Seibu Department Stores, Ltd. - Company Profile, Information, Business Description, History, Background Information on Seibu Department Stores, Ltd.



Seibu Ikebukuro Building
16-15-1-chome Minamiikebukuro
Toshima-ku
Tokyo 171-8530
Japan

Company Perspectives:

Seibu Department Stores employs its unique business strategies to provide a level of quality, variety and value that others cannot achieve.

History of Seibu Department Stores, Ltd.

Seibu Department Stores, Ltd. operates retail businesses such as department stores, specialty stores, shopping centers, and direct marketing, as well as sports clubs and merchandise development. The chain has 25 stores, primarily located in Japan—including the Ikebukuro store in Tokyo, one of the biggest department stores in Japan. Seibu is also one of the major companies that form the Saison Group. The Saison Group participates in various industries, including food, retail, finance, transportation, real estate, and entertainment.

1920–50: A Diverse Range of Businesses

The founder of Seibu Department Stores was Yasujiro Tsutsumi, father of the group's former chairman, Seiji Tsutsumi. Yasujiro was not only an entrepreneur but also a member of the House of Representatives. He achieved success in residential development and the leisure industry between 1920 and 1950. Yasujiro Tsutsumi also launched a private railway business.

In 1935 a small-scale department store, Kikuya Department Store, was opened near Ikebukuro Station, the terminal of a private railway in Tokyo. In 1940 Yasujiro Tsutsumi bought the Kikuya Department Store and changed its name to Musashino Department Store, thereby establishing the department store business. Ikebukuro is now one of Tokyo's large shopping districts. When Musashino Department Store was founded, Ikebukuro was a small town undergoing development. Soon afterward, Japan became involved in World War II. Under the controlled wartime economy, the department store was almost forced to stop doing business, and the store building was destroyed in an air raid. After the war, however, business was resumed in a temporary shelter.

During Japan's postwar rehabilitation, Yasujiro Tsutsumi expanded the business and reopened the department store, under the name of Seibu Department Store (later pluralized), in a two-story building with a selling area of about 1,500 square meters. It sold daily necessities such as food, clothes, and sundry goods. Seibu Department Store expanded, taking advantage of Japan's strong economic growth.

1950s-70s: Expansion

From the 1950s through the 1970s, people in Tokyo and other large Japanese cities increasingly moved to the suburbs. The population in the areas along the railway line from Ikebukuro increased rapidly. Seibu Department Store's profits grew steadily in conjunction with this shift in population. Seiji Tsutsumi began to work for Seibu Department Store in 1954. In 1956 Seibu Department Store extended its selling space for the fourth time, to 43,000 square meters, and ranked top in business performance among department stores based near railway terminals in the Ikebukuro district.

Between the late 1950s and early 1960s, the company opened four small-scale stores and expanded the range of merchandise, introduced credit sales, formed customer clubs, and installed information systems. It also diversified into car sales, petroleum and liquid petroleum gas sales, and helicopter services, and launched leisure and real estate businesses. The car sales, helicopter, and real estate businesses later were separated from the department store operations to become one of the Saison Group's core units. This attempt became the basis for further diversification and paved the way to a mass market business with a wide range of activities.

In 1967 a department store of about 10,000 square meters was opened in Funabashi, a suburb of Tokyo. In 1968 a store of about 24,000 square meters was opened in Shibuya, another large shopping area outside Tokyo. For the next few years until the early 1970s, Seibu Department Stores endeavored to open more stores in Tokyo's satellite cities and towns, and in the Tokai district. The Ikebukuro store continued to occupy an important strategic position as the flagship store.

In 1971 Seibu Department Stores Kansai Co., Ltd. was founded as a stepping-stone for expansion into the Kansai district, another important Japanese economic center. In the same year, a shopping complex called PARCO was opened in Shinsaibashi, Osaka. The company planned to construct a large-scale department store in Takatsuki, Osaka Prefecture, and in Otsu, Shiga Prefecture. These stores were opened in 1974 and 1976, respectively. Between the 1960s and the early 1970s new stores were opened consecutively: Itohan and Darumaya in the Hokuriku district, Matsukiya and Honkin in the Tohoku district, Tabata Department Store in Chiba Prefecture, and Toden Kaikan in the Shikoku district, while other local department stores became affiliates of Seibu Department Stores; all except Matsukiya were bought by Seibu Department Stores.

Late 1970s-80s: Taking a New Approach

After the oil crisis in the autumn of 1973, the Japanese economy's rate of growth slowed. In the late 1970s, consumer consumption decreased and many retailers were faced with stagnant sales. The business results of department stores were poor. In response, Seibu Department Stores adopted an aggressive store improvement strategy.

In 1974 Seibu Takatsuki Shopping Center, with a selling area of about 58,000 square meters, was opened in Takatsukishi, Osaka Prefecture. The center was scheduled to open in 1973, but shortly before opening a fire broke out, postponing the opening for about one year.

In 1975 the Ikebukuro store was extended and refurbished for the ninth time and reappeared as a sophisticated department store, offering a wide range of products. The interior of the store and the accompanying advertising campaign reflected its new focus. A museum and a park were constructed within the store, which was intended to be seen as a cultural and social center rather than an ordinary retail store. This innovative concept was later adopted as other stores were remodeled.

PARCO, at that time a subsidiary of Seibu Department Stores, accelerated the trend of developing retail stores as social and cultural centers. PARCO was formerly the Marubutsu Department Store, which, located in Ikebukuro, was on the verge of bankruptcy. Seibu Department Stores bought out Marubutsu in 1969 and reconstructed it as an urban shopping center. In 1969, PARCO Co., Ltd. was established. In 1973 Shibuya PARCO was opened. Five PARCOs opened in the Hokkaido, Chiba, and Oita prefectures in the ensuing years. In 1976 Seibu Otsu Shopping Center, with a selling area of about 40,000 square meters, was opened.

In the early 1980s consumption slackened and retail sales were low. In addition, the restrictions of the Large Store Law of 1974 were enforced to prohibit large retailers from opening stores and to protect small retailers.

At this time, Seibu Department Stores developed the second multistore project (the first had occurred in the 1970s), remodeled the existing stores, including those at Ikebukuro and Shibuya, and promoted businesses other than department stores. As a result, Seibu Department Stores ranked top in sales in the Japanese department store industry in 1987.



As part of the multistore project of the 1980s, five department stores opened: Yurakucho Seibu (1984); Tsukuba Store and Tsukashin Store (1985); Tokorozawa Seibu (1986); and Kawasaki Seibu (1988). These stores were innovative in terms of merchandising, layout, and interior design.

Yurakucho Seibu was located in an area adjacent to the Ginza, Tokyo's most popular downtown area. It was constructed on the former site of the Asahi Shimbun newspaper offices and the Nippon Theater. Yurakucho Seibu and Hankyu Department Store completed a twin tower, of which they were co-tenants. Yurakucho Seibu was an up-to-date store providing modern commodities and services, and acted as a showcase for the merchandise and services of the entire Saison Group.

The Tsukuba store was located in the center of the Tsukuba Academic City and incorporated advanced distribution information technology. For this reason the store attracted considerable publicity in the new high-technology city as an experimental store.

The Tsukashin store was a town-like shopping center developed with the support of the entire Saison Group, including Seibu Department Stores. The store was constructed as part of a redevelopment project on the grounds of a spinning factory. In an area of about 66,000 square meters, a mall of specialty shops, an eating and drinking zone including various restaurants and bars, a multipurpose hall, and sporting facilities were constructed, in addition to a department store with a selling area of about 30,000 square meters. Moreover, a park, a river, a sports center, and even a church were added. This big urban development project took 12 years to complete and greatly contributed to the efforts of Seibu Department Stores and the Saison Group to penetrate the Kansai market.

The Tokorozawa Seibu, located in the residential area of a satellite town along a railway line from Ikebukuro, was a suburban-type large-scale department store of about 23,000 square meters. Kawasaki Seibu, covering about 22,000 square meters, was located in Kawasaki, a town next to Tokyo that was changing from an industrial to a more culturally oriented city. Thus Kawasaki Seibu tried to offer not only merchandise but also various services and information, including financial information and information on leisure activities.

While department stores were being created along these new lines, large-scale specialty stores also were established, such as WAVE, offering audio-visual goods; THE PRIME, a restaurant complex; SEED, accommodating fashion boutiques; and LOFT, carrying miscellaneous modern goods. Several other businesses were actively promoted, including marketing to corporations, import/export and other trading activities; direct marketing; new media; fitness; and wholesale, handling mainly Japanese and well-known foreign fashion goods brands such as Hermès, Ralph Lauren, Yves Saint Laurent, and Benetton.

In 1989 Seibu Department Stores Co., Ltd. and Seibu Department Stores Kansai Co., Ltd., which had been separate companies, were merged to form Seibu Department Stores, Ltd. At the time, the enterprise ranked fifth among Japanese retail companies, following The Daiei, Ito-Yokado, Seiyu, and Jusco.

The Seibu Department Stores Group consisted of 11 department store companies and 38 miscellaneous companies. Included among the latter were Ikebukuro Shopping Park Co., Ltd.; importers Hermès Japan Co., Ltd., Yves Saint-Laurent-Seibu S.A., and Ellebis, Ltd.; and direct marketing company Saison Direct Marketing Co., Ltd.

The Seibu Department Stores Group and Seibu Saison Group introduced various innovations to their stores, including importing and selling Euro-American high-grade brand goods, offering life and other insurance, participating in financial services, and issuing international credit cards.

1990s: Restructuring

In 1990, Seibu opened its first store outside Japan, in Hong Kong. Three years later, the company opened a store in Shenzhen, China. Despite the expansion, however, the first years of the decade were marked by trouble. Flat sales and losses plagued Seibu—and its parent company, the Saison Group, was likewise burdened by sagging revenues and enormous debt. In 1991, Seiji Tsutsumi, son of Seibu's founder, resigned from several high-level positions within the Saison Group, including that of "representative director" of Seibu Department Stores.

In the middle of 1992, the troubled company announced a restructuring plan that was to include freezing investment in new stores under development in three cities and liquidating or absorbing affiliates that were losing money—which included approximately one-third of 30 affiliated companies. The company also began reducing its workforce substantially, by not replacing workers who retired or left the company and by reassigning workers to affiliated companies.

Turnaround efforts continued into the middle of the decade. In 1994 and early 1995, Seibu sold 25 million shares of three affiliate companies, as well as ¥26.1 billion of its own corporate-owned shares. It also began closing department stores that were losing money. In 1996, the company sold majority ownership of its Hong Kong and China stores to a Hong Kong department store chain, generating approximately ¥1.5 billion.

In 1997, Seibu posted its first revenue increase in seven years. Meanwhile, the company began to make cautious moves toward resuming expansion. In early 1998, Seibu partnered with a Japanese and a U.S. developer to make plans for opening as many as 16 large shopping malls in Japan. In November of the same year, the company teamed up with a Denmark group to develop a chain of Scandinavian-style home furnishings stores in Japan.

Early 2000s: More Problems and New Alliances

In mid-2000, it became apparent that one of the companies under the Saison Group's umbrella—Seiyo Corp.—was in an irretrievably difficult position. Because Seibu was Seiyo's largest stockholder, the department store chain also was affected adversely. To prop up its sagging financial condition, Seibu converted equity in its flagship department store in Ikebukuro into marketable securities. The securitization, which was expected to raise approximately ¥108 billion, was Japan's largest.

The first two years of the new century also saw a number of new partnerships for Seibu. In 2000, Itochu Corporation, a trading house based in Japan, purchased almost 5 percent of Seibu, making it the sixth largest shareholder in the company. Seibu and Itochu planned to work jointly on developing an e-commerce initiative. In early 2001, Seibu took over a struggling department store chain—Sogo Co.—which had filed for court protection from creditors. Under the terms of the purchase, Seibu owned 95 percent of Sogo and installed ten of its own members on Sogo's board of directors.

As Seibu looked to the future, it hoped to leverage technology to reduce its debt and improve efficiency. The company had forged an alliance with NTT Data Corp. and planned to build an information network for use in the distribution sector. The first project for the partnership was expected to be an Internet-based system designed to manage Seibu's sales to corporate clients, from order to fulfillment.

Principal Subsidiaries: The Loft Co., Ltd.; Shell Garden Co., Ltd.; Polo/Ralph Lauren Japan, Co., Ltd.; Liberty Japan Co., Ltd.; Ikebukuro Shopping Park Co., Ltd.; Millennium Development, Inc.; Yatsugatake Kogen Lodge; The Ellebis, Ltd.; De-Gliffe-Club; Jean-Louis Scherrer Japon Co., Ltd.; F Co., Ltd.; Family Seibu Co., Ltd.; J. Osawa & Co., Ltd.; Asahi Food Processing Co., Ltd.; Asahi Industries Co., Ltd.; PISA Co., Ltd.; Business System Agent Co., Ltd.; Career On Co., Ltd.

Principal Competitors: The Daimaru, Inc.; Mitsukoshi, Ltd.; Takashimaya Company, Limited.

Chronology

Additional Details

Further Reference

"Itochu Tie-up Key to Seibu's Success," Yomiuri Shimbun/Daily Yomiuri, September 9, 2000.Kamachi, Akihiro, and Toru Takahashi, "Retail Goliaths Undergo Massive Restructuring," Yomiuri Shimbun/Daily Yomiuri, May 3, 1998."Seibu Plans Biggest Securitisation," South China Morning Post, August 17, 2000, p. 16.Yui, Tsunehiko, The History of Saison, Tokyo: Libroport, 1991.

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