Skip to main content
Select Source:

Isetan Company Limited

Isetan Company Limited

3-14-1, Shinjuku
Shinjuku-ku
Tokyo 160-8011
Japan
Telephone: (03) 3352-1111
Fax: (03) 5273-5321
Web site: http://www.isetan.co.jp

Public Company
Incorporated:
1930
Employees: 5,115
Sales: ¥578.44 billion (US$5.39 billion) (1999)
Stock Exchanges: Tokyo Niigata
NAIC: 452110 Department Stores

Isetan Company Limited is one of Japans leading department store companies, particularly noted for its merchandising strength in the area of high-fashion apparel for women in their 20s and 30s. It has compensated for its comparatively late entry into the field by innovation and niche-building, establishing itself as a fashion leader through sophisticated consumer re-search and extensive introduction of merchandise from abroad, both well-known designer labels and brands developed exclusively for Isetan. The company operates seven department stores in Tokyo as well as two other stores in Shizuoka and Niigata. Isetan is also active outside of Japan, having established overseas presences in China, Malaysia, Singapore, Thai-land, Europe, and the United States.

Kimono Shop Origins

In common with other top Japanese department stores, Isetan traces its origins back to a kimono shop. Whereas Mitsukoshi, Daimaru, and Takashimaya have histories going back hundreds of years, Isetans story begins in 1886, with the opening of the Iseya Tanji Drapery in Tokyos Kanda district, then a bustling center of commerce located near the Kanda river. Its founder, Tanji Kosuge, was born Tanji Nowatari in 1859. At the age of 12 he was apprenticed to the Isesho Drapery in Kanda. By the age of 20 Tanji had risen to the position of banto, or head clerk. In 1881 he married Hanako Kosuge, the daughter of one of Iseshos best customers, a local rice merchant, and took the surname Kosuge. Five years later, with the blessing of his employer, Tanji Kosuge went into business for himself.

Kanda was one of the most densely populated areas of the city, and the new shops location near a busy intersection guaranteed it a steady stream of business. Because of the shops proximity to several well-known geisha districts, Kosuges customers included many geisha who needed to maintain a well-stocked wardrobe of fine kimonos. He created his own range of original products, and the Iseya Tanji Drapery came to be associated with exquisite obithe belt used to tie the kimonoand quality design.

Tanji Kosuge began expanding the business in various ways. He experimented with staying open at night, he sent out salesmen with samples of the stores original designs to visit the homes of customers, he introduced seasonal bargain sales, he began buying out other kimono stores, and in 1899, as business prospered, he enlarged the Kanda store. So successful had he been that by the turn of the century, the Iseya Tanji Drapery had entered the ranks of Tokyos top five dry goods stores.

Nevertheless, there was still a big gap between Kosuges store and those of its long-established rivals. While the older stores were already thinking of moving to a department store format, complete with display cabinets for their products and a wider variety of merchandise, Kosuge was still concentrating on building up the kimono business.

In an effort to bring the stores image more in line with those of its rivals, in 1907 he simplified the stores name to Isetan Drapery, combining the first two syllables of Iseya with the first syllable of Tanji. Three years later he considered building a department store in Tokyos Hibiya district but shelved the idea as premature. At his death in 1916, Isetan was well-established as a kimono store, but had yet to make the switch to a department store.

Kosuge was succeeded by his son-in-law, Gihei Takahashi. Takahashi had married Tanji Kosuges eldest daughter in 1908, taking the family name of Kosuge. Upon his father-in-laws death, he took the name Tanji as well.

Takahashi had been working for another kimono store when he first came to the attention of Isetan in 1908. One day he bought 20 obi for his store at a ten percent discount from an Isetan salesman, who assured him that the obi were not being sold at the Isetan store. Walking past Isetan some days later, he discovered that the same obi were being sold, and for a 20 percent discount. Going in to complain, he handled himself so well that he got a further discount. He impressed the man he dealt withTanji Kosuges younger brotheras both a good businessman and a potential husband for Tanjis eldest daughter. Takahashi joined Isetan shortly afterward and was married within six months.

A man who read widely, Takahashi had many ideas about retailing. As Tanji Kosuge II, he began to lay the groundwork for Isetans transformation from a kimono shop to a department store. His first move was to place Isetan on a more businesslike footing by creating the Isetan Partnership to run the store in 1917. It was, however, a catastrophic event six years later that would really move Isetans plans forward.

Shifting to Department Store Format: 1920s30s

The Great Kanto Earthquake of September 1, 1923, killed some 130,000 people. The Kanda store burned to the ground, along with much of the rest of Kanda. The necessity of rebuilding the Kanda store provided Kosuge with the opportunity to introduce a department store format. When Isetan re-opened in 1924 it was selling not only kimonos but also childrens clothes, toys, umbrellas, cosmetics, stationery, household goods, and food. If the store had changed, so had Kanda, and it gradually became apparent that Kanda was no longer the prime site it once had been.

There were three reasons for this. First, within Kanda, the devastation caused by the earthquake and subsequent conflagration resulted in a changed street configuration, and Isetan no longer was situated near the corner of a busy intersection. Second, transportation was improving steadily, making the public more mobile. As the subway system was extended, Ginza and Nihonbashi, where Tokyos leading department stores were located, became more accessible. With the completion of the Yamanote Line, a surface railway that circled Tokyo, new shopping and recreational areas grew up around stations such as Shibuya, Shinjuku, and Ikebukuro. Third, and in many ways most far-reaching, as a result of the Great Kanto Earthquake the center of the population moved away from the devastated areas in central and eastern Tokyo to the suburbs in the west.

By 1928 it was clear that there was no future for Isetan in Kanda. It abandoned a project to build a new eight-story department store there, although four stories of the building had been completed, and began looking for an alternative site. Hibiya, in downtown Tokyo, was considered once more, but after Tanji Kosuge had spent three days looking at the proposed site, he decided that there would not be enough customers and continued the search elsewhere. His eventual choice was Shinjuku, in the west of Tokyo, an area that had begun to develop after the opening of Shinjuku Station in 1875, but which had really taken off after the Great Kanto Earthquake. It was a decision that was to be as important for Shinjuku as it was for Isetan, and the two have grown in tandem ever since.

In 1930, in preparation for its move into the department stor business proper, Isetan formed itself into a limited company, Isetan Company Limited, capitalized at ¥500,000. In 1931 it purchased the land on which its new flagship store would stand, adjacent to an existing department store called Hoteiya. Work began on the Isetan building in 1932, and the main building wa completed in 1933. It consisted of two floors below ground and seven above, including an auditorium. On its first day of business, it attracted 130,000 customers. Three months later, the old store in Kanda closed.

In 1935 Isetan bought the ailing Hoteiya department store for ¥2 million. This included the building, the land it stood on, and the entire contents of the store. It borrowed ¥3.3 million from the Bank of Japan to pay for the purchase and redevelopment of the store as part of Isetan. A year later, this new addition to Isetan was open for business.

Key Dates

1886:
Tanji Kosuge opens a kimono shop called Iseya Tanji Drapery in Tokyos Kanda district.
1907:
The shops name is changed to Isetan Drapery.
1916:
Kosuge dies and is succeeded by his son-in-law, who is known as Tanji Kosuge II.
1923:
The Great Kanto Earthquake destroys the Isetan store.
1924:
Isetan reopens as a department store.
1930:
Firm is incorporated as a limited company, Isetan Company Limited.
1933:
Company opens new flagship department store in Tokyos Shinjuku district. The Kanda store closes.
1945:
Allied occupation authorities requisition much of the Isetan store for Allied use.
1952:
With the end of the occupation, Isetan regains full control of its building.
1956:
Postwar expansion begins with the opening of three new stores.
1961:
Company goes public.
1968:
First overseas representative office opens in Paris.
1972:
First overseas store opens in Singapore.
1988:
First European store opens in London.
1989:
Company enters into a joint venture with New York-based Barneys, Inc.
1990:
Barneys joint venture opens first Barneys store in Japan, in Tokyo.
1992:
Sales decline for the first time in company history.
1996:
Barneys files for Chapter 11 bankruptcy protection; Isetan and Barneys sue each other.
1999:
Barneys emerges from Chapter 11Isetan holds seven percent stake and control of several stores in Japan and the United States.

Shinjuku was by then established as one of Tokyos new city subcenters. It was frequented by middle-class salaried workers and their families, attracted to its shops, cafes, and cinemas. As a new, up-and-coming department store, Isetan blended in perfectly. A play on a popular catch phrase of the day captures the mood of those times. Today the Imperial Theatre, tomorrow Mitsukoshi went the original, linking together these bastions of tradition in the heart of downtown Tokyo. Today the Moulin Rouge [a new Shinjuku theater that opened in 1931], tomorrow Isetan, went the other, clearly identifying Isetan as something of a trendsetter, appealing to those who preferred black comedy to traditional Kabuki.

Surviving World War II and the Allied Occupation

During World War II, Isetan remained open for business almost until the end of the war, although its displays grew barer and its sales area gradually shrank to 50 percent of prewar levels. Escalators and elevators were removed and melted down for the war effort in 1943. That year, Isetan was asked by the Imperial Japanese Army to manage a hotel and store taken over by the Japanese in Sumatra, which it did until the end of the war. The Allied fire bomb raids on the night of March 10, 1945, devastated large areas of Tokyo, reducing the old Kanda store to ashes, but Isetans flagship store remained standing. Quick action that night on the part of employees put out a fire that threatened to rage out of control; neighboring buildings, however, were not so lucky.

According to one of his sons, Tanji Kosuge shrugged off the despondent comments of his employees on August 15, 1945, the day the Japanese emperor announced Japans surrender. What are you saying? The stores still standing, isnt it? Youve got nothing to worry about. Im going back to work tomorrow. Kosuges wish for a quick return to business as usual was not fulfilled for several years, however. Apart from the problem of the lack of merchandise, the Allied occupation authorities had taken a liking to the building, and in 1945 requisitioned it for Allied use from the third floor up. Not until the end of the occupation, in 1952, would Isetan have the building to itself again.

The department store business after World War II saw a much greater emphasis on Western-style clothing. In the years immediately following the war, women made do with what they hadblouses and Japanese-style pantaloons called monpei but from the late 1940s there was a growing fashion-consciousness, initially inspired by the military look sported by women in the Allied occupation forces. In 1951 Isetan sponsored Tokyos first postwar fashion showTokyo Fashion 51which presaged a boom in fashion shows, modeling, and modeling schools.

Launching a Postwar Expansion

In 1956 Isetan underwent its first major postwar extension. Three new buildings were added, increasing the sales area by 25 percent. The purpose was not simply to increase Isetans size; it was to reaffirm Isetans image as a fashion leader. From this period Isetan introduced modern merchandising techniques, dividing up customers very specifically on the basis of age, sex, taste, and spending power. The new-look Isetanit also changed its logocelebrated the completion of its refurbishment with a grand opening in October 1957.

In 1960 Tanji Kosuge II stepped down as president and was succeeded by his eldest son, Toshio, who took the name Tanji upon his fathers death two years later. The new president was a graduate of Keio University who had joined Mitsui Trading Company in 1941, before being drafted into the Imperial Japanese Army in 1942. After the war he had spent three years at Showa Textile Company before joining Isetan as a director in 1948.

Under Tanji Kosuge III, Isetan maintained its reputation for innovation during the 1960s. Anticipating the growth in private car ownership, it opened a parking garage adjacent to the store in 1960, becoming the first Japanese department store to have its own car park. In 1963 it introduced designer brands to the store with a Pierre Balmain haute couture salon, and in 1964 took the initiative in rationalizing womens clothing sizes, developing a system that has since been utilized by all Japanese department stores. In 1968 it opened a new annex devoted entirely to mens-wear. Many were opposed to the move, but Kosuge believed that by removing all mens clothes from the main building he could both create space for more womens and childrens clothing and target the different categories of male shoppers more effectively in a building designed for that purpose. Bring him along, too, said the publicity as Isetan sought to reach out to male shoppers through wives, girlfriends, sisters, and daughters who already shopped regularly at Isetan. Meantime, Isetan had become a publicly traded company in 1961.

By the late 1960s Isetan had established itself as the number one fashion merchandiser in Japan and recorded Japans highest sales per month for a single store. In a move to strengthen its fashion merchandising capability further, in 1967 it established the Isetan Research Institute Company, Ltd., a think tank for collecting and analyzing information about the latest fashion, industrial, and consumer trends. The institute was an important source of ideas for Isetans new product development. A year later, it opened its first overseas representative office, in Paris, which, along with other offices opened subsequently, also acted as a source of information on fashion trends.

Expanding Overseas and Diversifying: 1970s80s

From the 1970s Isetan began a period of expansion, opening new stores both at home and overseas. Isetans first overseas store opened in Singapore in 1972, followed by a store in Hong Kong a year later. The increase in stores continued in the 1980s, accompanied by the growing diversification of Isetans business activities in the areas of fashion, food, leisure, and finance.

Subsidiaries set up in these areas in the 1980s included J.F. Corporation, which supplied Isetan with originally developed brands and also created brands for specialty stores around the country; Prio Company, Ltd., an importer-wholesaler of quality womens wear; Queens Isetan Co., Ltd., a gourmet foods store; Isetan Travel Service Company, Ltd., which arranged package tours to domestic and overseas destinations; and Isetan Finance Company, Ltd., which was responsible for a wide range of nonbanking financial operations including the credit management of Isetans charge card, the I-Card, the use of which was extended in 1988 to all shoppers at Isetan, as well as cashing, leasing, and loan services.

Isetan also ran a chain of supermarkets through Queens Isetan Co., Ltd.; operated a nationwide restaurant chain of approximately 100 outlets through Isetan Petit Monde Company, Ltd., started in 1957; and imported and sold cars through Isetan Motors Company, Ltd., started in 1970.

Under Kuniyasu Kosuge, who succeeded his father, Tanji Kosuge III, in 1984, the company continued to grow. A graduate of Keio University who subsequently studied in the United States, Kosuge worked for Mitsubishi Bank for seven years, including a stint in London, before joining Isetan as a director in 1979. His overseas experience was useful as he presided over a growing international network of companies.

In Europe, Isetan operated stores in London, established in 1988, and Vienna, opened in 1990, which together with the companys representative offices in Paris, Milan, and Barcelona strengthened their business capabilities, including the procurement of merchandise through licensing agreements, product development projects, and information gathering. In 1988 Isetan established an international finance company in Amsterdam to support its overseas business activities. It opened a store in Barcelona in October 1991.

Active in the United States since the opening of a representative office in New York in 1979, Isetan moved into the U.S. market with more purpose when it entered into a joint venture with New York-based Barneys, Inc., an upscale retailer of clothing and sundry goods, in 1989. Isetan looked to strengthen its merchandising and increase its expertise in specialty-store management through the joint venture, while helping Barneys to open new stores across the United States. The tie-up also resulted in the opening of a branch of Barneys in Tokyo in November 1990. The Shinjuku store became the largest joint venture between a Japanese and a U.S. retailer, and Isetan had plans to open Barneys outlets in other Japanese cities.

Struggling Through the 1990s

In the mid-1990s Isetan suffered from the aftermath of the rapid decline of the Japanese economy and the souring of the Barneys joint venture. When the Japanese economic bubble burst in 1991, the economy was thrown into a lengthy downturn featuring a precipitous drop in consumer spending. In 1992 overall department store sales fell 3.3 percent, the first such decline in 27 years. Isetans sales began to decline as wellthey fell for the first time in company history in 1992and at a particularly inopportune time, given the companys far-ranging expansion in the heady days of the late 1980s that left it with a mountain of debt. In the depressed climate of the mid-1990s, Isetan also faced increased competition from the burgeoning ranks of discount stores such as Ito-Yokado Co., Ltd. In fact, Isetan in 1993 was threatened with a takeover by Ito-Yokado after Isetans largest shareholder, Shuwa Corporation, a financially troubled real estate firm, sought to unload its 29 percent stake. But Mitsubishi Bank, Isetans main bank, intervened, forcing Kuniyasu Kosuge to step down as president in favor of 30-plus-year company veteran Kazumasa Koshiba, and arranging the sale of the Shuwa shares to 41 of Isetans major existing shareholders and business partners. The pushing of Kosuge into the honorary chairmans seat marked the end of the Kosuge familys reign over Isetan. Meanwhile, the culminating moves of Kuniyasu Kosuges overseas expansion also came in 1993 when new stores opened in Bangkok, ThailandIsetans largest unit in southeast Asiaand in Shanghai, China.

The companys new president put a halt to any more store building and concentrated on improving profits. He closed underperforming affiliates, including the companys stores in Hong Kong, a fitness club in Tokyo, and Isetan Motors. In the short term, however, Isetan was haunted by the overexpansion of the 1980s. The Amsterdam-based finance company formed in 1988 suffered large losses from secret derivatives trading during the 1994 fiscal year, leading Isetan to post an extraordinary loss of ¥9.7 billion (US$89 million). The relationship with Barneys turned south in 1994 when the U.S. retailer requested more money from Isetan to fund its newly expanded operations but Koshiba refused to do so, his company having already poured more than US$600 million into the joint venture. This led Barneys, unable to make the rent payments on its stores, to file for Chapter 11 bankruptcy protection in early 1996. For the fiscal year ending in March 1996 Isetan posted its first net loss since 1961 as a result of the writing off of billions of yen in loans to Barneys. Legal action ensued as well, with both sides suing each other over the original terms of their joint venture agreement. Kuniyasu Kosuge, the architect of the Barneys venture, voluntarily resigned from the Isetan board in mid-1996, leaving a 0.43 percent stake as the only connection between the founding family and the company.

The dispute with Barneys was not resolved until early 1999 when the company emerged from bankruptcy under a reorganization plan in which the companys creditors received more than 90 percent of the equity. Isetan came away with a stake of about seven percent as well as various concessions that settled the lawsuits. Isetan gained ownership of Barneys stores in New York, Chicago, and Beverly Hills, California, the exclusive right to license the Barneys name in Japan, and a 30 percent stake in a joint venture with Barneys to license the name elsewhere in Asia. Isetan also continued to operate two Barneys units in Japan, located in Tokyo and Yokohama.

With the resolution of the Barneys debacle settled on terms that seemed to favor Isetan, the Japanese retailer was finally in a position to concentrate fully on turning its fortunes around. Isetan, however, continued to face the extremely difficult Japanese retail environment at the dawn of the new millennium, a time in which some prominent Japanese retailers were them-selves declaring bankruptcy.

Principal Subsidiaries

Barneys Japan Co. Ltd.; Century Trading Co. Ltd.; Cerruti Japan Corporation; Isetan Clean System Co. Ltd.; Isetan Data Center Co. Ltd.; Isetan Finance Co. Ltd.; Isetan Petit Monde Co. Ltd.; Mamina Co. Ltd.; Musashino Kaihatsu Kanri K.K.; Niigata Isetan Co. Ltd.; Queens Isetan Co. Ltd.; Shizuoka Isetan K.K.; Isetan (Singapore) Limited; Isetan (U K) Ltd.; Isetan Co. Ltd. (U.K.); Isetan Department Store & Co. (U.K.); Isetan Italia S.p.A. (Italy); Isetan of Japan Ltd. (Hong Kong); Isetan of Japan Sdn. Bhd. (Malaysia); Isetan S.p.A. (Italy).

Principal Competitors

The Daimaru, Inc.; Mitsukoshi, Ltd.; Mycal Corporation; Seibu Department Stores, Ltd.; The Seiyu, Ltd.; Takashimaya Company, Limited; Tokyu Department Store Co., Ltd.

Further Reading

Agins, Teri, Barneys Style Gets Translated into Japanese, Wall Street Journal, May 29, 1990, p. B1.

Agins, Ten, Laura Bird, and Laura Jereski, Overdoing It: A Thirst for Glitter and a Pliant Partner Got Barneys in a Bind, Wall Street Journal, January 19, 1996, pp. A1 +.

Bird, Laura, and Laura Jereski, Isetan Contends Barneys Withheld Data, Wall Street Journal, January 18, 1996, p. A10.

Bird, Laura, and Teri Agins, Bruised Barneys Seeks Shelter from Creditors, Wall Street Journal, January 12, 1996, p. B1.

Isetan hyakunenshi, Tokyo: Isetan, 1990.

Japanese Retailing: The Recovery Department, Economist, December 2, 1995, p. 64.

Katayama, Mataichiro, Isetan 100 nen no shoho, Tokyo: Hyogensha, 1983.

Kong, Wong Wei, Isetans Rebound Damped by Singapore Sales Slump, Asian Wall Street Journal, February 14, 1997, p. 13.

Ono, Yumiko, Japanese Department Stores Fall from 1980s Heyday, Wall Street Journal, February 9, 1993, p. B4.

______, Japanese Stores May Be Hiding Some Bargains: Shares May Offer Value As Department Chains Start to Restructure, Asian Wall Street Journal, March 30, 2000, p. 15.

Reorganization Plan for Barneys Is Cleared by Bankruptcy Judge, Wall Street Journal, December 22, 1998, p. B7.

Shirouzu, Norihiko, Cooperation Sparks Interest in Two Retailers, Asian Wall Street Journal, February 7, 1996, p. 15.

______, Isetan Doesnt Want to Divorce Barneys, Wall Street Journal, January 22, 1996, p. A9.

Terazono, Emiko, Isetan Hangs On to Heritage by Thread, Financial Times, June 20, 1996, p. 27.

Yatsko, Pamela, Wanted: Shoppers: Shanghais Retail Glut Cramps Japanese Store, Far Eastern Economic Review, December 4, 1997, pp. 8586.

Jonathan Lloyd-Owen

updated by David E. Salamie

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Isetan Company Limited." International Directory of Company Histories. . Encyclopedia.com. 22 Aug. 2017 <http://www.encyclopedia.com>.

"Isetan Company Limited." International Directory of Company Histories. . Encyclopedia.com. (August 22, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/isetan-company-limited-0

"Isetan Company Limited." International Directory of Company Histories. . Retrieved August 22, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/isetan-company-limited-0

Isetan Company Limited

Isetan Company Limited

14-1, Shinjuku 3-chome
Shinjuku-ku, Tokyo 160
Japan
(03) 3352-1111
Fax: (03) 3225-2464

Public Company
Incorporated: 1930
Employees: 5,602
Sales: ¥430.95 billion (US$3.45 billion)
Stock Exchange: Tokyo Niigata

Isetan is one of Japans leading department store companies, particularly noted for its merchandising strength in the area of mens and womens high-fashion apparel. It has compensated for its comparatively late entry into the field by innovation and niche-building, establishing itself as a fashion leader through sophisticated consumer research and extensive introduction of merchandise from abroad, both well-known designer labels and brands developed exclusively for Isetan. While its department store operations in Japan remain the nucleus of its business, the company is rapidly diversifying its interests and steadily building up its overseas presence.

In common with other top Japanese department stores, Isetan traces its origins back to a kimono shop. Whereas the likes of Mitsukoshi, Daimaru, and Takashimaya have histories going back hundreds of years, Isetans story began in 1886, with the opening of the Iseya Tanji Drapery in Tokyos Kanda district, then a bustling center of commerce located near the Kanda river. Its founder, Tanji Kosuge, was born Tanji Nowatari in 1859. At the age of 12 he was apprenticed to the Isesho Drapery in Kanda. By the age of 20 Tanji had risen to the position of banto, or head clerk. In 1881 he married Hanako Kosuge, the daughter of one of Iseshos best customers, a local rice merchant, and took the surname Kosuge. Five years later, with the blessing of his employer, Tanji Kosuge went into business for himself.

Kanda was one of the most densely populated areas of the city, and the new shops location near a busy intersection guaranteed it a steady stream of business. Because of the shops proximity to several well-known geisha districts, Kosuges customers included many geisha who needed to maintain a well-stocked wardrobe of fine kimonos. He created his own range of original products, and the Iseya Tanji Drapery came to be associated with exquisite obithe belt used to tie the kimonoand quality design.

Tanji Kosuge began expanding the business in various ways. He experimented with staying open at night, he sent out salesmen with samples of the stores original designs to visit the homes of customers, he introduced seasonal bargain sales, he began buying out other kimono stores, and in 1899, as business prospered, he enlarged the Kanda store. So successful had he been that by the turn of the century, the Iseya Tanji Drapery had entered the ranks of Tokyos top five dry-goods stores.

Nevertheless, there was still a big gap between Kosuges store and those of its long-established rivals. While the older stores were already thinking of moving to a department store format, complete with display cabinets for their products and a wider variety of merchandise, Kosuge was still concentrating on building up the kimono business.

In an effort to bring the stores image more in line with those of its rivals, in 1907 he simplified the stores name to Isetan Drapery, combining the first two syllables of Iseya with the first syllable of Tanji. Three years later he considered building a department store in Tokyos Hibiya district but shelved the idea as premature. At his death in 1916, Isetan was well-established as a kimono store, but had yet to make the switch to a department store.

Kosuge was succeeded by his son-in-law, Gihei Takahashi. Takahashi had married Tanji Kosuges eldest daughter in 1908, taking the family name of Kosuge. Upon his father-in-laws death, he took the name Tanji as well.

Takahashi had been working for another kimono store when he first came to the attention of Isetan in 1908. One day he bought 20 obi for his store at a 10% discount from an Isetan salesman, who assured him that the obi were not being sold at the Isetan store. Walking past Isetan some days later, he discovered that the same obi were being sold, and for a 20% discount. Going in to complain, he handled himself so well that he got a further discount. He impressed the man he dealt withTanji Kosuges younger brotheras both a good businessman and a potential husband for Tanjis eldest daughter. Takahashi joined Isetan shortly afterward and was married within six months.

A man who read widely, Takahashi had many ideas about retailing. As Tanji Kosuge II, he began to lay the groundwork for Isetans transformation from a kimono shop to a department store. His first move was to place Isetan on a more businesslike footing by creating the Isetan Partnership to run the store in 1917. It was, however, a catastrophic event six years later that would really move Isetans plans forward.

The Great Kanto Earthquake of September 1, 1923, killed some 130,000 people. The Kanda store burned to the ground, along with much of the rest of Kanda. The necessity of rebuilding the Kanda store provided Kosuge with the opportunity to introduce a department store format. When Isetan reopened in 1924 it was selling not only kimono but also childrens clothes, toys, umbrellas, cosmetics, stationery, household goods, and food. If the store had changed, so had Kanda, and it gradually became apparent that Kanda was no longer the prime site it once had been.

There were three reasons for this. First, within Kanda, the devastation caused by the earthquake and subsequent conflagration resulted in a changed street configuration, and Isetan no longer was situated near the corner of a busy intersection. Second, transportation was improving steadily, making the public more mobile. As the subway system was extended, Ginza and Nihonbashi, where Tokyos leading department stores were located, became more accessible. With the completion of the Yamanote Line, a surface railway that circles Tokyo, new shopping and recreational areas grew up around stations such as Shibuya, Shinjuku, and Ikebukuro. Third, and in many ways most far-reaching, as a result of the Great Kanto Earthquake the center of the population moved away from the devastated areas in central and eastern Tokyo to the suburbs in the west.

By 1928 it was clear that there was no future for Isetan in Kanda. It abandoned a project to build a new eight-story department store there, although four stories of the building had been completed, and began looking for an alternative site. Hi-biya, in downtown Tokyo, was considered once more, but after Tanji Kosuge had spent three days looking at the proposed site, he decided that there would not be enough customers and continued the search elsewhere. His eventual choice was Shinjuku, in the west of Tokyo, an area that had begun to develop after the opening of Shinjuku Station in 1875, but which had really taken off after the Great Kanto Earthquake. It was a decision that was to be as important for Shinjuku as it was for Isetan, and the two have grown in tandem ever since.

In 1930, in preparation for its move into the department store business proper, Isetan formed itself into a limited company, Isetan Company Limited, capitalized at ¥500,000. In 1931 it purchased the land on which its new flagship store would stand, adjacent to an existing department store called Hoteiya. Work began on the Isetan building in 1932, and the main building was completed in 1933. It consisted of two floors below ground and seven above, including an auditorium. On its first day of business, it attracted 130,000 customers. Three months later, the old store in Kanda closed.

In 1935 Isetan bought the ailing Hoteiya department store for ¥2 million. This included the building, the land it stood on, and the entire contents of the store. It borrowed ¥3.3 million from the Bank of Japan to pay for the purchase and redevelopment of the store as part of Isetan. A year later, this new addition to Isetan was open for business.

Shinjuku was by then established as one of Tokyos new city subcenters. It was frequented by middle-class salaried workers and their families, attracted to its shops, cafes, and cinemas. As a new, up-and-coming department store, Isetan fitted in perfectly. A play on a popular catch phrase of the day captures the mood of those times. Today the Imperial Theatre, tomorrow Mitsukoshi went the original, linking together these bastions of tradition in the heart of downtown Tokyo. Today the Moulin Rouge [a new Shinjuku theatre that opened in 1931], tomorrow Isetan, went the other, clearly identifying Isetan as something of a trendsetter, appealing to those who preferred black comedy to traditional Kabuki.

During World War II Isetan remained open for business almost until the end of the war, although its displays grew barer and its sales area gradually shrank to 50% of prewar levels. Escalators and elevators were removed and melted down for the war effort in 1943. That year, Isetan was asked by the Imperial Japanese Army to manage a hotel and store taken over by the Japanese in Sumatra, which it did until the end of the war. The Allied fire bomb raids on the night of March 10, 1945 devastated large areas of Tokyo, reducing the old Kanda store to ashes, but Isetans flagship store remained standing. Quick action that night on the part of employees put out a fire that threatened to rage out of control; neighboring buildings, however, were not so lucky.

According to one of his sons, Tanji Kosuge shrugged off the despondent comments of his employees on August 15, 1945, the day the Japanese emperor announced Japans surrender. What are you saying? The stores still standing, isnt it? Youve got nothing to worry about. Im going back to work tomorrow. Kosuges wish for a quick return to business as usual was not fulfilled for several years, however. Apart from the problem of the lack of merchandise, the Allied occupation authorities had taken a liking to the building, and in 1945 requisitioned it for Allied use from the third floor up. Not until the end of the occupation, in 1952, would Isetan have the building to itself again.

The department store business after World War II saw a much greater emphasis on Western-style clothing. In the years immediately following the war, women made do with what they hadblouses and Japanese-style pantaloons called monpei but from the late 1940s there was a growing fashion- consciousness, initially inspired by the military look sported by women in the Allied occupation forces. In 1951 Isetan sponsored Tokyos first postwar fashion showTokyo Fashion 51which presaged a boom in fashion shows, modeling, and modeling schools.

In 1956 Isetan underwent its first major postwar extension. Three new buildings were added, increasing the sales area by 25%. The purpose was not simply to increase Isetans size; it was to reaffirm Isetans image as a fashion leader. From this period Isetan introduced modern merchandising techniques, dividing up customers very specifically on the basis of age, sex, taste, and spending power. The new-look Isetanit also changed its logocelebrated the completion of its refurbishment with a grand opening in October 1957.

In 1960 Tanji Kosuge II stepped down as president and was succeeded by his eldest son, Toshio, who took the name Tanji upon his fathers death two years later. The new president was a graduate of Keio University who had joined Mitsui Trading Company in 1941, before being drafted into the Imperial Japanese Army in 1942. After the war he had spent three years at Showa Textile Company before joining Isetan as a director in 1948.

Under Tanji Kosuge III, Isetan maintained its reputation for innovation during the 1960s. Anticipating the growth in private car ownership, it opened a parking garage adjacent to the store in 1960, becoming the first Japanese department store to have its own car park. In 1963 it introduced designer brands to the store with a Pierre Balmain haute couture salon, and in 1964 took the initiative in rationalizing womens clothing sizes, developing a system that has since been utilized by all Japanese department stores. In 1968 it opened a new annex devoted entirely to menswear. Many were opposed to the move, but Kosuge believed that by removing all mens clothes from the main building he could both create space for more womens and childrens clothing and target the different categories of male shoppers more effectively in a building designed for that purpose. Bring him along, too, said the publicity as Isetan sought to reach out to male shoppers through wives, girlfriends, sisters, and daughters who already shopped regularly at Isetan.

By the late 1960s Isetan had established itself as the number-one fashion merchandiser in Japan and recorded Japans highest sales per month for a single store. In a move to strengthen its fashion merchandising capability further, in 1967 it established the Isetan Research Institute Company, Ltd., a think tank for collecting and analyzing information about the latest fashion, industrial, and consumer trends. The institute is an important source of ideas for Isetans new-product development. A year later, it opened its first overseas representative office, in Paris, which, along with other offices opened subsequently, has also acted as a source of information on fashion trends.

From the 1970s Isetan began a period of expansion, opening new stores both at home and overseas. Isetans first overseas store opened in Singapore in 1972, followed by a store in Hong Kong a year later. The increase in stores continued in the 1980s, accompanied by the growing diversification of Isetans business activities in the areas of fashion, food, leisure, and finance.

Subsidiaries set up in these areas in the 1980s include J.F. Corporation, which supplies Isetan with originally developed brands and also creates brands for specialty stores around the country; Prio Company, Ltd., an importer-wholesaler of quality womens wear; Queens Isetan Co., Ltd., a gourmet foods store; Isetan Travel Service Company, Ltd., which arranges package tours to domestic and overseas destinations; and Isetan Finance Company, Ltd., which is responsible for a wide range of nonbanking financial operations including the credit management of Isetans charge card, the I-Card, the use of which was extended in 1988 to all shoppers at Isetan, as well as cashing, leasing, and loan services.

Isetan also runs a chain of supermarkets through Queens Isetan Co., Ltd.; operates a nationwide restaurant chain of approximately 100 outlets through Isetan Petit Monde Company, Ltd., started in 1957; and imports and sells cars through Isetan Motors Company, Ltd., started in 1970.

Under Kuniyasu Kosuge, who succeeded his father, Tanji Kosuge III, in 1984, the company has continued to grow. A graduate of Keio University who subsequently studied in the United States, Kosuge worked for Mitsubishi Bank for seven years, including a stint in London, before joining Isetan as a director in 1979. His overseas experience is useful as he presides over a growing international network of companies.

In Europe, Isetan operates stores in London, established in 1988, and Vienna, opened in 1990, which together with the companys representative offices in Paris, Milan, and Barcelona have been strengthening their business capabilities, including the procurement of merchandise through licensing agreements, product development projects, and information gathering. In 1988 Isetan established an international finance company in Amsterdam to support its overseas business activities. It opened a store in Barcelona in October 1991.

In Asia, with existing stores in Singapore, Hong Kong, and Malaysia, Isetan is set to add to its network of stores in Association of South East Asian Nations (ASEAN) countries with the opening of a store in Bangkok, Thailand, at the beginning of 1992. The Bangkok store will be Isetans biggest in the region.

Active in the United States since the opening of a representative office in New York in 1979, Isetan is moving into the U.S. market with more purpose since it entered into a joint venture with Barneys, Inc. of New York, an upscale retailer of clothing and sundry goods, in 1989. Isetan is looking to strengthen its merchandising and increase its expertise in specialty-store management through the joint venture, while helping Barneys to open new stores across the United States. The tie-up has also resulted in the opening of a branch of Barneys in Tokyo in November 1990. The Shinjuku store became the largest joint venture between a Japanese and a U.S. retailer, and Isetan has plans to open Barneys outlets in other Japanese cities.

Other plans for Japan included the opening of a department store at Kyoto Station as part of the redevelopment of the station area. A joint venture between Isetan and the West Japan Railway Corporation, it would be Isetans first department store in western Japan and one of the largest department stores in the region. Isetan was also looking to open a store after 1995 in the Odaiba area of Tokyo as part of the Tokyo Bay development scheme. This will also be a joint venture, with the Sumitomo group.

Apart from joint ventures, Isetan is planning to open several new stores on its own, based on the store it opened in 1990 as part of the urban redevelopment project carried out in Sagami-hara City in the outskirts of Tokyo, where the store is designed to be an integral part of the community. Shinjuku, however, remains the hub of operations, and the faith of Tanji Kosuge in its potential has been rewarded by the relocation to Shinjuku of the massive apparatus of the Tokyo metropolitan government.

Principal Subsidiaries

Isetan Petit Monde Company, Ltd.; Queens Isetan Co., Ltd.; Mammina Company, Ltd. (90%); Century Trading Company (80%); Isetan Clean System; Atelier Francais; Isetan Research Institute; Isetan Data Center; Isetan Motors; Isetan Clover Circle; Isetan Sports Club; J.F. Corporation; Isetan Travel Service, Inc.; Isetan Finance Company, Ltd.; The Box; Barneys Japan; Niigata Isetan (80%); Prio (80%); Shizuoka Isetan (77%); Isetan International Finance B.V. (Netherlands); Isetan of Japan Ltd. (Hong Kong); Isetan (Thailand) Company, Ltd. (49%); Isetan (United Kingdom) Ltd.; Isetan of America Inc.; Isetan (Singapore) Ltd. (58.7%); Superio Company, Ltd. (Hong Kong); Barneys America Inc. (35%).

Further Reading

Katayama, Mataichiro, Isetan 100 nen no shoho, Tokyo, Hyogensha, 1983; Isetan hyakunenshi, Tokyo, Isetan, 1990.

Jonathan Lloyd-Owen

Cite this article
Pick a style below, and copy the text for your bibliography.

  • MLA
  • Chicago
  • APA

"Isetan Company Limited." International Directory of Company Histories. . Encyclopedia.com. 22 Aug. 2017 <http://www.encyclopedia.com>.

"Isetan Company Limited." International Directory of Company Histories. . Encyclopedia.com. (August 22, 2017). http://www.encyclopedia.com/books/politics-and-business-magazines/isetan-company-limited

"Isetan Company Limited." International Directory of Company Histories. . Retrieved August 22, 2017 from Encyclopedia.com: http://www.encyclopedia.com/books/politics-and-business-magazines/isetan-company-limited