Takashimaya Company, Limited Business Information, Profile, and History

Company Perspectives:

Over the years, the company has consistently adhered to a corporate philosophy of putting people first. In line with this philosophy, the company has made diligent efforts to offer consumers the means for a high-quality lifestyle through its products and services, as well as to respect its employees and practice corporate openness.

History of Takashimaya Company, Limited

Takashimaya Company, Limited is the oldest and one of the largest department store retailers in Japan. The company operates in three main segments: Department Store Business Operations, Affiliated Business Operations (which includes the Contract & Design, Corporate Customer Sales, and Direct Marketing divisions), and Group Affiliates' Operations (which encompasses the activities of the company's more than 85 domestic and overseas affiliates). Takashimaya's affiliates are involved in real estate, construction, wholesaling, and restaurant management.

1800s: Early Growth, International Trade

Takashimaya began in 1831. Like a number of Japan's leading department store retailers, the company originated as a small, specialty retailer of kimono, with the founder, Shinshichi Iida, opening the first store in Kyoto at the age of 27. The store had a sales space of only 3.6 square meters and specialized in Japanese formal wear--gofuku--supplying both kimono and related accessories. At the time, Japan was in the final 30 years of the feudal Edo period, and its economy was weak and in some confusion. In order to build a successful business, Iida laid down four principles, which Takashimaya's management maintains to this day: high-quality goods, fair prices, honesty in sales, and care and courtesy to all customers.

In 1855 the store was expanded to include more cotton goods and a wider range of formal wear accessories. At this time the company employed 21 people. Japan was finally opened to Western influence in 1867 with the restoration of the Meiji Emperor, and Takashimaya began to stock a wider range of goods, including many household products. In 1876 links were formed with U.S. businesses that had come to Japan with the opening of the feudal society, and the company began to import goods from abroad, even targeting the small but growing foreign community in Kyoto. Toward the end of the 1880s Takashimaya moved to expand its overseas trading. Dealing chiefly in fabrics, the company began to export to Europe, with considerable success. Around the turn of the century Takashimaya took part in various European expositions, displaying fine silks and dyed fabrics, and won prizes for its displays in London, Barcelona, and Paris. In 1899 a sales office was established in Lyons, and a direct export business was founded. An office was opened in London in 1903.

The second Takashimaya store opened in eastern Kyoto in 1893, and a further store was opened in Osaka in 1898. The company established a small office in Tokyo in 1890, which became a full store in 1897. With the opening of an export office in Yokohama in 1900, Takashimaya's business extended into the two major commercial areas of Japan, the Kansai area around Kyoto and Osaka, and the Kanto area centered in Tokyo.

Early 1900s: Evolution of a Department Store

By the turn of the century Takashimaya employed more than 500 people. Traditional stores like Takashimaya began to expand their businesses as a precursor to becoming general merchandise department stores. Takashimaya, however, maintained a strong emphasis on its original fabrics and clothing business, and the company became famous for the quality of its dyeing and weaving. By importing European expertise in weaving and design, Takashimaya introduced new designs and its own clothing brands, while at the same time keeping full control of costs and the final retail price. To display these new designs, in 1909 Takashimaya opened an art exhibition area within its stores. This later became common practice among Japanese department stores, with many, including some Takashimaya outlets, maintaining permanent art exhibition areas.

In 1909 Takashimaya became an unlimited partnership and at the same time began to operate its stores as departmentalized general merchandise stores. The company expanded and modernized all of its outlets to keep pace with other new department stores. The number and range of goods sold was greatly expanded, and by the end of World War I, Takashimaya had six major stores and nine nonretail offices in Japan and overseas. In 1916 the new Tokyo store was opened and Takashimaya introduced a full home-shopping service to its wealthier customers. These customers were given their own accounts and were visited regularly by Takashimaya salespeople. The main items sold in this way were kimono, interior decorations, and furniture. Customers could order by mail, a telephone order service was established, and along with the other major department stores, Takashimaya provided a home-sales service to customers living in the northern and southern regions of Japan. Salespeople would visit wealthy customers living hundreds of miles away from the stores, thus providing a national sales coverage for the Takashimaya stores. Takashimaya Iida Limited was established in 1916 as a separate company, operating as an independent overseas trading arm for the Takashimaya group.

Takashimaya became a private stock company following the end of World War I, with the company taking the name Takashimaya Gofuku Store Co. Ltd. By this time the number of employees had reached 891, and Takashimaya stores had become full department stores. The small restaurant businesses that had operated in the stores since 1912 were formally incorporated and expanded, establishing an independent restaurant business in 1922 based in the newly opened Osaka Takashimaya Store. Immediately after World War I, all stores were equipped with elevators and escalators for the first time. Many of these new facilities were leased from major insurance firms, increasing the level of outside capital involved in the business.

Expanding the Customer Base, Battling Competition: 1920s-30s

In the Great Kanto Earthquake of 1923, Takashimaya's store in Tokyo was destroyed by fire, and a similar fate befell most other major department stores in the city. Out of the ashes, new department stores were built, which were larger and carried a far wider range of merchandise, making department stores available to a wider clientele and not only the most wealthy. Department stores became the general retail stores of Japan. Takashimaya's image was one of privilege, and to introduce its stores to a wider clientele, in 1926 the company began 10 Sen Kinitsu Markets, translated as "Everything for 10 sen," sen being a unit of a yen. The markets were opened in existing Takashimaya stores and were highly successful, selling simple household goods.

Takashimaya also expanded its nonstore retailing business, sending salespeople to a greater number of customers and increasing the availability of goods by mail order. Department stores also began to provide free home delivery services and bus services to transport customers to and from major rail stations. As the leading retailers in Japan at the time, department stores engaged in fierce competition as each one fought to establish a strong niche in the market. This competition was heightened by the entrance into the department store business of such major railroad companies as Tokyu and Hankyu, which opened "terminal department stores" at rail terminals. The advantages of these sites were clear and Takashimaya followed suit, opening a terminal store in Osaka in 1930. In the same year, Takashimaya changed its legal name to Takashimaya Co., Limited, dropping Gofuku Store, which indicated its roots in garment retailing. Takashimaya appointed its first outside director and became a public limited company in 1933, at the height of competition between Japanese department stores. This fierce competition affected many small retailers, not only in the major urban areas but also throughout the regions in which stores sent their traveling salespeople to people's homes. Takashimaya maintained an advantage through its upmarket image and through the development of a new cheap retailing business. The 10 Sen Kinitsu Markets within existing Takashimaya stores proved so successful as a low-price retail strategy that the company began a chain of stores selling low-priced household goods in 1931. Within a year, some 51 new outlets were opened.

Eventually public groups began to see the competition between department stores and their rapid expansion as being detrimental to Japanese retailing overall. In 1932 the Japan Department Store Association--founded in 1924--called for self-restraint in new store openings and the restriction of home visit sales, especially in the provinces. Even so, small retailers continued to complain, and in 1937 the Department Store Law, the original forerunner of the modern Large Store Law (1974) was promulgated to restrict the operations of large stores. As the law was aimed at department stores, the only large-scale retailers in existence at the time, Takashimaya made its new chain of low-price stores into a separate company, calling it Marutaka Kinitsu Store Ltd., and the new company continued to expand the chain store under the name Kinitsu. To get around restrictions on home selling, Takashimaya moved to expand its mail-order business, producing catalogs and advertising widely in national newspapers.

World War II and the Postwar Period: Destruction and Rebuilding

The Department Store Law effectively stopped the expansion of the department store chains, but capital became increasingly scarce as Japan reached the height of its military power during the late 1930s. From 1939 restrictions were placed on the supply of consumer goods, and a black market soon arose. Throughout this period, Takashimaya, along with some other department stores, maintained a policy of setting fair prices, establishing an image of trustworthiness that still exists today. Takashimaya continued to expand its Kinitsu chain of stores and operated 106 outlets covering 39,000 square meters of sales space and employing more than 2,000 people by 1941. The ravages of war took their toll, however, and Takashimaya had lost all but 21 stores by the time the war ended in 1945. Of these, three were department stores and 18 were Kinitsu stores.

Takashimaya's outlets in both Osaka and Tokyo were badly damaged in air raids in March 1945, although enough remained for the company to continue trading. These stores were rebuilt and refurbished between 1945 and 1948, and small offices were opened in various parts of Japan including Shikoku, Hiroshima, Kyushu, and Hokkaido. In 1948 the Allied occupation authorities abolished the original Department Store Law and department stores were finally free to consider opening new stores.

Takashimaya, however, chose to expand and improve its existing main stores in Osaka, Kyoto, and Tokyo, and even closed smaller stores in Kyoto and Wakayama in the early 1950s. In 1956 the Department Store Law was reintroduced by the new Japanese government. The 1956 law restricted the opening of new retail businesses larger than 1,500 square meters, regulated opening hours, and laid down minimum numbers of closing days. The expansion of all department stores was held back by this law, but by careful acquisition of sites and long-term negotiations with local retailers, Takashimaya opened three major new stores up to 1965, including Yokohama Takashimaya, which was established in 1959 at the west exit of Yokohama Station. The company already owned the site, and the new store was established as a separate company from Takashimaya. Further stores were opened in Sakai and Yonago, with the latter store also operating as a separate company.

1950s-90s: International Expansion and Diversification

During the 1950s and 1960s, Takashimaya began to expand its range of businesses. In 1956 Takashimaya became the Japanese member of the Intercontinental Group of Department Stores, an international body covering stores throughout the world. In the same year, this new contact enabled Takashimaya to become the first Japanese department store to hold an international fair for imported goods, the theme on this occasion being Italian. The company later exhibited the famous collection of anthropological photographs, "The Family of Man," in all of its stores, followed by other world famous art collections. In 1958 Takashimaya opened a store on New York's Fifth Avenue, the first of a number of overseas boutiques and restaurants, which later included stores in New York, Paris, Milan, and London.

Takashimaya Shoji Limited was established in 1959 to manufacture a range of exclusive brand-name products. Between 1960 and 1989, 34 of these brands were introduced, including formal wear, food products, cut diamond jewelry, and tableware, designed to be sold at the high-price, high-quality end of the retail market. Other subsidiaries were opened during the 1960s including real estate--Koei Real Estate Ltd.--and a housing and shopping development company, Toshin Kaihatsu Ltd. The latter company was responsible for the development of the Tamagawa Shopping Centre, which opened to the southwest of Tokyo in 1969. This was Japan's first major suburban shopping center development and had a Takashimaya Department Store at its center, with some 48,800 square meters of sales floor space, accounting for a little more than 50 percent of the total shopping center.

In 1971, Takashimaya formed the Hi-Land Group, a buying and development organization that allowed its members to source and buy products collectively and provided professional consultancy and advice, physical distribution facilities, and some financial support. All Takashimaya stores became members, and the group subsequently expanded to include many independent regional department stores. By 1990, the group included 40 member stores from all over Japan.

Takashimaya was the only company to successfully span the two major markets of Kanto and Kansai, although in each case the company often found its retail sales falling below that of the local stores, Daimaru in Osaka and Kyoto and Mitsukoshi in Tokyo. At the beginning of the 1990s, Seibu dominated the Tokyo department store market, but was competing at a slightly different level because of its shorter, less prestigious history.

Takashimaya maintained a significant advantage in its diversification strategies. In addition to operating a number of overseas boutiques and restaurants, it had introduced many overseas brands into the Japanese market. In 1959, the company acquired a license to manufacture and sell Pierre Cardin goods and in 1990 maintained exclusive licenses to manufacture 15 overseas brands, including Fauchon and Emanuel Ungaro. The store was also the exclusive importer of 12 major brands, including James Martin whiskey and Rosenthal tableware.

In 1990, Takashimaya's second main activity was nonstore retailing. The company first began mail-order retailing as long ago as 1899 and, following a curtailment of business during World War II, reintroduced a mail-order service in 1953 from the company's main Osaka store. In the 1980s Takashimaya began to expand its catalog sales, introducing a cable television shopping service and a number of multimedia catalogs, including videotapes and floppy disks. As a result, Takashimaya became the 14th largest nonstore retailer in Japan--this category included direct mail-order or catalog sales as well as home sales--and was far ahead of any other retailers also competing in the market. Takashimaya had the third largest mail-order business in Japan and in 1990 produced 1.45 million catalogs of various kinds, achieving sales of more than ¥65 billion.

Less widely known was Takashimaya's involvement in the interior design business. Based on the company's original fabrics business, Takashimaya had offered high-quality interior design services since 1878 and especially since the early 1970s had been involved in the design of numerous hotels and office and state buildings throughout the world.

For a period at the end of the 1970s and beginning of the 1980s Takashimaya's business benefited from a scandal at the Mitsukoshi Department Store, the company's leading rival in Tokyo, involving the selling of fake antiques and a rumored affair between the chairman and a younger woman. The scandal served to emphasize Takashimaya's reputation for trustworthiness and honesty, and Takashimaya briefly overtook Mitsukoshi as the most popular store at which to buy the obligatory, biannual gifts that are so important in Japanese society. For many consumers this was the first time they had considered using a store other than Mitsukoshi for such socially important purchases. Mitsukoshi later recovered its position as Tokyo's most prestigious store, but Takashimaya maintained a more modern image after the incident.

In 1990 Takashimaya formed High Retail System Co., Ltd. to open upscale convenience stores in major urban areas. Using a telephone-ordering system, customers were able to phone their shopping lists to the local store and receive delivery a few minutes later. The stores were geared to serve office areas and include various services such as color copying, in addition to offering basic convenience foods, drinks, and packaged meals. Gifts also could be ordered by catalog from the main department store's full range.

End of the Century: Difficult Times

By the end of the 1980s, Japan's economy was a problem waiting to happen. Low interest rates, a seemingly endless stream of investment capital, and rampant speculation had combined to grossly overinflate real estate and stock values. At the beginning of the 1990s, the bubble burst. Interest rates rose, causing the flow of money to dry up and causing property and stock values to collapse. The resulting dramatic slowdown in consumer spending inflicted heavy damage on Takashimaya and its competitors alike. Net profit for the company plummeted, falling 74 percent in fiscal 1992, and another 78 percent in 1993.

Despite its ongoing financial woes, in 1993 Takashimaya opened a new store on New York's Fifth Avenue, replacing a small gift shop it had previously operated. With its prestigious location and its 20,500 square feet of space housing luxury clothing, home fashions, and a fine art gallery, the new store was Takashimaya's flagship store for the United States. One of the company's goals for the new store was to better establish its own lines of fashions and furnishings.

In 1995, as Japan's recession dragged on, Takashimaya established a three-year plan for restructuring its business and lowering operating costs. One of the first steps taken under the new plan was the merging of six group companies that managed department stores into one single entity, thereby eliminating redundancies and reducing expenses. The company also set new, lower limits for various budgetary items, such as advertising and distribution. At the same time, it implemented various measures designed to increase sales, such as extending its stores' operating hours, augmenting sales floor space, and expanding its product selection.

By the end of fiscal 1996, Takashimaya was beginning to see results from its efforts. Net sales for that year rose by 26 percent--but more significantly, net income rose by 208 percent from the previous fiscal year. Net income grew again in 1997, albeit at a more conservative rate. But in 1998, with Japan still plagued by an uncertain economic future, personal spending hit a new low, and the already challenging retail environment grew even tougher. Takashimaya's net profits decreased by 18 percent, and the company implemented its second short-term plan for restructuring. This second plan, like the first, involved cost-trimming measures and operational reforms. It also called for a renewed focus on the customer and a new, "socially open" corporate culture.

One of the first cost-cutting measures undertaken involved a partnership with Japan's second largest department store operator, Mitsukoshi Ltd. In March 2000, the two companies joined together to integrate many of their operations, including distribution, purchasing, and information systems. Takashimaya expected the partnership to result in cost savings of several billion yen. By early 2001, Japanese department store superpowers Daimaru and Matsuzakaya also had joined the distribution network.

In 2001, when Takashimaya's second three-year restructuring plan ended, Japan's economy was still weak, unemployment still high, and consumer confidence still low. Faced with these significant obstacles as it looked to bolster its shaky profitability, the company evolved a third plan. One of the plan's major components involved strengthening its department store business by concentrating its investments on the five large stores in Tokyo, Yokohama, Shinjuku, Osaka, and Kyoto. The plan also called for increasing the percentage of Takashimaya private-brand goods offered in the product mix, continuing to overhaul the company's divisional structure, reducing interest-bearing debt, and further trimming employment and related operating expenses.

Looking Ahead

The year 2001 was yet another difficult one for Takashimaya and its fellow Japanese retailers; according to Japan's Ministry of Economy, Trade and Industry, retail sales declined throughout the last four quarters of 2001, with an especially sharp drop of 4.5 percent in December. As 2001 gave way to 2002, there appeared to be no immediate relief in sight. Economists claimed that with the economy still weak and corporate earnings still on the decline, the pressure on retailers was likely to continue.

Takashimaya had so far remained profitable--something not all of its competitors had managed to do. How well it would continue to hold up under the ongoing economic slump, however, remained to be seen.

Principal Subsidiaries: A.T.A. Co., Ltd.; Century & Co., Ltd.; Fashion Plaza 21 Co., Ltd.; Georg Jensen Japan, Ltd.; Golden Spa New Otani Co.; Gourmail Co., Ltd.; Hotel Seagull Takashimaya Co., Ltd.; Kanto Telephone Communication Center, Inc.; Koei Real Estate Co., Ltd.; Nippon Craft Co., Ltd.; R.T. Corporation; Rosier Co., Ltd.; Shin-Nankai Store Co., Ltd.; Takashimaya Building Maintenance Co., Ltd.; Takashimaya Credit Co., Ltd.; Takashimaya Kosakusho Co., Ltd.; Takashimaya Logistics Service Co., Ltd.; Takashimaya Nippatsu Kogyo Co., Ltd.; Takashimaya Store Co., Ltd.; Takashimaya Sun Roser Co., Ltd.; Takashimaya Tomonokai Co., Ltd.; Takashimaya Trading Co., Ltd.; Takashimaya Urban Freight Co., Ltd.; TAPP Co., Ltd.; Toshin Development Co., Ltd.; Yutaka Construction & Engineering Co., Ltd.; Takashimaya (California), Inc. (U.S.A.); Takashimaya Enterprises, Inc.; Takashimaya Fifth Avenue Corporation (U.S.A.); Takashimaya New York, Inc. (U.S.A.); Rodeo Drive Properties, Inc. (U.S.A.); S.A. Leroy (France); Takashimaya (France) S.A.; Takashimaya (Italia) S.P.A. (Italy); Takashimaya International Finance B.V. (The Netherlands); Kakashimaya Hong Kong Enterprises Limited; Ngee Ann Development Private Ltd. (Singapore); Takashimaya Advertising & Promotion PTE, Ltd. (Singapore); Takashimaya (Singapore) Ltd.; Toshin Development International (1995) PTE, Ltd. (Singapore); Dayeh Takashimaya Department Store, Inc. (China); Taipei Takashimaya International Co., Ltd. (China); P.T. Nowl Knitting Indonesia; P.T. Trisenta Interior Manufacturing (Indonesia); Takashimaya (Thailand) Co., Ltd.; Takashimaya Retailing Australia PTY, Ltd.; Takashimaya Australia PTY, Ltd.

Principal Competitors: The Daimaru, Inc.; Istean Co., Ltd.; The Seibu Department Stores, Ltd.

Chronology

• Key Dates:
• 1831: Shinshichi Iida establishes the Takashimaya clothing store in Kyoto.
• 1876: Takashimaya begins to import goods from abroad.
• 1893: The second Takashimaya store opens in eastern Kyoto.
• 1898: A Takashimaya store opens in Osaka.
• 1899: Takashimaya forms a direct export business.
• 1909: Takashimaya first opens an art exhibition area in its stores; the company becomes an unlimited partnership; the company begins to operate its stores as departmentalized general merchandise stores.
• 1916: A Takashimaya opens in Tokyo; Takashimaya Iida Limited is established to serve as an independent overseas trading arm for the group.
• 1922: Takashimaya establishes an independent restaurant business to handle the small eateries in its stores.
• 1930: Takashimaya changes its corporate name to Takashimaya Company, Limited.
• 1931: The company starts a chain of stores designed to sell low-priced household goods.
• 1933: Takashimaya becomes a public limited company.
• 1937: The Department Store Law is established in Japan, to restrict the operations of large stores.
• 1945: World War II ends; Takashimaya is left with only 21 of its original stores--only three of which are department stores.
• 1953: Takashimaya reintroduces mail-order service.
• 1956: Takashimaya joins the Intercontinental Group of Department Stores as Japan's representative.
• 1958: The company opens a shop in New York, becoming the first Japanese department store to do so after the war.
• 1959: Takashimaya Shoji Limited is established to manufacture brand-name products.
• 1990: Takashimaya forms High Retail System Co., Ltd. to open upscale convenience stores in urban areas; Japan's economy suffers a major downturn.
• 1993: Takashimaya opens a flagship U.S. store in New York.
• 1995: The company implements the first of three medium-term restructuring plans.