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)

<ul>
<li>This is an in-depth review of Japanese e-commerce in the last 18 months, a time when e-commerce expanded rapidly and by 2023, e-commerce will be Japan’s single biggest retail channel.</li>
<li>We are now riding a wave of change as retailers integrate the e-commerce channel into their businesses, increasingly approaching a true omnichannel model.</li>
<li>And this is important in Japan because, although e-commerce penetration appears low, this overlooks the importance, convenience and ease of access to physical shops and integration with online.</li>
</ul>


This is an in-depth review of Japanese e-commerce in the last 18 months, a time when e-commerce expanded rapidly and by 2023, e-commerce will be Japan’s single biggest retail channel.
We are now riding a wave of change as retailers integrate the e-commerce channel into their businesses, increasingly approaching a true omnichannel model.
And this is important in Japan because, although e-commerce penetration appears low, this overlooks the importance, convenience and ease of access to physical shops and integration with online.


Private Capital Markets

Nitori Holdings / Private Capital Markets

<ul>
<li>Iconic retail chain, Tokyu Hands, is to be acquired by Cainz, Japan’s leading home centre retailer. </li>
<li>Tokyu Hands remains as popular as ever thanks to its unique merchandising, but it has struggled to be profitable for a long time.</li>
<li>Cainz should be able to fix this and Hands will be part of Cainz’s plans to become the <a href="https://www.smartkarma.com/entities/workman-co-ltd" target="_blank" data-smartkarma-citation="entities:8467:1" rel="noopener">Workman Co Ltd (7564 JP)</a> of home retailing – bringing competition to Nitori.</li>
</ul>


Iconic retail chain, Tokyu Hands, is to be acquired by Cainz, Japan’s leading home centre retailer. 
Tokyu Hands remains as popular as ever thanks to its unique merchandising, but it has struggled to be profitable for a long time.
Cainz should be able to fix this and Hands will be part of Cainz’s plans to become the Workman Co Ltd (7564 JP) of home retailing – bringing competition to Nitori.


Cainz Takes on Nitori with Tokyu Hands Takeover

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Keiyo announced a large (9.2% of shares out) ToSTNeT-3 buyback for tomorrow morning at JPY 855/share. </li>
<li>Normally this would be an occasion for looking at the significant accretion. </li>
<li>This time there are possible offsets which are less encouraging.</li>
</ul>


Keiyo announced a large (9.2% of shares out) ToSTNeT-3 buyback for tomorrow morning at JPY 855/share. 
Normally this would be an occasion for looking at the significant accretion. 
This time there are possible offsets which are less encouraging.


Very Large Keiyo (8168 JP) Buyback NOT Necessarily Bullish

<p><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.</p><p><strong>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.</strong> 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.</p><p>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.</p>

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?

<p>Overnight it became clear in a Nikkei <a href="https://asia.nikkei.com/Business/Business-deals/Japan-s-Nitori-wins-over-Shimachu-with-2bn-takeover-bid" target="_blank" rel="noopener">article</a> that <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> was going to succumb to the charms of bidder <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> and accept its proposal of a takeover at ¥5500. Shimachu had heretofore officially supported a bid by <a href="https://www.smartkarma.com/entities/dcm-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:13042:1" rel="noopener">DCM Holdings (3050 JP)</a> at ¥4200/share, but acceptance of Nitori means that its bid will not be officially "hostile."</p><p>After the close, Shimachu and Nitori defined that support in a set of documents and the comment in the media from Shimachu was that DCM had not responded. </p><p>DCM's Tender Offer (discussed in <a href="https://www.smartkarma.com/insights/dcm-does-a-full-takeover-of-shimachu-looks-like-a-strong-price-look-again" target="_blank" data-smartkarma-citation="insights:43806" rel="noopener">DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.</a>) ends on 16 November, the same day Nitori's starts. </p><p>DCM can still respond by a) extending the time period at the same price, b) raising the price and creating an automatic extension, or c) doing nothing. At the very least, I expect DCM to extend by 10 business days because doing so would extend their own Tender Offer past the JFTC Phase 1 response deadline to the Nitori application (Nitori will launch without having received official approval). </p><p>More below.</p><hr><p><em>The list of insights in this series (on this particular event) are as below:</em></p><table class="table table-striped"><tbody>
<tr><td colspan="2" style="width: 724.8px;"><h3>Previous Insights on the DCM (3050) and Nitori (9843) Approaches to Shimachu (8184)</h3></td></tr>
<tr>
<td style="width: 88.8px;"><strong>Date</strong></td>
<td style="width: 615.2px;"><strong>Insight Title</strong></td>
</tr>
<tr>
<td style="width: 88.8px;">21 Sep 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/dcm-partial-offer-for-shimachu-coming" target="_blank" data-smartkarma-citation="insights:43444" rel="noopener">DCM Partial Offer for Shimachu Coming?</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">4 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/dcm-does-a-full-takeover-of-shimachu-looks-like-a-strong-price-look-again" target="_blank" data-smartkarma-citation="insights:43806" rel="noopener">DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">21 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/nitori-to-make-a-rival-bid-for-shimachu-more-fun-to-go" target="_blank" data-smartkarma-citation="insights:44353" rel="noopener">Nitori To Make a Rival Bid for Shimachu? More Fun To Go</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">28 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/gaming-out-a-nitori-bid-for-shimachu" target="_blank" data-smartkarma-citation="insights:44636" rel="noopener">Gaming Out a Nitori Bid for Shimachu</a> </td>
</tr>
<tr>
<td style="width: 88.8px;">29 Oct 2020</td>
<td style="width: 615.2px;">
<a href="https://www.smartkarma.com/insights/nitori-bids-up-for-shimachu-now-things-slow-down" target="_blank" data-smartkarma-citation="insights:44679" rel="noopener">Nitori Bids UP For Shimachu - Now Things Slow Down</a> </td>
</tr>
</tbody></table>

Overnight it became clear in a Nikkei article that Shimachu Co Ltd (8184 JP) was going to succumb to the charms of bidder Nitori Holdings (9843 JP) and accept its proposal of a takeover at ¥5500. Shimachu had heretofore officially supported a bid by DCM Holdings (3050 JP) at ¥4200/share, but acceptance of Nitori means that its bid will not be officially "hostile."After the close, Shimachu and Nitori defined that support in a set of documents and the comment in the media from Shimachu was that DCM had not responded. DCM's Tender Offer (discussed in DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again.) ends on 16 November, the same day Nitori's starts. DCM can still respond by a) extending the time period at the same price, b) raising the price and creating an automatic extension, or c) doing nothing. At the very least, I expect DCM to extend by 10 business days because doing so would extend their own Tender Offer past the JFTC Phase 1 response deadline to the Nitori application (Nitori will launch without having received official approval). More below.The list of insights in this series (on this particular event) are as below:
Previous Insights on the DCM (3050) and Nitori (9843) Approaches to Shimachu (8184)

Date
Insight Title


21 Sep 2020

DCM Partial Offer for Shimachu Coming? 


4 Oct 2020

DCM Does a Full Takeover of Shimachu - Looks Like a Strong Price. Look Again. 


21 Oct 2020

Nitori To Make a Rival Bid for Shimachu? More Fun To Go 


28 Oct 2020

Gaming Out a Nitori Bid for Shimachu 


29 Oct 2020

Nitori Bids UP For Shimachu - Now Things Slow Down 



Nitori's Bid for Shimachu Goes Friendly as Shimachu Dumps DCM

Japan

DCM Holdings Co., Ltd. is a holding company established through merger of Kahma, Daiki, and Homac.  The Company operates home center chain stores throughout Japan.  DCM Japan Holdings offers merchandise such as home improvement products, household utensils, gardening supplies, sporting/leisure goods, and pet products .

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DCM Holdings (3050 JP)

E-Commerce in Japan: The Big Review

Japan's e-commerce sector expanded rapidly in the last 18 months. The following is a complete review and analysis of the major trends as well as...

Michael Causton

Cainz Takes on Nitori with Tokyu Hands Takeover

Nitori and Muji have pretty much had the interiors market to themselves until now thanks to IKEA's slow rollout but new competition is coming from...

Michael Causton

Very Large Keiyo (8168 JP) Buyback NOT Necessarily Bullish

Keiyo announced a large buyback for tomorrow AM. Big accretion is usually bullish but Keiyo is rich to peers, and it is not clear where incremental...

Travis Lundy

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

Nitori's Bid for Shimachu Goes Friendly as Shimachu Dumps DCM

Nitori and Shimachu signed a deal to make Nitori's JPY 5500/share friendly. The Tender Offer starts 16 Nov the same day as DCM's JPY 4200/share bid...

Travis Lundy

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