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

Aeon is aiming high in e-commerce. It has Ocado technology coming online in 2023 and says it will spend ¥450 billion in new investment. Last month, it introduced iAeon, a new app that combines access to services across its entire group with an existing database of some 120 million users and more than one billion customer visits a year. In 2019, e-commerce accounted for an estimated 2% of Aeon’s total sales. Its medium term plan calls for an ‘Accelerated and Evolved Digital Shift’ by 2025 with e-commerce sales of ¥1 trillion or around 10-15% of total turnover.

Aeon is aiming high in e-commerce. It has Ocado technology coming online in 2023 and says it will spend ¥450 billion in new investment. Last month, it introduced iAeon, a new app that combines access to services across its entire group with an existing database of some 120 million users and more than one billion customer visits a year. In 2019, e-commerce accounted for an estimated 2% of Aeon’s total sales. Its medium term plan calls for an ‘Accelerated and Evolved Digital Shift’ by 2025 with e-commerce sales of ¥1 trillion or around 10-15% of total turnover.

Aeon: Investing Online, but GMS Struggles

Thematic (Sector/Industry)

Contraction in apparel consumption aside, Japanese fashion retailers and brands have made dramatic strides to pull in customers online with e-commerce sales up 24% last year according to one survey, faster than the growth in e-commerce overall. Even some wholesalers are succeeding digitally. 
What the results show is a breakthrough shift to online with likely further growth this year, taking the online channel’s share above 25% and more than 30% for many of those firms with higher online ratios.

Contraction in apparel consumption aside, Japanese fashion retailers and brands have made dramatic strides to pull in customers online with e-commerce sales up 24% last year according to one survey, faster than the growth in e-commerce overall. Even some wholesalers are succeeding digitally. 
What the results show is a breakthrough shift to online with likely further growth this year, taking the online channel’s share above 25% and more than 30% for many of those firms with higher online ratios.

Nitori+ isn’t on the radar of most apparel retail competitors because they think a furniture retailer can’t sell apparel. But, as Nitori’s 18th N+ store attests, the home furnishings retailer may have struck gold with its chain for women over 40 thanks to a mix of disciplined supply chains, simple designs and low prices – and the fact that this age group is one of the few to grow in the next decade. We expect to see around 150 stores open within the next two years.

Nitori+ isn’t on the radar of most apparel retail competitors because they think a furniture retailer can’t sell apparel. But, as Nitori’s 18th N+ store attests, the home furnishings retailer may have struck gold with its chain for women over 40 thanks to a mix of disciplined supply chains, simple designs and low prices – and the fact that this age group is one of the few to grow in the next decade. We expect to see around 150 stores open within the next two years.

N+ Nitori: Fashion the New Frontier for the Japanese Giant

Event-Driven

<a href="https://www.smartkarma.com/entities/h2o-retailing-corp" target="_blank" data-smartkarma-citation="entities:17562:1" rel="noopener">H2 O Retailing (8242 JP)</a>, the biggest retail group in Kansai, announced in late August that it would expand its share in <a href="https://www.smartkarma.com/entities/kansai-super-market-ltd" target="_blank" data-smartkarma-citation="entities:15519:1" rel="noopener">Kansai Super Market (9919 JP)</a> to take a majority stake. As is usual, the announcement was made with full understanding and acceptance by Kansai Supermarket’s board and CEO, but things have not gone according to plan. We now face another situation where existing shareholders object to a cosy, pre-agreed takeover. In this case, the company objecting is OK Super, the perennially successful Tokyo-based discount supermarket.OK Super would, in our opinion, offer the best growth longer term given its operational excellence, low price positioning and massive pent-up Japanese consumer demand for lower prices. Last year, OK Super broke ¥508 billion in sales for the first time, making it a top four chain, and achieved operating profits of ¥37.8 billion. In contrast, Kansai Super sales were ¥130.9 billion, with operating profits of ¥2.7 billion.Whereas Kansai Super largely represents past supermarket success, OK is the present and future and the prospect of OK entering the Kansai market would represent a serious threat to existing chains, not least H2O’s own.

H2 O Retailing (8242 JP), the biggest retail group in Kansai, announced in late August that it would expand its share in Kansai Super Market (9919 JP) to take a majority stake. As is usual, the announcement was made with full understanding and acceptance by Kansai Supermarket’s board and CEO, but things have not gone according to plan. We now face another situation where existing shareholders object to a cosy, pre-agreed takeover. In this case, the company objecting is OK Super, the perennially successful Tokyo-based discount supermarket.OK Super would, in our opinion, offer the best growth longer term given its operational excellence, low price positioning and massive pent-up Japanese consumer demand for lower prices. Last year, OK Super broke ¥508 billion in sales for the first time, making it a top four chain, and achieved operating profits of ¥37.8 billion. In contrast, Kansai Super sales were ¥130.9 billion, with operating profits of ¥2.7 billion.Whereas Kansai Super largely represents past supermarket success, OK is the present and future and the prospect of OK entering the Kansai market would represent a serious threat to existing chains, not least H2O’s own.

H2O Retailing and OK Super: Which Is the Better Owner of Kansai Supermarket?

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<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> has reached a deal with the majority owners of <a href="https://www.smartkarma.com/entities/can-do-co-ltd" target="_blank" data-smartkarma-citation="entities:6879:1" rel="noopener">Can Do Co Ltd (2698 JP)</a> to buy a majority stake in the company through two separate tender offers at two different prices. Can Do Co finds new store acquisition to be very challenging and is experiencing a rise in procurement costs. Under these circumstances, by becoming a consolidated subsidiary of Aeon, they believe better utilisation of scale and management resources could help the company survive in this competitive environment. The first tender offer can be thought of as an Unconditional Partial Offer at ¥2,700/share. The second as a full tender offer at ¥2,300/share.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/235/449/original/Screenshot+2021-10-16+at+12.17.16+PM.png?1634361665" class="editor-image img-responsive" data-smartkarma-image-id="235449"></figure>The details of the deal are interesting, and have unusual implications for the event itself and for the situation post-tender. </section>

Aeon Co Ltd (8267 JP) has reached a deal with the majority owners of Can Do Co Ltd (2698 JP) to buy a majority stake in the company through two separate tender offers at two different prices. Can Do Co finds new store acquisition to be very challenging and is experiencing a rise in procurement costs. Under these circumstances, by becoming a consolidated subsidiary of Aeon, they believe better utilisation of scale and management resources could help the company survive in this competitive environment. The first tender offer can be thought of as an Unconditional Partial Offer at ¥2,700/share. The second as a full tender offer at ¥2,300/share.The details of the deal are interesting, and have unusual implications for the event itself and for the situation post-tender. 

Can Do (2698 JP) Does... The Funky Two Step Tender

Japan

AEON CO., LTD. operates general merchandise stores, supermarkets, and convenience stores throughout Japan. The Company is also engaged in women's and casual clothing store business, development business of commercial property, and financing service through the subsidiaries.

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Aeon Co Ltd (8267 JP)

Aeon: Investing Online, but GMS Struggles

Aeon was far behind in e-commerce, just like its rival for the top spot in Japanese retailing, Seven & I. Unlike Seven & I it has a long-term plan...

Michael Causton

Japan Online Fashion Sales Soar

Before, the boom in online was just a theory but the numbers now make it clear that Japanese consumers have shifted their spending habits,...

Michael Causton

N+ Nitori: Fashion the New Frontier for the Japanese Giant

Some worry that Nitori is reaching saturation in the Japanese home market but, as well as more growth in that area including through category...

Michael Causton

H2O Retailing and OK Super: Which Is the Better Owner of Kansai Supermarket?

Kansai Super is the prize in a bidding war between H2O Retailing and OK Super. While the former would use Kansai to consolidate market share, a...

Michael Causton

Can Do (2698 JP) Does... The Funky Two Step Tender

Aeon is taking control of 100 yen shop Can Do (2698), buying out the family to get to 51%. It is being done through two tender offers at different...

Travis Lundy

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