Matsuzakaya Company Limited
Matsuzakaya Company Limited
Matsuzakaya is Japan’s oldest department store with roots that can be traced back to the 17th century. The Nagoya-based chain operates large stores in most of Japan’s major cities, its largest store being in Nagoya. Matsuzakaya ranks sixth among Japanese department stores in terms of sales, and its business centers around the retailing of clothes, accessories, and luxury foodstuffs. Matsuzakaya has a reputation for quality and sound management.
In 1611 Yudo Ito opened a kimono and clothing store in Nagoya in central Japan. Its family were members of the samurai or warrior class in feudal Japan, and it was taken for granted that Yudo would carry on the family name and tradition. Instead, he chose the life of a merchant and used part of the family estate to go into business. The store was moderately successful and was renowned in Nagoya and the surrounding areas for its high-quality clothes. It stayed in the Ito family for many generations.
In 1768 the Ito family decided to expand further afield. It purchased a clothing store called Matsuzakaya—meaning “pine hill store”—in the Ueno district of Tokyo, which was known as a busy shopping area. At the time, Tokyo—then known as Edo—was Japan’s most important city and one of the world’s major metropolitan areas, with a population exceeding one million. The Ueno store was destroyed in 1858 in a fire that swept through Tokyo, but was subsequently rebuilt.
New stores were opened and continued to be operated and owned by the Itos as a family business. In 1910 the 33-year-old Morimatsu Ito, a fifteenth-generation descendant of Yudo Ito, decided that the time was ripe for expansion. He formed a company called Ito Gofuku Co. Ltd.—“Gofuku” can be translated as drapery or clothing—with capital of ¥500,000. Leading up to the establishment of this company, the Nagoya and Tokyo stores had been expanded and a new store built in Kyoto. A large advertising campaign in major newspapers preceded their opening. An inauguration sale was held in the Nagoya store, with 40,000 people passing through the store’s gates during the sale. The store was the largest in Nagoya at the time and flourished in the rapidly growing economy. Japan had defeated China and Russia in 1896 and 1904 respectively and was reaping the benefits of these victories. An affluent upper middle class was appearing in Japanese society as new businesses flourished. The Ito Gofuku store in Nagoya catered to these customers, selling Western clothes, tobacco, jewelry, and footwear as well as the traditional Japanese clothing that had been the foundation of the family’s business for many years. In 1914 the Nagoya store established a food department specializing in imported items and delicacies. In 1913 a restaurant was introduced in the Ueno store and in 1917 the store was illuminated by electric lighting, as was the Nagoya store shortly afterwards. In 1916 senior managers of the company traveled to the United States to view the country’s prestigious department stores and the current fashion trends. The following year saw the further expansion of the Ueno Matsuzakaya store to a floor space of 5,940 square meters and the addition of elevators. By 1920 the company’s capital exceeded ¥5 million, a tenfold increase in ten years. The company’s store in Kyoto was expanded further in 1922 and new items, such as imported glassware, were sold at all three stores.
In 1923 the Kanto region of Tokyo suffered its worst earthquake in recent memory, and the resultant fire destroyed or damaged large areas of the city. The destruction was compounded by the fact that most houses were constructed from wood, and that most households used gas lamps, which were easily upset in an earthquake. The Matsuzakaya store in Ueno was totally destroyed and its staff of 150 temporarily relocated to the company’s other stores. Within months, however, a new store had been constructed and was open for business by early 1924.
In the same year Ito Gofuku acquired a building in the Ginza, a shopping and entertainment district in Tokyo, and opened a second Matsuzakaya store for the Japanese capital. A store had also been opened in Japan’s second largest city, Osaka, in 1923. The opening was preceded by extensive publicity and canvassing by company employees. In 1924 the company’s Nagoya flagship store was renovated to become a six-story structure illuminated by neon lighting at night. To unite the company’s stores under a brand name, all Ito Gofuku stores became known as Matsuzakaya, and the company changed its name to Matsuzakaya Company Limited in 1925. Company revenues increased rapidly as the stores were expanded and demand for imported Western items boomed.
In 1929 Matsuzakaya’s Ueno store was rebuilt and opened to the public with much fanfare. The store was spectacular for its time, with 26,000 square meters of floorspace, eight elevators, heating and air conditioning, and its own post office and hairdresser. The store also contained a zoo on the roof of the six-story building and was hailed as the most prestigious department store in Japan at the time. Fashion shows were regularly held at the store, and it was known as the best place to shop for the latest fashions. The expansion and investment in all Matsuzakaya stores continued in the 1930s as the Japanese economy grew at a fast pace. A new store was opened in the city of Shizuoka in 1932, and in 1937 the Nagoya store was expanded to 30,000 square meters, surpassing the Ueno store. In the same year Matsuzakaya’s Nagoya store hosted the New Japan Cultural Exhibition.
With the start of World War II, Matsuzakaya’s fortunes declined. The supply of luxury consumer goods from the West slowed greatly after 1940, and the military government’s policy was to stimulate the economy and labor force to help the war effort. This led to falling sales for the company, and the military government asked the store to help publicize and take part in energy-saving and recycling initiatives. By 1944 it was clear to many Japanese that the country would lose the war. In this atmosphere, Matsuzakaya began the retailing of gold, silver, platinum, and jewels to nervous investors. By 1945 Japan had lost the war and the U.S. air force had inflicted destruction on major Japanese cities with its nightly B-29 attacks. Matsuzakaya’s Ginza and Nagoya stores were destroyed in air raids in March and the Osaka and Ueno stores were damaged. During the war Matsuzakaya had optimistically invested in various parts of South-east Asia occupied by Japanese forces. These investments included a hotel in Kuala Lumpur and a store in Peking. These were confiscated after Japan’s defeat and the cost to the company totalled ¥8 million.
Thus Matsuzakaya, along with most other postwar Japanese businesses, was in a state of disarray. The Japanese were, however, quick to rebuild their country and corporate Japan was also quick to reorganize itself, aided greatly by subsidies from the U.S. government, which effectively controlled Japan until 1951. The occupying forces asked most large Japanese companies to aid in the relief effort. Matsuzakaya’s contribution was the conversion of its Osaka store, which had escaped the air raids largely undamaged, into a Red Cross center to tend to the sick and wounded. In early 1946 the first postwar shareholders’ meeting was held and plans to rebuild the company’s stores were announced. This was followed by the reopening later in the year of the Ginza, Nagoya, and Shizuoka stores. The Ueno store was refurbished, with a cinema built on the top floor of the seven-story structure. In 1948 the company launched a promotion campaign in which it claimed to be “binding together lifestyle and culture” in Japan. The late 1940s, however, were a time of rationing in Japan and it was not until 1949 that Matsuzakaya’s sales reached the level of prewar years. The year 1949 also marked a turning point in the Japanese economy, with living standards also reaching prewar levels.
In 1950 Matsuzakaya celebrated its 40th anniversary of incorporation and in the following year the 340th anniversary of Yudo Ito’s first store. The year 1952 saw the expansion and refurbishment of Matsuzakaya’s Ginza store and the following year that of the Nagoya store. The Ueno store followed in 1957. The work on these stores laid the foundation for their present-day position as landmark department stores in Tokyo and Nagoya.
By 1960 the world economy, and Japan’s in particular, were booming. The 1960s were years of strong growth for Matsuzakaya at a time when new retail empires such as Ito-Yokado and Daiei were building up large chains of supermarkets. These were hugely successful in catering to the day-to-day shopping needs of the consumer, while Matsuzakaya offered upmarket goods. There was now less emphasis on food and more on luxury goods. In 1964 Japan’s economic recovery was in full swing and the country played host to the Olympic Games. The Matsuzakaya Ginza store mounted several exhibitions connected with the games, and a salon, a pool hall, and a boutique devoted to Nina Ricci clothes were added to the store. This was complemented by the addition of a Henry Poole men’s suit boutique in each store in 1964. The boutiques were staffed by tailors hired from the United Kingdom to cut suits in the style worn by the English gentleman. In 1965 the accounting operations of the company were computerized with the introduction of an IBM mainframe. The following year saw investment in staff training with the establishment of a training scheme for all employees and a training school in Nagoya for the company’s managers. In 1966 a new store was completed in Osaka with a floor space of 67,000 square meters. The store was built on Osaka Bay and attracted 30,000 customers on its opening day. In 1968 Matsuzakaya set itself a sales target of ¥100 billion to be achieved by the company’s sixtieth anniversary in 1970. The company exceeded this figure with sales of ¥103 billion in that year.
By 1971 Matsuzakaya, along with Daimaru Co. Ltd., had become the leading department store in Japan in terms of reputation and prestige. The company completely refurbished its Nagoya store in 1971, and once again this became Matsuzakaya’s largest store. With floor space of 71,000 square meters and ten floors above ground and two underground, it was one of the largest department stores in the country. In addition a new store was opened in Nagoya, located near the main railway station. The 1970s saw the continued expansion of the Matsuzakaya chain into other Japanese cities such as Okasaki in 1971 and Kuzuka in 1972. A Paris branch was added in 1978. The original customer base of Matsuzakaya’s first overseas department store was the Japanese expatriate community in Paris, but the store soon became popular with native Parisians. In 1980 Mayor Bradley of Los Angeles officially opened the first Matsuzakaya in the United States. Again the targeted customer base was the large Japanese community in Los Angeles.
The 1980s saw Japanese consumers spending more and more on luxury items as the huge and wealthy middle-class reaped the rewards of Japan’s booming economy. Women’s fashions from France and Italy became especially popular, with an extremely lucrative and competitive market. Matsuzakaya and the other big department stores such as Mitsukoshi Co. Ltd. and Isetan Co. Ltd. devoted several floors of their large city stores to women’s fashion and saw large profits from the sales in this department.
A seventeenth-generation Ito, Jirozaemon Ito, currently heads the company, although the Ito family no longer holds a significant number of shares. A recent development for the company was the establishment of retailing via communications satellite tie-ups with Prestel of the United Kingdom and Teletel of France. Although Japanese department stores had a record year in 1991 in terms of earnings, Matsuzakaya included, the current slowing of growth in the Japanese economy has made the company more cautious about future investment plans. However, Matsuzakaya’s excellent name and customer base mean that the company is well-positioned to continue enjoying steady, if slower growth.
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