Ito-Yokado Co., Ltd.

4-1-4 Shiba-Koen
Minato-ku
Tokyo 105
Japan
(3) 459 2111
Fax: (3) 434 8375

Public Company
Incorporated: 1958 as Yokado Co., Ltd.
Employees: 31,110
Sales: ¥1.83 trillion (US$14.66 billion)
Stock Exchanges: Tokyo Luxembourg Paris

Ito-Yokado Co., Ltd. (Ito-Yokado) and its subsidiaries represent the second-largest supermarket chain in Japan in terms of sales. The company is, however, by far the largest in terms of earnings, ahead of its closest rivals The Daiei, Inc. and The Seiyu, Ltd. The stores are concentrated in the Kanto region of Japan which includes the cities of Tokyo, Yokohama, and Kawasaki. Ito-Yokado holds a majority stake in 7-Eleven Japan, Japan’s largest convenience store chain, and the restaurant chain Denny’s Japan. These two companies, along with 26 other subsidiaries and affiliated companies, are known as the Ito-Yokado Group, with activities ranging from the core business of supermarket retailing to real estate and food processing. The group has strong connections with Western retailers; both Denny’s Japan and 7-Eleven Japan are Japanese versions of major U.S. chains. In March 1991, Ito-Yokado acquired a majority stake in Southland Corporation, the U.S.-based operator of the worldwide 7-Eleven convenience store chain.

Ito-Yokado developed from a subsidiary of Yokado Clothing Store—Yokado Yohin-ten in Japanese—established by Binyu Yoshikawa in 1920. The store was located in the Asakusa area of Tokyo and its main customers were prosperous members of the emerging Japanese middle class. Japan was in a period of high economic growth following its military defeat of China and Russia in conflicts in 1897 and 1904. Western goods such as home appliances and suits were in high demand, and stores specializing in such goods flourished. By 1930, Yoshikawa’s business had expanded to include four stores in the Asakusa area, but sales suffered in the late stages of World War II, as rationing of basic goods was introduced by Japan’s military government. The public had very little money to spend on nonessential goods and the stores were forced to close due to bombing raids by the U.S. air force in the first half of 1945. The original store in Asakusa was destroyed in the air raids, and the other stores were badly damaged. Yoshikawa’s situation was similar to that of numerous small retailers in postwar Tokyo and, like them, he began the painful task of rebuilding his business. He chose to relocate to the Kitasenju part of Tokyo, not far from Asakusa. Like his old stores, the new store sold goods imported from the West, such as clothes and cosmetics, but it also stocked household goods.

During the 1950s the Japanese economy was growing rapidly, fueled by exports and growing consumer demand. Yoshikawa gave his nephew Masatoshi Ito’s parents control of the Yokado store in 1958, and they established Yokado Co., Ltd. It was here that the history of Ito-Yokado really began. Ito was determined to make his mark on the company. In 1961, at the age of 39, Ito traveled to the United States and Europe to gather information on Western retailing methods. This flow of information from the West to Japan was occurring in most sectors of the Japanese business world at the time. Ito studied the major U.S. retailing chains and was convinced that the future of consumer goods retailing in Japan lay in the establishment of such chains. Following his return to Japan, Ito began to take an active role in the family business. In October of 1961 a second Yokado store was opened in the Tokyo region of Akabane, and this came about largely as a result of Ito’s efforts. He succeeded in raising the capital to open another store in 1963 and two more in 1964. The stores were based on large U.S. retail outlets, and stocked food as well as clothes and household goods. In 1965, to avoid confusion with the original Yokado stores, the name was changed from Yokado Co., Ltd. to Ito-Yokado Co., Ltd., with Ito as president. He continued his policy of making the company a major supermarket chain by opening nine new Ito-Yokado stores between 1965 and 1970. They included a supermarket in Noda, Chiba prefecture, the first store outside Tokyo.

By the early 1970s Ito-Yokado was a medium-sized but fast-growing supermarket chain in Tokyo, and in 1972 it obtained a listing on the Second Section of the Tokyo Stock Exchange. Also in this year the corporate logo, which became a familiar sight all over Japan, was conceived. It consists of a white dove on a background of red and blue. Japan’s economy, led by consumer spending, was booming, and Ito wished to expand his company’s business into other areas. In 1972 the restaurant chain Famil was established with the opening of a family diner in Tokyo. Like the Ito-Yokado supermarkets, the Famil chain was aimed at the middle-class family market. The company’s diversification into the restaurant business continued in the following year when, under license from the U.S. chain Denny’s, Denny’s Japan Co. Ltd. was formed. The plan was to open restaurants with a visible Western brand name in the Tokyo suburbs by the side of major roads. The first store, in Tokyo, was highly successful, and Denny’s restaurants were soon opening up all over Japan. In 1973 Ito-Yokado was listed on the First Section of the Tokyo Stock Exchange, and the company acquired a stake in the Fukushima-based supermarket chain Benimaru Co. Ltd. A joint-venture company, York Benimaru, was established. Ito-Yokado contributed its knowledge of chain retailing as well as the familiar Ito-Yokado company logo. Established in 1948, the Benimaru chain of supermarkets thus became an affiliate of Ito-Yokado, and aided in the latter company’s plans for nationwide expansion.

In 1973 under license from the Dallas-based Southland Corporation, Ito-Yokado established 7-Eleven Japan, with a majority shareholding retained by Ito-Yokado. At the time 7-Eleven was the leading convenience-store franchise in the United States, and Ito was determined to establish his company’s dominance in the Japanese market with the aid of the 7-Eleven brand name. The stores were extremely successful and were opened at the rate of about a hundred a year, initially in the Kanto region and subsequently all over Japan. Like the Denny’s restaurants, Ito-Yokado’s 7-Eleven stores were mainly located in suburban regions near major roads.

In the middle to late 1970s Japanese consumers were becoming increasingly concerned about the quality of the goods they bought, as well as the cost. Young Japanese consumers, notably women, were becoming increasingly fashion-conscious and discerning in shopping. In 1978 Ito-Yokado established Mary Ann Co. Ltd., a chain store specializing in fashionable women’s clothing, and the stores became boutiques within shopping centers. The expansion of the Ito-Yokado stores continued. The stores became known as “superstores” because of their large size and abundant floor space. They began to stock such goods as electrical appliances and furniture, and many of them were multilevel. In the 1970s Ito-Yokado opened more than 70 new flagship (Ito-Yokado) stores, with the expansion mainly occurring in the prefectures of Tokyo, Kanagawa, and Chiba.

In 1978 Ito-Yokado increased its penetration of the retail sector in Kanagawa by its purchase of Daikuma Co. Ltd., a Kanagawa-based chain specializing in discount retailing. The stores sold everything from clothes to television sets in warehouse-like buildings. The Ito-Yokado logo was not incorporated into these stores. In 1978 Ito-Yokado joined forces with Japan’s most prestigious department-store chain, Matsu-zakaya Co. Ltd., to establish a department store in Hokkaido, Japan’s northernmost island. The store is 90%-owned by Ito-Yokado and is called York-Matsuzakaya. This venture high-lighted the company’s aim to expand into every sector of retailing in Japan. In 1981 Steps Co. Ltd., a chain of mens-wear stores, was established to complement the existing Mary Ann chain. That same year, 7-Eleven Japan was listed on the First Section of the Tokyo Stock Exchange. By 1982 a computerized point-of-sale (POS) stock monitoring system was introduced throughout the chain. The system speeds up the checkout process and also enables information such as the time of purchase and type of customer to be recorded. The information is sent to the mainframe computer at 7-Eleven Japan’s headquarters, which then returns information to the individual store to aid in ordering decisions. The presence of a bar code on all products sold and a scanner capable of identifying the code made the system possible. With the high rate of stock turnover and slim profit margins on sales, this became a vital ingredient in the chain’s success. POS systems were introduced into all Ito-Yokado stores by 1985.

In 1984 Ito-Yokado made further inroads into the department-store business in Japan with the establishment of Robinson’s Japan Co. Ltd., a wholly owned subsidiary of Ito-Yokado. Although the name suggests foreign influence, the concept was conceived by Ito-Yokado. The first store opened in 1985 in Kasukabe, Saitama prefecture, near Tokyo, and sold a range of luxury goods in a relaxed atmosphere, contrasting with the more frantic pace of the Ito-Yokado superstores. In 1990 a second Robinson’s store was opened in Utsunomiya, Tochigi prefecture. Ito-Yokado entered the sporting goods market with the establishment of Oshman’s Japan Co. Ltd. This venture has only opened two stores, both of them in Tokyo. By 1986 the Ito-Yokado chain was well established in the Kanto region as one of the leading retail chains. This was also true in the northern Japanese island of Hokkaido, and northern Honshu. However, the company had yet to open a store in Japan’s second-largest metropolitan area, the Kansai plain. In 1986 Ito-Yokado’s first store in Kansai opened in Osaka, but as of 1991 it was the only Ito-Yokado store in the region. This market represents a challenge for Ito-Yokado for the 1990s.

The company, with Masatoshi Ito still at the helm, began expansion overseas in 1989 with the opening of a liaison office in Seattle, Washington. In the same year 7-Eleven Japan acquired the 58 branches of 7-Eleven in Hawaii, at the request of owners Southland Corporation. It was apparent that Southland was in financial difficulty, and—according to 7-Eleven Japan’s president, Toshifumi Suzuki—was not responding to the changing U.S. retail market. In reorganizing the stores in Hawaii, Suzuki noticed that the amount of inventory present at a given time was three times the average for his stores in Japan. In addition the stores in Japan had an average floor space of 100 square meters and daily sales of ¥650,000. The equivalent figures for the stores in Hawaii were 170 square meters and ¥400,000. Suzuki realized that tight inventory control was the key to success, and in 1991 Ito-Yokado acquired a 70% stake in Southland Corporation, with the full cooperation of the latter firm’s management. One of the prerequisites put forward by Ito-Yokado before the purchase was that Southland’s management would have to be prepared to listen and learn from 7-Eleven Japan. This represents a major purchase for Ito-Yokado and will push the group’s annual sales past the ¥4 trillion mark, the largest for a Japanese-owned retail group.

Ito-Yokado’s future plans include expansion of all the retail chains, notably in the Kansai region, and the increased use of computer systems in the control and monitoring of sales. This is an area in which Ito-Yokado has gained a competitive advantage. Yasuhisa Ito is currently a director in Ito-Yokado, but it remains to be seen whether or not he will follow in his father’s footsteps at the helm of the company.

Principal Subsidiaries

Marudai Co. Ltd. (80%); Maruki To-bishima Co. Ltd. (80%); Robinson’s Japan Co. Ltd.; York Matsuzakaya Co. Ltd. (90%); York Mart Co. Ltd.; York Benimaru Co. Ltd. (28%); Daikuma Co. Ltd. (82%); Mary Ann Co. Ltd.; Oshman’s Japan Co. Ltd. (90%); Steps Co. Ltd. (15%); 7-Eleven Japan (50.3%); Denny’s Japan Co. Ltd. (51%); Famil Co. Ltd. (96%); York Bussan Co. Ltd.; Union Lease Co. Ltd. (97%); York Keibi Co. Ltd.; Southland Corporation (U.S.A., 70%).

—Dylan Tanner