Tokyu Department Store Co., Ltd.

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Tokyu Department Store Co., Ltd.

2-24-1, Dogenzaka
Shibuya-ku
Tokyo 150
Japan
(03) 3477-3111,
Fax: (03) 3496-7200

Public Company
Incorporated: 1919 as Shirokiya Drapery Shop Co., Ltd.
Employees: 5,738
Sales: ¥393.22 billion (US$3.15 billion)
Stock Exchanges: Tokyo Sapporo

Tokyu Department Store Co., Ltd. is Japan’s eighth-largest department store chain, operating ten major stores in Japan. Five of the stores are in the Tokyo area, and the two most important are in the city’s busy Shibuya district. Tokyu Department Store also has extensive international links, including seven major overseas outlets in Hawaii and Southeast Asia.

The company is an innovator in its industry; it was the first retailer in Japan to open a department store at a railway station, the first to open a shopping arcade, and the first to introduce door-to-door sales. Perhaps as a consequence of this type of innovation, it tends to show above-average profitability.

Tokyu Department Store is one of the most important of the Tokyu Companies, a complex group of businesses of which Tokyu Corporation is the nucleus. These companies, of which there are nearly 400, are divided into four main groups: retailing and distribution; development; transportation; and recreation and leisure. Tokyu Department Store is the nucleus of the retailing and distribution group, which represented almost 40% of the Tokyu Companies’ total sales in 1990. The company works closely with other Tokyu enterprises; for example, its stores are usually sited at Tokyu Corporation railway stations, Tokyu’s air and land transportation operations carry its merchandise, and its new shopping facilities are often constructed in conjunction with Tokyu property development companies.

Tokyu Department Store’s most venerable antecedent dates back to the 17th century. This ancestor was a drapers’ shop, Shirokiya, founded in 1662 by Hikotaro Omura in the Nihon-bashi area of Tokyo, or Edo as the city was then called. In 1919 this business was incorporated as the Shirokiya Drapery Shop Co., Ltd. Four years later, the store, like most others in Tokyo, was devastated by fire following the Great Kanto Earthquake. Operating under the new trading name of Shirokiya Co., Ltd., the company redeveloped the old site to create a new and more up-to-date store, which opened in June 1933.

The evolution of Shirokiya constitutes one strand of the Tokyu Department Store’s history. The other principal strand begins in the 1930s, a boom period for Japanese department stores. At this time Tokyo’s suburbs were growing rapidly, and railway lines were stretching out from the center to serve them. The railway companies often used the land adjacent to their commuter stations to build department stores, which they financed with money from their transport activities. One of the earliest railway companies to spot this opportunity was the Tokyo Yokohama Electric Railways Co., Ltd., owned by entrepreneur Keita Gotoh’s Tokyo Corporation. In 1934 the Tokyo Yokohama Electric Railways Co. opened Toyoko Department Store, the first department store to be sited at a railway station—“Toyoko” is a portmanteau word formed from “Tokyo” and “Yokohama”.

After World War II the Allied occupying forces pursued a policy of dismantling the large combines or zaibatsu, which in the Allies’ opinion had contributed to Japan’s entry into the war. Many Tokyu operations were reconstituted as semi-independent companies. One such company, Toyoko Kogyo, assumed control of Tokyu’s department-store business in 1948, shortly afterwards becoming known as Toyoko Department Store Co., Ltd.

Another company originating in 1948, and today affiliated with Tokyu Department Store, is Tokyu Foods. 40 years after its foundation, Tokyu Foods was to become a significant manufacturer and retailer of bakery goods, operating 140 bakeries in Japan and elsewhere under the name “St-Germain,” also selling delicatessen-style meats. Tokyu Foods would also build up several restaurant chains. Tokyu Department Store’s other important food-manufacturing affiliate, Gold Pak, whose award-winning products are all based on fresh fruit and vegetable juices, would begin trading in 1966.

Meanwhile, after the immediate postwar hardships, Japan’s prosperity grew rapidly. Department stores flourished because they offered convenient one-stop shopping; from being primarily dry-goods suppliers before the war, they now came to supply everything from food to consumer durables. They also catered to the Westernization of Japanese tastes by bringing in imports in a way that smaller retailers could not afford to do. Department stores were typically situated at railway stations, as were Toyoko’s stores.

It was against this promising background that Toyoko Department Store opened its Ikebukuro store in 1950, which was to close after only 14 years’ trading. In 1951 the company inaugurated Tokyo’s first shopping arcade under the name Toyoko Norengai. The west wing of the main Toyoko store was also extended during the early 1950s.

The two strands of Tokyu Department Store’s history come together in the late 1950s. Shirokiya Co. joined the Tokyu group of companies in 1956. Two years later, after a period of intensive modernization and expansion of the Shirokiya main store, Shirokiya and Toyoko Department Store merged, adopting the name Toyoko Co., Ltd.

The company took an initial step towards globalization with the creation of Shirokiya Incorporated in 1959. In the same year, this new affiliate opened Tokyu’s first overseas store, the Hawaii Shirokiya in the Ala Moana Shopping Center.

Over the years Shirokiya Incorporated would open another three stores in Hawaii, two of them in shopping centers and one in a hotel. That Shirokiya became a valued part of Hawaiian life is indicated by the fact that the city of Honolulu designated October 15, 1989, as “Shirokiya Day” in honor of the first store’s 30th anniversary.

On the domestic front, the early 1960s found department stores facing unprecedented demand for household goods such as televisions and washing machines. However, the stores were also presented with growing competition from the newly-arrived supermarkets and superstores which, sited away from town centers as they tended to be, could often provide shoppers with a more pleasant environment and lower-priced goods. Despite this competition, Toyoko continued to grow, both through acquisition and through construction of attractive new stores. In 1966 Toyoko formed a tie-up with Nagano Maruzen, which in 1970 would change its name to the Nagano Tokyu Department Store Ltd.

The company adopted its current name of Tokyu Department Store Co., Ltd. in 1967, the year in which it opened a new main store in Shibuya at one of Tokyo’s largest railway stations. Both this and the original Toyoko Store nearby were to undergo an important expansion program in the late 1960s.

Also in 1967, the 300-year old Shirokiya shop changed its name to the Nihonbashi Tokyu Department Store. Its advantageous site, adjacent to the intersection of three subway lines and in an important shopping and business district, continued to make it one of Tokyu’s busiest enterprises.

The 1973 oil shock precipitated a period of stagnation in the department-store sector. In spite of this, the 1970s were notable for the opening of several new Tokyu stores. In 1973 came the new Sapporo Tokyu Department Store, situated across the road from Sapporo Station in Hokkaido. This was the first Tokyu store to open outside the capital, and Tokyu made a point of staffing it locally to ensure a strong rapport with shoppers and a thorough understanding of their preferences. Initially a company in its own right, Sapporo Tokyu Department Store was to merge with Tokyu Department Store in 1978.

The Kichijoji store opened in 1974 at the Japan Railways Kichijoji Station in Musashino City, Tokyo. In 1980 the Machida Tokyu Department Store Co. began trading; it would become part of the Tokyu Department Store Co. in 1989. Machida is one of Tokyo’s most rapidly-growing residential suburbs, and the store offers mainly sporting and leisure equipment to local shoppers.

During the 1970s and 1980s there was a trend toward specialization among Japanese department stores. A store would cater to specific groups of customers, such as newly-married women or teenagers. In 1979 Tokyu Department Store affiliate T.M.D. opened Shibuyu 109, a center aimed at the fashion-conscious woman and by the 1990s containing 93 separate shops. Its success sparked off a series of similar enterprises, including the KOHRINBO 109 in Kanazawa, opened in 1985; One-Oh-Nine, opened in 1986; and 109-2, opened in 1987.

In 1990 Tokyu launched the first of a new style of fashion store, 1 2 3 (pronounced “un deux trois”) in Shibuya. Among the boutiques it comprised was Trans Continents, an outlet for Tokyu affiliate Millenium Japan Ltd., also founded in 1990 as a retailer of fashion clothing and accessories. This exemplifies Tokyu’s participation in the trend for Japanese retailers to develop own-brand fashion products, appealing to consumers in the way that designer-labeled goods do, but undercutting designer-label prices.

In the 1980s Tokyu added energetically to its overseas interests, starting with the opening of the Hong Kong Tokyu store in 1980 when it became the principal tenant of the then recently-completed New World Center in Kowloon on the Chinese mainland. Then came stores in Bangkok and Thailand in 1985, and in Singapore in 1987. In each case Tokyu made a point of integrating itself into the local community—the slogan of the Singapore store is “Born and Raised in Singapore”— while offering shoppers a taste of Japanese courtesy and quality. Outside Asia, the OK Gift Shop 109 opened in Auckland, New Zealand, in 1990.

As well as opening new stores, Tokyu expanded overseas through acquisition. It bought the Dragon Seed Co. Ltd., a Hong Kong department store company, in 1988 from investment company First Pacific. With Dragon Seed, Tokyu gained a valuable building in the Central area of Hong Kong Island, as well as a ten-store chain. Tokyu bought an equity participation in the Ever Green Department Store Corporation of Taiwan in 1990.

Tokyu’s overseas operations were not confined to its retail outlets. International buying operations and tie-ups were becoming increasingly important. Tokyu acquired the monopoly for Jim Thompson Thai silk in 1985, opening a Jim Thompson boutique in its main store. In 1988 it formed an alliance with Williams-Sonoma, a U.S. catalog-sales company, to establish Williams-Sonoma Japan. Williams-Sonoma specialties include household goods and furnishings.

Overseas buying was not exclusively a quest for exotica. Like many of its competitors, Tokyu Department Store sought to reduce its unit costs through imports, and adopted a “develop and import” system whereby it joined forces with local interests to produce goods for sale initially in the local marketplace and, when a sufficiently high standard had been attained, for import to Japan. Goods imported in this way included knitwear from China, clothing from Hong Kong, and fruit from Thailand.

The 1980s was a period of recovery in the Japanese consumer market. Tokyu’s expansion in the 1970s had left it well placed to benefit despite continued fierce competition from supermarkets. New Tokyu department stores continued to open. The Kitami Tokyu began trading in 1982 and the Komoro Tokyu store in Nagano prefecture, part of the Nagano Tokyu Department Store Co., began trading the following year, as did the Tama Plaza Tokyu department store. The Tama Plaza Shopping Center, constructed by Tokyu Corporation, was adjacent to Tama Plaza station in Yokohama, and the department store was its principal occupant. The Tama Plaza Tokyu Department Store Co. became the Seinan Tokyu Department Store Co. in 1989, though the store itself continued to be known as Tama Plaza.

Japanese department stores appear to be more successful if they frequently remodel their premises to refresh their appeal to their customers. Interior redesigns of existing outlets have also been a response to government planning restrictions on the building of new stores.

Remodeling of stores was a keynote of Tokyu’s activities throughout the 1980s. In 1984 it celebrated the 50th anniversary of the opening of Toyoko Department Store with a radical remodeling of the main store in Shibuya. This flagship store now contains a range of specialty shops under one roof. The Shibuya store’s food department in the basement was greatly extended in 1990. The Toyoko store was refitted in 1985 and 1986. This, too, houses a mall of specialty shops, including concessions such as Benetton, and the first Williams-Sonoma Japan retail outlet, which opened in 1988 with a view to enhancing Williams-Sonoma’s understanding of local consumer preferences for the benefit of the mail-order side of its business. The store’s exterior was renovated in 1989.

Outside Tokyo, too, shops were constantly being restyled to keep abreast of consumer preferences. The Nagano Tokyu store was extended in 1986 and a new annex called Cherchez was added, making this the largest urban department store in the Nagano prefecture.

In 1988 the Kichijoji store was redecorated, and the Sapporo store embarked on an extension and renewal program. Thanks to the opening of a new subway line, the store’s food floor in the basement was now directly connected to Sapporo station. The Nihonbashi store, too, underwent a dramatic transformation, reopening complete with La Plasis, a huge customer service mall offering postal, travel, and other facilities. The renovated store also boasted a greatly expanded women’s clothing department. A couple of years later the Nihonbashi store was crowned with the imaginative addition of a rooftop golf school.

During the 1970s and 1980s the Japanese department store sector, which had previously dominated the retail industry in terms of both sales and profitability, began to lag behind the supermarket companies with their out-of-town superstores. This tendency was attributed partly to the supermarkets’ faster conversion to information technology. In 1988, however, Tokyu introduced a Point of Sale (POS) system to all its department stores to automate stock control and keep track of local customer preferences.

Tokyu was also innovative in finding ways to woo the shopper back from the superstores. In February 1987, for instance, The Economist reported that four Tokyu stores had introduced door-to-door sales teams of housewives selling on commission. This personal approach was so successful that several other department stores quickly followed suit.

Japanese stores try to lure shoppers through their own doors by helping to improve the area of the city in which they operate; for example, an adjunct of the Toyoko Store renovation in 1985 was a project to improve and promote the whole street in cooperation with local government. This form of competition has become known as the “Commercial Block War”.

Tokyu has played a major role in the revitalization of the Shibuya area, where its headquarters and largest stores are situated. Tokyu’s most spectacular contribution to date has been the Bunkamura or Tokyu Culture Village. A cooperative venture between a number of Tokyu companies, it involved the construction of a large complex including art gallery, concert hall, and theatre. It opened in 1989 on a site adjacent to Tokyu’s main store, and the Japan Company Handbook soon reported that takings at the main store were shooting up under the influence of the Bunkamura.

In the early 1990s, investments such as this should continue to pay dividends. Healthy turnover of goods such as jewelry and fine art reflects the luxurious ambience which Tokyu strives to project in its stores and malls. New stores continue to open, usually in the proximity of stations. In 1990, for instance, Nagano Tokyu Department Store Co., Ltd. opened its Nagano Tokyu Life Store at the Japan Railways Kita-Nagano Station. A new store, provisionally named the Aoba-dai Tokyu Department Store, is scheduled to open at Aobadai Station in Tokyo in 1993. Refurbishment also continues apace with the expansion of the Machida store, due for completion in 1992.

Tokyu is pursuing an active policy of expansion in and beyond the Pacific Rim area. There are now four Hawaii stores and one each in Hong Kong, Bangkok, and Singapore, as well as a further six representative offices worldwide. A second Thai store is preparing to open in 1993.

Synergy with other companies in the group is an important factor in the success of Tokyu Department Store; for instance, the retailing and distribution group also comprises a supermarket chain, the Tokyu Store Chain, with over 100 stores in the greater Tokyo area. Like the department stores, most of these adjoin the Tokyu Corporation’s railway lines. Tokyu Department Store and Tokyu Store Chain can combine to achieve economies of scale in buying and distribution.

Tokyu also operates specialty stores such as Tokyu Time Co., started in 1965 to sell and repair watches, and Sports Tokyu Co., started in 1970. Both of these are affiliates of Tokyu Department Store Co., while a number of other specialty stores, such as Top Shoes, are more closely linked with the Tokyu Store Chain Co. All these specialty stores are available for inclusion in Tokyu Department Store’s shopping malls.

The slogan of the Tokyu Companies is “Creating a well-balanced life for the 21st century.” This aspiration is reflected in Tokyu Department Store’s community- and lifestyle-oriented approach to its customers. The stores do not simply try to sell individual products and services; they offer lectures, cultural events, and educational programs to the public to reinforce the sales message and at the same time improve the quality of life. The stores use local staff to emphasise that the business is rooted in the customer community.

In the 1990s the competitive environment in which Tokyu Department Store operates is undergoing a dramatic transformation. The Large Store Law which restricted the construction of new stores is being relaxed in response to the Japanese-American Structural Impediments Initiative. This liberalization will make it easier for Tokyu to expand, but equally it will throw its market open to foreign competitors.

Writing in Business JAPAN (August, 1990) in his capacity as chairman of the Japan Department Stores Association, Tokyu Department Store’s president Mamoru Miura discussed the legislative changes and warned that Japan was about to encounter an “increasingly sinister” economic environment with labor shortages, rising interest rates, and unstable stock and foreign exchange markets. He identified the internationalization of the marketplace and the need for better information management as the two main challenges facing the department store industry in the coming decade. With its experience of overseas link-ups and its well-established computer systems—it even owns its own software development company, Tokyu Information Systems—Tokyu Department Store looks well positioned to face both of these challenges.

Principal Subsidiaries

Nagano Tokyu Department Store Co., Ltd.; Seinan Tokyu Department Store Co., Ltd.; Kitami Tokyu Department Store Co., Ltd.; T.M.D. Co., Ltd.; Tokyu Time Co., Ltd.; Sports Tokyu Co., Ltd.; Shibuya Underground Shopping Center Co., Ltd.; UN International Co., Ltd.; Tokyu Information Systems Co., Ltd.; Williams-Sonoma Japan Co., Ltd.; Millennium Japan Ltd.; Shirokiya, Inc.; Hong Kong Tokyu Department Store Co., Ltd.; Tokyu Department Store (Singapore) Pte. Ltd.; Tokyu Foods Co., Ltd.; Gold Pak Co., Ltd.; Tokyu Department Store Service Co., Ltd.; Sapporo Plaza Co., Ltd.