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MarketScreener Homepage  >  Equities  >  Tokyo Stock Exchange  >  Aeon Co., Ltd.    8267   JP3388200002


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Japan's fussy food shoppers finally go online amid pandemic

06/29/2020 | 09:02pm EST
FILE PHOTO: A shopper wearing a protective mask pushes a shopping cart at Japan's supermarket group Aeon's shopping mall as the mall reopens amid the coronavirus disease (COVID-19) outbreak in Chiba

By Ritsuko Ando

The coronavirus has forced Japan's notoriously fussy food shoppers to abandon doubts about online grocery stores, sending retailers such as Aeon Co scrambling to meet a surge in delivery demand.

Although Japanese shoppers aren't alone in going online during the outbreak, the shift is remarkable for a country that had been expected to take years to embrace online food shopping because of a zeal for fresh and perfectly presented produce.

"I think that this pandemic has triggered an inflection point in the adoption of grocery e-commerce," said Luke Jensen, executive director of Ocado Group, hired to build a grocery e-commerce business for Japanese retail giant Aeon.

Most companies won't disclose numbers, but retail executives and analysts estimate internet sales now account for about 5% or more of Japan's total grocery sales, compared with 2.5% before the pandemic.

Although that is still lower than some pre-crisis estimates of 15% in China and even 7% in broadband laggard Britain, it challenges a long-held belief that Japanese shoppers will always on shopping daily and in person, checking the goods first-hand.

Yuri Ohtaka, a graphic designer living in Tokyo's western suburbs, began ordering from multiple online supermarkets in March after seeing shoppers emptying shelves at a nearby store.

Although fears of shortages have subsided, online deliveries have made it easier as she works from home, making three meals a day for her family, including her 3-year-old son. She's also happy to avoid stores amid fears of infections.

"There's no need for face-to-face, dealing with registers, or standing in line," she said, adding that she's also persuaded her parents to go online. "They were shopping every day in the supermarket, and I really didn't want them to."

As more households have two people working, analysts say, people want to spend less time shopping. But they still have exacting standards for service and produce quality, which have perplexed previous foreign entrants such as Carrefour and Tesco.

Such changes are closely watched as Japan is one of the world's most valuable grocery markets, worth over 50 trillion yen ($466.42 billion) a year. Per capita, only countries such as Switzerland, Norway and Israel spend more on food.


Major Japanese supermarkets, despite talking about online services for years, have only recently begun large-scale spending on e-commerce infrastructure.

Most have struggled to meet the spike in demand, and would-be-shoppers on Twitter have complained of difficulty securing delivery slots throughout the crisis.

Aeon hired British online grocery pioneer Ocado in November to build state-of-the-art robotic warehouses, aiming to fend off rivals such as Amazon, Seven & i Holdings' Ito-Yokado and a venture between Walmart-owned Seiyu and e-commerce giant Rakuten Inc.

But the first of those warehouses won't start operating until 2023. In the meantime, Aeon said it is hiring more staff to help pack online grocery orders, although it is having difficulty hiring more delivery drivers.

Despite such constraints, Aeon expects online grocery sales to grow 50 percent and account for about 10 percent of sales by the end of its financial year ending next February, according to company executives.

That is not an official target unveiled to investors, but the company confirmed President Akio Yoshida, who was appointed to the top job in March, set it as a goal.

Executives expect the shift to last.

"When people increase their use of online, they stay with it rather than going back. In Japan we'd expect there to be a step up in the growth of e-commerce," said Ocado's Jensen, who is also chief executive of the group's Ocado Solutions technology business.


Analysts say the shift is also likely to favour bigger retailers who can invest in high-tech warehouses capable of handling large volumes rather than just having store staff pick items from retail shelves and package them for delivery.

That could put smaller supermarkets and mom-and-pop stores, already struggling to match the likes of Aeon and Ito-Yokado in pricing, at a further disadvantage.

But Violetta Volovich, who has researched global grocery industry trends for e-commerce consultancy Edge by Ascential, said remote and costly high-tech fulfilment centres were not the answer for all retailers.

Instead, she envisions many retailers adopting automating more jobs in existing brick-and-mortar stores and embracing features such as "click and collect", in which shoppers pick up online purchases at the stores.

She also said the rise in food e-commerce didn't mean an end to traditional grocery shopping.

"Just because people get pizza delivery doesn't mean they will stop going to pizza restaurants," she said.

(Reporting by Ritsuko Ando. Editing by Gerry Doyle)

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AEON CO., LTD. -0.60% 3315 End-of-day quote.-2.07%
AEON MALL CO., LTD. 0.18% 1679 End-of-day quote.-1.35%
AMAZON.COM, INC. -0.45% 3292.23 Delayed Quote.1.08%
ASCENTIAL PLC -0.83% 357 Delayed Quote.-6.93%
CARREFOUR -2.39% 14.715 Real-time Quote.4.88%
OCADO GROUP PLC 0.56% 2690 Delayed Quote.17.62%
RAKUTEN, INC. 0.20% 979 End-of-day quote.-1.51%
SEVEN & I HOLDINGS CO., LTD. 0.36% 3950 End-of-day quote.7.95%
TESCO PLC -0.08% 241.9 Delayed Quote.4.54%
WALMART INC. 1.02% 146.33 Delayed Quote.1.51%
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Sales 2021 8 591 B 82 767 M 82 767 M
Net income 2021 -17 561 M -169 M -169 M
Net Debt 2021 2 082 B 20 054 M 20 054 M
P/E ratio 2021 -159x
Yield 2021 1,09%
Capitalization 2 802 B 26 998 M 26 996 M
EV / Sales 2021 0,57x
EV / Sales 2022 0,55x
Nbr of Employees 160 227
Free-Float 83,0%
Chart AEON CO., LTD.
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Aeon Co., Ltd. Technical Analysis Chart | MarketScreener
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Technical analysis trends AEON CO., LTD.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 8
Average target price 2 356,25 JPY
Last Close Price 3 315,00 JPY
Spread / Highest target -0,45%
Spread / Average Target -28,9%
Spread / Lowest Target -62,3%
EPS Revisions
Managers and Directors
Akio Yoshida Executive President & Representative Director
Motoya Okada Executive Chairman
Akinori Yamashita Director, Head-Finance & Business Administration
Yukako Uchinaga Independent Outside Director
Toru Nagashima Independent Outside Director
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