater scale and will spur the leading players like Welcia Holdings (3141 JP) and Tsuruha Holdings (3391 JP) to make further acquisitions to catch up with the new leader. 

Matsukiyo-Cocokara Merger Heralds New Era for Drugstores

Japan

TSURUHA HOLDINGS INC. is a holding company which manages subsidiaries that operate drug stores in Hokkaido and the Tohoku area.  The Company's product line includes drugs, cosmetics, and household utensils.

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Tsuruha Holdings (3391 JP)

The Polarising Pandemic in Japanese Retail

A complete review of the Japanese retail sector in the last 18 months, format by format, category by category, providing key trends and winners &...

Michael Causton

Drugstores Leads Large Store Openings in Japan Led by Cosmos Pharma

Some analysts think the drugstore sector in Japan is saturated. As the latest govt. data shows, the sector has led in large store expansion in the...

Michael Causton

FY2020 Proves Better than Expected for Japan Retail but Savings Surge

A bad year for dept. stores and sectors like apparel (with more bad news to come) but a great one for drugstores, electronics and food. Savings...

Michael Causton

Japan Drugstores: Growing Leadership in Food, Household, Cosmetics – and the Odd Medicine Too

The Japanese drugstore sector has seen a big merger but there will be more as the sector not only consolidates down to a few leaders but also...

Michael Causton

Matsukiyo-Cocokara Merger Heralds New Era for Drugstores

The merger of Matsukiyo and Cocokara will force further consolidation through M&A in the drugstore sector as regional powerhouses begin to clash as...

Michael Causton

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