Uny Co., Ltd.

Uny Co., Ltd.

2-45-19 Meieki
Nakamura-ku
Nagoya 450
Japan
(052) 585 3111
Fax: 052 585 3299

Public Company
Incorporated: 197’1
Employees: 6,785
Sales: ¥738.31 billion (US$5.91 billion)
Stock Exchanges: Tokyo Nagoya Luxembourg Paris

Uny Co., Ltd. is the sixth-largest supermarket chain in Japan and a dominant force in Japan’s Chubu region. Uny Co., Ltd. is the parent company of a group of more than 20 subsidiaries, including specialty clothing stores, convenience stores, food supermarkets, and the Uny superstores. Uny aims to increase its share of the lucrative but highly competitive Tokyo retail market and has opened a store in Hong Kong.

Uny was founded in 1971 through the merger of the two largest retailing chains in Nagoya, Hoteiya and Nishikawaya. Nagoya is the largest city in Chubu, a group of prefectures situated between the vast industrial cities of Osaka and Tokyo. The history of the Nishikawaya and Hoteiya chains can be traced back to the early 20th century when Choju Nishikawa opened a small footwear store in Nagoya, for which he and his wife manufactured the shoes. The business supported Nishikawa’s family but did not grow significantly until he decided to sell kimono. Business flourished and in 1925 the store moved to larger premises in the center of Nagoya. It was also in this year that Nishikawa’s third son and future chairman of Uny, Toshio Nishikawa, was born. The store flourished but, like most of the retail sector in Japan, was devastated by World War II; store damage, distribution network disruption, power shortages, and a lack of supplies all wreaked havoc.

After graduating from college with a degree in pharmacology, Toshio Nishikawa joined a pharmaceutical company, where, due to the small size of the organization, he was involved in every aspect of corporate life, including sales, management, and finance. In 1950 Toshio Nishikawa joined the family firm and put into practice the management skills he had gained at his previous job. Nishikawaya still consisted of a single store, and Toshio Nishikawa, along with his two elder brothers, was anxious to expand. Another floor was added, and in 1950 a limited company, Nishikawaya Co., Ltd., was formed with the aid of ¥900,000 in capital. The family’s aim was to turn the group into the number-one retailer in Nagoya in terms of sales, a goal that they were to achieve in less than 20 years. By 1952 the store employed ten people and had sales of ¥30 million. This continued growth made it possible to build a new concrete and steel—rather than the traditional wood—three-story store with floor space of 660 square meters. The store became known as one of the most prestigious in the Nagoya area.

In 1959 a typhoon struck central Japan, killing 3,200 people and causing severe damage to Nagoya. Although the Nishikawaya store provided shelter during the storm for many city dwellers, it too sustained damage. This, however, did not stop the sale that took place the following week. In 1960 a second store was opened in Nagoya, selling food and household goods as well as clothes. At 1,320 square meters, the new store was twice as large as the original one.

The late 1950s and 1960s were a time of frantic economic growth in Japan as the nation strove to compete with the West. One strategy was for Japan’s business leaders to travel overseas, mainly to the United States, on information-gathering tours. Returning to Japan, they would not only apply the best of what they saw, but often improve upon it. In 1961 Toshio Nishikawa visited the United States to look for new retailing ideas. Armed with a camera and his curiosity, he visited such U.S. institutions as the Sears, Roebuck and Wool worth stores and the huge supermarkets in Los Angeles. He noted how the style of retailing was geared to the lifestyle of the local people and went back to Japan full of ideas for his business. In particular, the idea of chain store operation contributed to the growth of the company in the following years. In 1963 he launched the Nishikawaya Chain Co., Ltd. and began to open stores around Nagoya and to expand aggressively, launching the first store outside the city in 1966.

In 1971 Nishikawaya Chain Co., Ltd. became the largest retailing chain in Nagoya and merged with the second-largest chain, Hoteiya, to form Uny Co., Ltd. Hoteiya was started in 1927 by two brothers, Seijiro and Shuichi Furukawa, as a kimono retailer in the port city of Yokohama, near Tokyo. Like the Nishikawaya store, Hoteiya was damaged during World War II and the Furukawas were not able to reopen for business until 1954. Hotei is the god of longevity in Japan and is depicted as a potbellied old man, which became the store’s mascot. In 1957 one of the brothers, Shuichi, left Yokohama with three employees to develop business in Nagoya. He initially opened four small stores and, like the Nishikawa family, aimed to dominate the Nagoya clothing retail market. In the first year, sales were an impressive ¥80 million, and the chain expanded to stock western goods. In 1960 Seijiro Furukawa died suddenly, leaving his brother Shuichi to concentrate on expanding in Nagoya. A food division was added, and Hoteiya became a major retailer in the Chubu region.

On a European information-gathering trip in 1964, Toshio Nishikawa and Shuichi Furukawa became friends and discussed the idea of merging their respective companies. Both men had ambitions to expand beyond Nagoya, and they realized they could achieve this more easily as a single entity. The two companies used the same primary supplier and distributor, the Ta-kihyo Company, and both men believed that Hoteiya’s largely main-street presence would complement Nishikawaya’s larger suburban stores, and vice versa. Thus the two chains were joined under the single brand name Uny, which suggests English words such as unique, united, and universal. This illustrated the trend in corporate Japan towards using English-sounding names. Uny immediately became the leading retailer in Nagoya, and the company’s leaders set out to expand throughout Japan, to Tokyo in particular. With Toshio Nishikawa’s brother Yoshio as Uny’s chairman, three regional groups were established—Uny Chubu, Uny Tokai, and Uny Kanto, the last of which was responsible for operations in Tokyo and Yokohama. By this time only a small proportion of Uny’s sales came from the goods with which Nishikawaya and Hoteiya had begun: kimono. However, kimono were still highly expensive and profitable retail items. The company decided to establish the kimono retailing operation as an independent business, and so the Sagami chain was formed.

Uny’s formation coincided with a time of upheaval in the Japanese economy. The oil crises of the 1970s resulted in sharp decreases in consumer spending. This, in Uny’s case, was compounded by the fect that the company was undergoing a rationalization as a result of the merger; new stores were being opened at a faster pace than the lower-profit-margin older stores could be closed. As a result, sales increased by 32% in fiscal year 1975 while profits fell by 16%. In the following year sales were up 12% while profits were flat. This suggested serious problems and Toshio Nishikawa frequently stated that he could not remember a more worrying three years for his company.

In 1976 Yoshio Nishikawa was replaced as chairman by Hi-satoku Takagi, and Toshio Nishikawa became president. The company closed 21 unprofitable stores while opening five superstores in Nagoya—larger stores meant a lower overhead-to-sales ratio. Uny’s superstores were opened under various brand names according to atmosphere and targeted customers. The flagship Uny stores were conceived as small department stores, offering a full range of products. The Sun Terrace shopping centers targeted family shoppers. Later, Uny launched stores called Apita (1983) and Seikatsu-Soko (1985), both catering to the younger fashion-conscious customer. By 1976 there were 80 Uny stores and Nishikawa made it a point to visit all of them regularly. Emphasis was put on quality rather than quantity, and new store openings and headlong expansion into the Tokyo retail market were put on hold until the financial position of the company could be improved. In 1978 Uny was listed on the Tokyo and Nagoya stock exchanges, and although 21 stores had been closed in the previous year, sales doubled due to the efficiency of the superstores.

Nonetheless, Toshio Nishikawa was not content with success in Nagoya alone and had not forgotten his ambition to become the leading retailer in Japan. He declared that the company’s expansion was just beginning and initiated the second phase of his development plan, which involved both nationwide and international expansion. The internationalization of Uny had begun in 1978 when the company entered into a joint venture with the U.S. restaurant chain Denny’s to open a chain of Winchell’s Donut House, which is one of the divisions of Denny’s, in Japan. Then the company approached the large U.S. convenience store franchise Circle K. Under license, Circle K Japan was set up in 1982, owned entirely by Uny. From Circle K, Uny learned how to operate successfully in the highturnover and fast-changing convenience store business. The chain flourished in the Nagoya region, and Uny set itself the goal of opening 1,000 convenience stores in the first ten years of that operation. Circle K Japan, as well as offering the usual goods associated with a convenience store, also provided parcel delivery and photo processing.

Specialty stores were a high-growth area in Japanese retailing in the 1980s. Most of the leading retail chains developed small chains of stores with exotic-sounding foreign names to take advantage of the affluent Japanese consumer’s taste for expensive brand-name goods. Uny started several brand-name stores during this time. Molie and Palemo sold women’s fashions, Rough Ox, Depot, and Topio Tokai offered men’s and boys’ clothes, and the upmarket Catiart, selling furs and jewelry, opened a boutique in Paris in 1982. These ventures were the result of careful market research and monitoring of Western fashion trends. The year 1985 was busy for Uny as the company entered numerous new business areas. Comp-U-Card Japan offered telephone and electronic shopping facilities in Uny stores. Uny Hong Kong was established, joining the growing list of Japanese department store chains opening branches in the British colony. In 1987 a superstore and boutique were opened in an international shopping center in the Taikoo Shing district of Hong Kong Island. Uny acquired a license to operate a cable television station and established Central Cable TV in 1985. Uny’s forays overseas also included raising capital, which was facilitated by listings on the Luxembourg and Paris stock exchanges in 1980 and 1985, respectively.

The late 1980s and 1990s brought the longest continuous period of growth in the Japanese economy since World War 11—58 consecutive months as of September 1991. In 1990 Japanese retailers, among then Uny, recorded their highest sales growth for more than a decade. In 1989 Nagoya hosted the World Design Exhibition, for which Uny provided a spectacular pavilion. Uny’s effort at this exhibition was organized by Toshio Nishikawa’s son Toshikazu, who was by then on the board of Uny, in charge of planning.

Long-term growth for Uny may not be easy to maintain. The Japanese economy in the early 1990s was in recession, and indeed department stores have reported that sales of high-priced items such as works of art and jewelry are no longer growing. Japan’s retailers will face stiff competition as the government faces pressure from both smaller retailers and the U.S. government to open up the retail market and grant licenses to operate chains. The U.S. retailer Toys “R” Us, for instance, created a stir by announcing plans for a chain of toy stores that would compete directly with the smaller Uny-owned Tom Tom chain. Competitive pressures such as this and economic uncertainty most likely mean that Uny will proceed cautiously and not hurry its expansion into Tokyo.

Principal Subsidiaries

Sagami Co., Ltd.; U Store Co., Ltd.; Circle K Japan Co., Ltd.; Molie Co., Ltd.; Palemo Co., Ltd.; Rough Ox Co., Ltd.; H.B. Hearts Co., Ltd.; Topio Tokai Co., Ltd.; Toyama Apita Co., Ltd.; U Life Co., Ltd.; Comp-U-Card Japan Co., Ltd.; Tom Tom Co., Ltd.; Depot Co., Ltd.; Uny (HK) Co., Ltd (Hong Kong).

Further Reading

Yanai, Nobuhisa, Uny—A Company History, Tokyo, Keizaikai Co., Ltd., 1991.

—Dylan Tanner