Japan’s loyalty cards offer sneak peek at company profits
TOKYO: When shopping in Japan, a phrase you’ll hear all the time is “Do you have a point card?”
And the most common is the T-card, which can be used at hundreds of thousands of shops nationwide, from car accessory dealers to convenience stores.
Half of Japan uses a T-card regularly, and the system records about seven trillion yen (RM247 billion) of purchases annually, according to operator CCC Marketing.
That’s a massive amount of data on who’s buying what — and now for stock pickers it’s a new source of information on which firms’ sales are rising or falling.
CCC has teamed up with bigdata company Nowcast to analyse the T-point data and provide sales forecasts for about 50 companies that manufacture consumer goods ranging from toiletries to digital cameras.
Nowcast said it would start in April, but declined to name any of the companies yet.
This was the first time T-Point data had been available for equity research, according to Nowcast chief executive officer Ryota Hayashi.
The big advantage will be speed: while companies generally report results a month to six weeks after a quarter ends, Nowcast will be able to predict sales after the first month of the period.
Then, about three weeks after the quarter ends, it will give its final estimate.
Nowcast already provides sales projections for about 60 companies to clients such as hedge funds using data from point-ofsale machines.
It plans to expand coverage of the new system to about 100 companies, and wants to forecast profits as well.
The initiative is part of a wave of companies and governments tapping new data sources to forecast everything from prices to power markets.
Japan’s government is also getting in on the act, testing systems to estimate industrial production from tweets, and track sales of consumer electronics from retailers’ information on individual transactions.
“Hedge funds started using alternative data in addition to traditional research around last year,” said Hayashi.
“We see them becoming even more active and our T-Point service will play a significant role in this field,” he said, noting regulations introduced this month in Europe created an opportunity to shake up the investment research industry.
Under Europe’s revised Markets in Financial Instruments Directive, or MiFID II, brokers must separate research and trading fees to create transparency and curb conflicts of interest.
That means firms are having to decide how much to charge for their research, and find ways to make it more attractive to clients.
Hayashi sees this as an opportunity for companies like Nowcast, whose data scientists can automate what humans do in certain areas of corporate and economic analysis, to claim a piece of the lucrative equity research market.