The Rise of Department Stores in Modern Day Japan

How They Came to Be: Japan and Their Intensive Selection of Department Stores

It is a given fact that modernization in the eastern hemisphere is very close to catching up with its western counterparts. Among the notable growing economies in Asia are Japan and South Korea. Japan, in particular, has been gaining attention for high-quality products in terms of electronics, automotive and other goods. This parallels the rising demand for consumer goods all over the world. Another proof that consumerism has already taken over Japan is the influx of "hyakkaten" (or basically department stores) offering a wide variety of goods.

However, the concept of department stores is not completely a foreign concept to modern day Japan. In fact, similar retail stores have already been around centuries prior to the rise of department stores in the west. The first roots of department stores were traced from London in the 1700's, however, Japan's Echigoya predates that by a hundred years.

In the 1600's, a businessman revolutionized the experience of shopping for ready made kimono by breaking tradition and setting up a physical store where clients may opt to fit their clothing prior to purchase. This was a completely new idea at the time when the acceptable practice was to visit customers one by one at their residence in order to offer goods.  Echigoya eventually evolved to what is now Mitsukoshi. Another department store chain in Japan also has roots from selling kimonos during the 1600s – this is currently Matsuzakaya.

Through time, the first retailers veered away from just selling kimonos and diversified into various goods. The passing years saw the rise of more department stores, either from old homegrown chains or sprawling new ones. An interesting fact about Japanese department stores as well is that since the early 1900s, they started being paired with adjacent terminal stations. A good example of a Japanese department store chain that has gained bank by situating shopping stores near railways is Hankyu Department stores. In a way, Hankyu is also a good representation of how Japanese department stores has changed the retailing landscape through the years.

Merging Railways and Department Stores: Japan's Hankyu Department Stores Chain

Japan is pretty famous for their massive railway system. Almost every area of Japan is accessible by riding the subway or shinkansen (bullet train). There is a good probability that a department store is present in close proximity of a train or subway station. In fact, in Japan, the history of railways and department stores are pretty much intertwined with each other. In other countries, private owners build department stores in proximity to mass transport stations as a way to become accessible to the public. Meanwhile, in Japan, a company operating a train line was also the owner of a nearby department store chain.

Take Hankyu for example. The original department store was built in the 70's. Prior to erecting a department store, Osaka and Kyoto railway systems were already connected by Hankyu Hanshin Electric Railway Co. – a company that has been around since the beginning of the 1900's to provide mass transportation through electric railways. In time, they diversified into businesses like hotels, logistics and eventually department stores.

The first department store under Hankyu was opened during the 1920's. In the 1940's, the parent company Hankyu Hanshin Holdings Inc (previously named Keihanshin Kyuko Railway Company then), decided to separate their department store business into what is now the Hankyu Department Stores, Inc. The company hails from Kyoto, which was already populated then by traditional Japanese clothing stores since Kyoto was the center of textile trade back in the days. Prior to 1929, the location of Hankyu Department Store was leased to Shirokiya, who would later evolve into Tokyu Department Store in the latter years. Shirokiya originally was focused on selling food items, and offering a cafeteria style dining within its premises.

The rise of Hankyu paved way for different department stores to rise as retail giants. In the latter parts of this article, most of Japan's big-name department stores will be mentioned.

Exploring Tokyo: Department Stores Within The Heart of Japan's Capital

Since the Meiji period, Edo (present-day Tokyo city) has already been a popular choice for business owners who want to set up their business.  Fast forward to present day and it is now the center of commercialization in Japan. The busy streets of Tokyo are always filled with people on the go, such as the local working population and tourists on travel. This also meant a higher demand for consumer goods, which is why the retail industry in Tokyo continues to grow more annually.

In contrast to Kyoto, which was the previous center of Japan, businesses in Tokyo choose to engage on a more diverse retail portfolio. In Kyoto, plenty of businesses have roots from the textile industry. Some of their modern day department stores were once specialized stores for selling ready to wear kimonos. Meanwhile, the retailers that sprawled all over Tokyo were one-stop shops, wherein people could buy a whole range of items such as beauty products, clothing, groceries and even appliances. At present, there are several massive department store chains that have embedded themselves in the everyday lives of the Japanese population. These names may even sound familiar to neighboring Asian countries where they have expanded their businesses. This section will serve as a guide to readers who are not familiar with the retailing scene in Tokyo.

An example of a global retailer that found its roots within Tokyo Prefecture is Isetan. Having expanded already to other countries in Asia, this company originally began in Shinjuku. Today, people can marvel at the cluster of buildings erected by Isetan group at Shinjuku so they can shop their wide selection of products.

A big name in Tokyo for retailing is Mitsukoshi, which is attributed as one of the first two traditional department stores in Japan. Almost a decade ago, Mitsukoshi decided to combine with Isetan in order to further dominate the retail landscape. While they were now being operated under a joint merger, the two chains kept their original names as they were already popular under those names. This is quite a smart move for the Isetan Mitsukoshi Holdings as they are able to handle two different demographics by offering a department store that is mass friendly, and one that targets the more upscale shoppers. Aside from having a more upscale vibe within their stores, Mitsukoshi is also notable for already having retail businesses in North America, Europe, and Asia.

The Japanese are really innovative when it comes to their ability to successfully merge business concepts. For example, Parco, another major department store in Japan, has been known not just for retailing consumer goods but also offers services on real estate. This is quite an unlikely combination, but luckily for Parco, this has been received positively in Japan, with the flagship store situated in Shibuya.

Relying heavily on marketing, Marui is another unique department store within Tokyo's realm. The unique aspect of Marui does not lie within its business model, but rather on the way it markets itself to its target demographic. While a majority of the existing retailers not just in Japan, but also all over the world, try to reach a diverse range of target customers, Marui focuses on a niche market – the "millennials".  Having built their business on retailing trendy Japanese streetwear, it comes to no surprise that their stores are still centered on fashion. Their logo "0101" that represents the Marui brand is almost too hipster; which is just a testament on how they target trendy, and hip young adults. An interesting service that Marui also offers is overseas shopping services through the Internet. This allows consumers to buy goods that are not available in Japan through Marui's online shop. A service that is perfect for the millennial generation.

On the other hand, Sogo / Seibu department store chain is a more traditional format of a department store. Coming from a big conglomerate that owns supermarkets and convenience store, each department store fulfills its promise of having a wide range of selection, so their shoppers are only required to shop in one store – making the shopping experience extremely convenient.

For The Big Spenders: Luxury Department Stores in Tokyo, Japan

Ginza is the place to go for anyone who wants to scout for upscale goods. Aside from carrying local upscale brands, imported luxury brands can also be purchased in this area. Anyone who's itching to buy something expensive, or just want a feel of luxury can opt to take a stroll within Matsuya. As mentioned earlier, Matsuya is the other of the two oldest department stores in Japan; having a rich history of serving affluent personalities from the 1600’s with their quality kimonos.

Another Ginza-based department store that stocks up on luxury items is the popular Hankyu department store chain. While their other branches do not carry luxury goods such as clothing, the one in Ginza definitely does so it is surely worth checking out.

For The Bargain Buyers: Cheap and Discount Department Stores in Tokyo, Japan

On the other end of the Spectrum from Hankyu and Matsuya is a huge 42-floor department store that is filled with bargain finds. Similar to a department store, the selection is quite wide in Takeya – the only difference is that they only stock up on items that have discount prices. Usually, the discount section carries food at dirt-cheap prices, China made electronics and appliances and imported American brands.  If for some weird reason, one would suddenly have the urge to buy an engagement ring while buying cheap tea and nori, fret not because Takeya also has a selection of fine jewelry. However, it is important to note that their selection of fine jewelry is still on the more expensive end.

Daimaru: Osaka and Kyoto's Largest Department Store Chain

Aside from Tokyo, the other prefectures that are known for having big department stores are Osaka and Kyoto. This comes to no surprise as they house Daimaru's flagship branch in Osaka, coming from its original store in Kyoto. Similar to Matsuya and Mitsukoshi, Daimaru is another one of those hundred-year-old companies that have been into retailing for centuries. Their roots can be traced back to the 1700's and have been doing business as a retailer ever since. The 1960's were glorious years for Daimaru. as they were then the largest retailer in all of Japan. This was prior to the widespread expansion of other competing chains.

While other larger chains have overtaken Daimaru in terms of size, it continues to enjoy popularity within the Kyoto and Osaka region. Their stores, particularly in Kyoto, are known for a single floor dedicated to scrumptious food selections. The food is so good that people go to Daimaru to eat, instead of shop. The selection of clothing is also good, offering a lot of imported brands for the local populace.

Okinawa Island: The Death of Department Stores

A stark contrast to Tokyo, Kyoto, and Osaka is Okinawa Island; where there is exactly one single department store open, unlike the latter cities with sprawling retail businesses. Being a remote island that is farther than the other prefectures, Okinawa's demand for consumer goods is not as high compared to other areas in Japan. This is the very reason that massive chain Mitsukoshi has permanently closed their doors in Naha, Okinawa around three years ago.

With the last department store under the umbrella of a big company closing, there is only one department store left. Local department store Ryubo in Naha capital is the only department store left in Okinawa. Despite being a smaller contender, Ryubo's offering is simple and targets the very basic demands of Okinawa's population. Aside from selling common brands available in Japan, Ryubo is also known for its in-house selection of food booths. The variety of food choices is good, with an added extra entertainment factor to keep its patrons.

Online Shopping: An Alternative to Department Stores in Japan

It is understandable that shopping in physical stores along with other people is not for everyone. There are certain people who do not enjoy going out just to purchase goods, as well as people who do not have the luxury of time to go out and shop. Luckily, technology is now so advanced and powerful, that almost everything is possible. The recent years have seen the rise of online shopping and e-commerce. A living testament to this is China's Jack Ma, who now happens to be one of the richest people in the world through his online shopping website Alibaba.

In Japan, those who want to shop for goods have several options. A key rule before engaging in a transaction is to Google the store for any possible red flags. Some may opt to stick to reputable stores instead to avoid any risks. Usually, official websites of a brand have already incorporated a shopping option. This means that users are not just limited to simply viewing product look books, or company information, but they already have an option to have purchased items shipped to their home address.

Another great thing about online shopping is the accessibility of products that are not readily available in the Japanese market. Global e-commerce company Amazon has a local version in Japan called Amazon JP, and the selection is impressive. Pretty much anything can be bought through Amazon, from skin care products to electronics, they offer it through affiliated online sellers. Aside from the great selection of products, Amazon also goes an extra mile to make the Japanese online shopping experience extra convenient. A user can now have the option to have their products shipped to any convenience store, where they could easily pick up the item. Imagine having to run to the convenience store to buy a liter of milk, while picking up a wireless iPhone charging dock. It is quite amazing.

Another e-commerce giant in Japan is the homegrown brand, Rakuten. Rakuten started at the early stages of the Internet. Back then, it was not as integral as it currently is to the lives of everyone. Perhaps, not even a majority had access to the Internet back in the 90's. However, Hiroshi Mikitani conceptualized the idea of allowing people to buy a wide range of items through the Internet. No one believed in Rakuten at the time, but now, it is the largest e-commerce website in Japan. Their success has spanned worldwide.

The rise of e-commerce has already made an impact on consumers' buying habits. Pretty much everything can be bought off the Internet nowadays. This seems to pose a real threat to the traditional shopping experience of going in-store to purchase items. While online shopping seems like it is the future, one should not forget that buying from physical stores offer different advantages such as being able to let customers try on the items before buying. This means that the rise of e-commerce does not necessarily signify the death of physical shopping.