Takashimaya Co., Limited

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Takashimaya Co., Limited

5-1-5 Nanba
Chuo-ku
Osaka 542
Japan
(6) 631-1101
Fax: (6) 632-3212

Public Company
Incorporated: 1920 as Takashimaya Goftiku Store Co., Ltd.
Employees: 14,091
Sales: ¥1.18 trillion (US$9.45 million)
Stock Exchanges: Tokyo Osaka Kyoto

Takashimaya Co., Limited is the third-largest department store retailer in Japan in terms of sales, and Japan’s seventh-largest retail company. As a retail group, Takashimaya is the sixth-largest retail conglomerate—this includes nonretail companies as well. This is by far the largest group among the traditional department store retailers who have business histories stretching back over 150 years. Takashimaya is one of the most progressive of these traditional stores, with greater international links and more modern stores than its competitors and, along with Mitsukoshi, is alone in maintaining significant success in more than one of Japan’s major urban markets. The chain includes some of Japan’s premier retail sites with major stores at Nihonbashi in Tokyo, at Yokohama central railway station, and at Nanba in Osaka. Group activities extend beyond retailing to cover all areas of distribution, and Takashimaya is famous for its interior design and direct mail-order businesses, in addition to department store retailing. Group sales exceeded ¥1.18 trillion in 1991, contributed by 40 subsidiary companies and 26 allied businesses.

Takashimaya began in 1831. Like a number of Japan’s leading department store retailers, the company originated as a small, specialty retailer of kimono, with the founder, Shinshichi Iida, opening the first store in Kyoto at the age of 27. The store had a sales space of only 3.6 square meters and specialized in Japanese formal wear—gofuku— supplying both kimono and related accessories. At the time, Japan was in the final 30 years of the feudal Edo period, and its economy was weak and in some confusion. In order to build a successful business, Iida laid down four principles which Takashimaya’s management maintains to this day: high-quality goods, fair prices, honesty in sales, and care and courtesy to all customers.

In 1855 the store was expanded to include more cotton goods and a wider range of formal wear accessories. At this time the company employed 21 people. Japan was finally opened to Western influence in 1867 with the restoration of the Meiji Emperor and Takashimaya began to stock a wider range of goods, including many household products. In 1876 links were formed with U.S. businesses that had come to Japan with the opening of the feudal society, and the company began to import goods from abroad, even targeting the small but growing foreign community in Kyoto. Toward the end of the 1880s Takashimaya moved to expand its overseas trading. Dealing chiefly in fabrics, the company began to export to Europe, with considerable success. Around the turn of the century Takashimaya took part in various European expositions, displaying fine silks and dyed fabrics, and won prizes for its displays in London, Barcelona, and Paris. In 1899 a sales office was established in Lyons, and a direct export business was founded. An office was opened in London in 1903.

The second Takashimaya store opened in eastern Kyoto in 1893, and a further store was opened in Osaka in 1898. The company established a small office in Tokyo in 1890, which became a full store in 1897. With the opening of an export office in Yokohama in 1900, Takashimaya’s business extended into the two major commercial areas of Japan, the Kansai area around Kyoto and Osaka, and the Kanto area centered in Tokyo. By the turn of the century Takashimaya employed more than 500 people. Traditional stores like Takashimaya began to expand their businesses as a precursor to becoming general merchandise department stores. Takashimaya, however, maintained a strong emphasis on its original fabrics and clothing business, and the company became famous for the quality of its dyeing and weaving. By importing European expertise in weaving and design, Takashimaya introduced new designs and its own clothing brands, while at the same time keeping full control of costs and the final retail price. To display these new designs, in 1909 Takashimaya opened an art exhibition area within its stores. This later became common practice among Japanese department stores, with many, including some Takashimaya outlets, maintaining permanent art exhibition areas.

In 1909 Takashimaya became an unlimited partnership and at the same time began to operate its stores as departmentalized general merchandise stores. The company expanded and modernized all its outlets to keep pace with other new department stores. The number and range of goods sold was greatly expanded, and by the end of World War I, Takashimaya had six major stores and nine nonretail offices in Japan and overseas. In 1916 the new Tokyo store was opened and Takashimaya introduced a full home-shopping service to its wealthier customers. These customers were given their own accounts and were visited regularly by Takashimaya salespeople. The main items sold in this way were kimono, interior decorations, and furniture. Customers could order by mail, a telephone order service was established, and along with the other major department stores, Takashimaya provided a home-sales service to customers living in the northern and southern regions of Japan. Salespeople would visit wealthy customers living hundreds of miles away from the stores, thus providing a national sales coverage for the Takashimaya stores. Takashimaya Iida Limited was established in 1916 as a separate company, operating as an independent overseas trading arm for the Takashimaya group.

Takashimaya became a private stock company following the end of World War I, with the company taking the name Takashimaya Goftiku Store Co. Ltd. By this time the number of employees had reached 891, and Takashimaya stores had become full department stores. The small restaurant businesses that had operated in the stores since 1912 were formally incorporated and expanded, establishing an independent restaurant business in 1922 based in the newly opened Osaka Takashimaya Store. Immediately after World War I, all stores were equipped with elevators and escalators for the first time. Many of these new facilities were leased from major insurance firms, increasing the level of outside capital involved in the business.

In the Great Kanto Earthquake of 1923, Takashimaya’s store in Tokyo was destroyed by fire, and a similar fate befell most other major department stores in the city. Out of the ashes, new department stores were built which were larger and carried a far wider range of merchandise, making department stores available to a wider clientele and not only the most wealthy. Department stores became the general retail stores of Japan. Takashimaya’s image was one of privilege, and to introduce its stores to a wider clientele, in 1926 the company began 10 Sen Kinitsu Markets, translated as “Everything for 10 sen,” sen being a unit of a yen. The markets were opened in existing Takashimaya stores and were highly successful, selling simple household goods.

Takashimaya also expanded its nonstore retailing business, sending salespeople to a greater number of customers and increasing the availability of goods by mail order. Department stores also began to provide free home delivery services and bus services to transport customers to and from major rail stations. As the leading retailers in Japan at the time, department stores engaged in fierce competition as each one fought to establish a strong niche in the market. This competition was heightened by the entrance into the department store business of major railroad companies like Tokyu and Hankyu that opened stores at major rail terminals known as “terminal department stores.” The advantages of these sites were clear and Takashimaya followed suit, opening a terminal store in Osaka in 1930. In the same year, Takashimaya changed its legal name to Takashimaya Co., Limited, dropping Gofuku Store which indicated its roots in garment retailing. Takashimaya appointed its first outside director and became a public limited company in 1933, at the height of competition between Japanese department stores. This fierce competition affected many small retailers, not only in the major urban areas but also throughout the regions in which stores sent their traveling salespeople to people’s homes. Takashimaya maintained an advantage through its upmarket image and through the development of a new cheap retailing business. The 10 Sen Kinitsu Markets within existing Takashimaya stores proved so successful as a low-price retail strategy that the company began a chain of stores selling low-price household goods in 1931. Within a year, some 51 new outlets were opened.

Eventually public groups began to see the competition between department stores and their rapid expansion as being detrimental to Japanese retailing overall. In 1932 the Japan Department Store Association—founded in 1924—called for self-restraint in new store openings and the restriction of home visit sales, especially in the provinces. Even so, small retailers continued to complain, and in 1937 the Department Store Law, the original forerunner of the modern Large Store Law (1974) was promulgated to restrict the operations of large stores. As the law was aimed at department stores, the only large-scale retailers in existence at the time, Takashimaya made its new chain of low-price stores into a separate company, calling it Marutaka Kinitsu Store Ltd., and the new company continued to expand the chain store under the name Kinitsu. To get around restrictions on home selling, Takashimaya moved to expand its mail-order business, producing catalogs and advertising widely in national newspapers.

The Department Store Law effectively stopped the expansion of the department store chains, but capital became increasingly scarce as Japan reached the height of its military power during the late 1930s. From 1939 restrictions were placed on the supply of consumer goods, and a black market soon arose. Throughout this period, Takashimaya, along with some other department stores, maintained a policy of setting fair prices, establishing an image of trustworthiness that still exists today. Takashimaya continued to expand its Kinitsu chain of stores and operated 106 outlets covering 39,000 square meters of sales space and employing more than 2,000 people by 1941. However, the ravages of war took their toll, and Takashimaya had lost all but 21 stores by the time the war ended in 1945. of these, 3 were department stores and 18 were Kinitsu stores.

Takashimaya’s outlets in both Osaka and Tokyo were badly damaged in air raids in March 1945, although enough remained for the company to continue trading. These stores were rebuilt and refurbished between 1945 and 1948, and small offices were opened in various parts of Japan including Shikoku, Hiroshima, Kyushu, and Hokkaido. In 1948 the Allied occupation authorities abolished the original Department Store Law and department stores were finally free to consider opening new stores.

Takashimaya, however, chose to expand and improve its existing main stores in Osaka, Kyoto, and Tokyo, and even closed smaller stores in Kyoto and Wakayama in the early 1950s. In 1956 the Department Store Law was reintroduced by the new Japanese government. The 1956 law restricted the opening of new retail businesses over 1,500 square meters, regulated opening hours, and laid down minimum numbers of closing days. The expansion of all department stores was held back by this law, but by careful acquisition of sites and long term negotiations with local retailers Takashimaya opened three major new stores up to 1965, including Yokohama Takashimaya, which was established in 1959 at the west exit of Yokohama Station. The company already owned the site, and the new store was established as a separate company from Takashimaya. Further stores were opened in Sakai and Yonago, with the latter store also operating as a separate company.

During the 1950s and 1960s, Takashimaya began to expand its range of businesses. In 1956 Takashimaya became the Japanese member of the Intercontinental Group of Department Stores, an international body covering stores throughout the world. In the same year, this new contact enabled Takashimaya to become the first Japanese department store to hold an international fair for imported goods, the theme on this occasion being Italian. The company later exhibited the famous collection of anthropological photographs, “The Family of Man,” in all its stores, followed by other world-famous art collections. In 1958 Takashimaya opened a store on New York’s Fifth Avenue, the first of a number of overseas boutiques and restaurants which later included stores in New York, Paris, Milan, and London.

Takashimaya Shoji Limited was established in 1959 to manufacture a range of exclusive brand-name products. Between 1960 and 1989, 34 of these brands were introduced, including formal wear, food products, cut diamond jewelry, and tableware, designed to be sold at the high-price, high-quality end of the retail market. Other subsidiaries were opened during the 1960s including real estate—Koei Real Estate Ltd.—and a housing and shopping development company, Toshin Kaihatsu Ltd. The latter company was responsible for the development of the Tamagawa Shopping Centre that opened to the southwest of Tokyo in 1969. This was Japan’s first major suburban shopping center development and has a Takashimaya Department Store at its center, with some 48,800 square meters of sales floor space, accounting for a little over 50% of the total shopping center.

In 1971, Takashimaya formed the Highland Group, a buying and development organization that allows its members to source and buy products collectively and provides professional consultancy and advice, physical distribution facilities, and some financial support. All Takashimaya stores became members, and the group subsequently expanded to include many independent regional department stores. In 1990 the group included 40 member stores from all over Japan.

Takashimaya is the only company to successfully span the two major markets of Kanto and Kansai, although in each case the company has often found its retail sales falling below that of the local stores, Daimaru in Osaka and Kyoto and Mitsukoshi in Tokyo. Seibu dominates the Tokyo department store market, but is competing at a slightly different level because of its shorter, less prestigious history. Takashimaya, Mitsukoshi, and Daimaru are the prestige stores in Japan and compete with each other on this basis.

Takashimaya maintains a significant advantage in its diversification strategies. In addition to operating a number of overseas boutiques and restaurants, it has introduced many overseas brands into the Japanese market. In 1959, the company acquired a license to manufacture and sell Pierre Cardin goods and in 1990 maintained exclusive licenses to manufacture 15 overseas brands, including Fauchon and Emanuel Ungaro. The store is also the exclusive importer of 12 major brands, including James Martin whiskey and Rosenthal tableware.

After its department store business, Takashimaya’s second main activity is nonstore retailing. The company first began mail-order retailing as long ago as 1899 and, following a curtailment of business during World War II, reintroduced a mailorder service in 1953 from the company’s main Osaka store. In the 1980s Takashimaya began to expand its catalog sales, introducing a cable television shopping service and a number of multimedia catalogs, including videotapes and floppy disks. Takashimaya is the 14th-largest nonstore retailer in Japan—this category includes direct mail-order or catalog sales as well as home sales—and is far ahead of any other store retailers also competing in the market. The second-largest nonstore retailer is Mitsukoshi. Takashimaya has the third-largest mail-order business in Japan and in 1990 produced 1.45 million catalogs of various kinds, achieving sales of more than ¥65 billion.

Less widely known is Takashimaya’s involvement in the interior design business. Based on the company’s original fabrics business, Takashimaya has offered high-quality interior design services since 1878 and especially since the early 1970s has been involved in the design of numerous hotels and office and state buildings throughout the world. Some of Takashimaya’s most famous projects include the New Showa Palace in Tokyo and the Jeddah State Palace in Saudi Arabia.

For a period at the end of the 1970s and beginning of the 1980s Takashimaya’s business benefited from a scandal at the Mitsukoshi Department Store, the company’s leading rival in Tokyo, involving the selling of fake antiques and a rumored affair between the chairman and a younger woman. The scandal served to emphasize Takashimaya’s reputation for trustworthiness and honesty, and Takashimaya briefly overtook Mitsukoshi as the most popular store at which to buy the obligatory, biannual gifts that are so important in Japanese society. For many consumers this was the first time they had considered using a store other than Mitsukoshi for such socially important purchases. Mitsukoshi has since recovered its position as Tokyo’s most prestigious store, but Takashimaya has maintained a more modern image since this incident.

In 1990 Takashimaya formed High Retail System Co., Ltd. to open upscale convenience stores in major urban areas. Using a telephone-ordering system, customers are able to phone their shopping lists to the local store and receive delivery a few minutes later. The stores are geared to serve office areas and include various services such as color copying, in additon to offering basic convenience foods, drinks, and packaged meals. Gifts can also be ordered by catalog from the main department store’s full range.

In 1991, despite moves to encourage the development of new large retail stores in Japan with major easing of restrictions under the Large Store Law, it is unlikely that there will be any significant growth in the number of department stores. The department store business will continue to compete on the basis of differentiation between stores and companies. Unlike some of the newer department stores, Takashimaya has not moved downmarket into the supermarket business, preferring to maintain a high-quality image. The number of department stores is limited and each group retains its own identity. Any significant increase in competition from within the same area of retailing seems unlikely in the coming years. The only danger to Takashimaya and other department stores that limit their business to the top end of the consumer market is competition from the leading superstore retailers, notably Ito-Yokado and Seiyu, which are improving quality. These firms are larger, more diverse, and arguably more efficient than the traditional department stores and lack only those stores’ long tradition.

Takashimaya continues to expand and modernize its mailorder business and in 1993 plans to open the largest shopping center development in Southeast Asia, in the center of Singapore, and invest directly in other parts of the world. At home, the company is likely to continue as one of Japan’s largest and most successful retailers.

Principal Subsidiaries

Yokohama Takashimaya (58.3%); Kanto Takashimaya (50%); Yonago Takashimaya (88.3%); Okayama Takashimaya (45%); Senboku Takashimaya (45%); Gifu Takashimaya (45%); T.F.C.; Takashimaya Kosakujo (38.1%); Takashimaya Nippatsu Kogyo (40%); Koei Real Estate Ltd. (49.4%); Toshin Kaihatsu Ltd. (23.1%).