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date: 18 November 2018

Japanese Department Stores

Summary and Keywords

Dry goods stores, the predecessors of Japanese department stores, were forced to modernize and change their business format after the Meiji Restoration in 1868, which led to the demise of their main customers. The largest dry goods store, Mitsukoshi, was the first to learn about modern retailing in the West, and it broke out of the mold of the traditional Japanese retailer in around 1900 in an effort to catch up with Western department stores. Other large dry goods stores were quick to follow its lead: they transformed into department stores and created their own “cathedrals of consumption” in the 1920s, to match those in the West. This new retail format strongly contributed to Japan’s economic growth and to the Westernization of the Japanese lifestyle.

Despite numerous publications on the history of department stores, there has been little research on this transfer of Western department stores into a very different world: Japan. Although there are many studies on Japanese department stores in Japanese, focusing on how they were influenced by Western department stores, they are mostly subdivided on the basis of specific topics, such as levels of consumption in the interwar period or their economic impact during Japan’s period of high economic growth. The focus here is on the whole development process of department stores, bridging the gap between Western and Japanese studies on department stores.

The first stage in the development of Japanese department stores was in the early 20th century, when Japanese retailers raced to catch up with Western department stores to become modern Western-style retailers themselves; the second stage was in the late 20th century, when these new Japanese stores continued developing along their own unique path in order to target the domestic market during the growth of the Japanese economy, introducing ready-to-wear clothing, luxury brands, and gift products. In this way, Japanese department stores succeeded in increasing their efficiency and establishing a more upmarket image. However, in exchange for this prosperity, department stores also gave up control of their sales floors to the wholesalers and reduced their own merchandising skills. After the economic bubble burst in 1991, Japanese department stores began to suffer from decreased sales and lack of control over the points of sale in their stores.

Keywords: department store, dry goods store, Japan, West, Westernization, modern retailer

When Prince Arthur, the first Duke of Connaught and Strathearn, made his first official visit from the United Kingdom to Japan on behalf of Edward VII in 1906 to give the Order of the Garter to the Japanese emperor, Japan’s leading department store, Mitsukoshi, hosted the royal delegation. Mitsukoshi guided the group, escorted by full Japanese admirals, to its flagship store in Tokyo. The store’s management showed the royal party some high-quality Japanese textiles, served a traditional tea ceremony in the rooftop tea room that was newly built for the occasion, and gave them Japanese dolls as gifts. The government was keen to show off its most modern retail establishment to the Western guests, and Mitsukoshi, in turn, was honored to host the prince and provide a welcoming and impressive venue for these important visitors to Japan (Mitsukoshi, 2005). While this event in itself was a great honor for Mitsukoshi, the store also used the opportunity to advertise itself as an exclusive place in Japan where Western people could enjoy relaxing and shopping.

When Mitsukoshi decided to transform its store in 1904 into a department store like Wanamaker’s in the United States, it introduced some new sales methods with display cases; the store was still small (its sales area in 1905 was approximately 13, 600 square feet over two floors), and the building was made of wood in the traditional Japanese style. So, in 1914 Mitsukoshi constructed a six-story Western Renaissance–style building including a basement level, built of concrete and using the latest technology, with a sales area of approximately 142, 200 square feet. This new building and its installation of Japan’s first escalators became symbols of a new era. Not only were people surprised by the facade and facilities of this impressive modern building, but the store—and the others that followed it—also embodied the modernization of the Japanese lifestyle. Most customers were seeing Western-style tables and chairs for the first time in these stores and were being taught how to use them. These department stores were the only retailers that succeeded in introducing Western sales techniques into their stores before World War II; and because they were established in Japan between the 1900s and the 1910s, almost half a century after those in the West, they sought to catch up with them throughout the early 20th century.

In the West, the department store was established in the middle of the 19th century, a time that was marked by industrialization and urbanization (Pasdermadjian, 1954; Lancaster, 1995). Many studies have looked at the business history of leading department stores, such as Le Bon Marché in France (Zola, 1928; Miller, 1981; Kashima, 1991), Wanamaker’s (Gibbons, 1971; Zulker, 1993) and Macy’s in the United States (Hower, 1976), Liberty’s (Adburgham, 1975) and Harrods in the United Kingdom (Dale, 1981), focusing mainly on their early development as they established themselves.

Researchers discussed what department stores were and what innovations they introduced. Nystrom (1919), for example, wrote that the one-price policy was a comparatively modern method, and that the displays of goods from many different lines were convenient for customers and stimulated greater demand. Benson and Shaw (1992) captured the story of the evolution of department stores as part of their research on retail development in the United Kingdom, Germany, and Canada, while Bluestone, Hanna, Kuhn, and Moore (1981) investigated the industrialization of department stores in the United States from a macroeconomic perspective and defined five types of department stores: department store chains, discount department stores chains, holding companies, independent department stores, and specialty stores. Weiss (1948) focused on American department store chains such as Sears and Macy’s in his research on the development of suburbia in the United States. More recently, Howard (2015) pointed out that these department stores are no longer at the cutting edge of the retail industry, and now largely gather attention as nostalgic artifacts.

Meanwhile, many studies have focused on the social aspect of department stores, especially on changing consumption and consumer behavior through the development of department stores. The new shopping paradigm brought a new mode of life for consumers. Customers, not only the upper classes but also middle classes, could freely browse the goods at these stores and enjoy the shopping experience. This was the democratization of luxury, which brought with it mass consumption (Williams, 1982). Although their customers included some middle-class shoplifters, as Abelson (1990) mentioned, department stores continued to stimulate customer demand at the point of sales through their new advertisements. This changing consumer behavior was described by Zola (1928) in his novel Au Bonheur des Dames, and the retail innovation of department stores was seen as a distinctly modern activity. Leach (1994) investigated the culture of consumer capitalism, while Crossick and Jaumain (1999) examined the “cathedrals of consumption” phenomenon of these modern department stores. Miller (1981) focused on the largest department store in the world before 1914, Le Bon Marché, and investigated the contradictory nature of the bourgeois dimension of these stores. He described the new bourgeois culture of the “cathedrals of consumption” and discussed how they sought to come to terms with an emerging mass bureaucratic society in the 19th century. Benson (1986) examined the culture of department store managers, saleswomen, and customers in American department stores, and pointed out the role of department stores in creating a change of culture in which buying goods and services was seen not simply as a way of fulfilling basic needs, but as a means of enhancing psychological well-being and social standing.

These dual perspectives in department store studies that include both economic and social insights are also common in studies on Japanese department stores, especially on their early development. For example, Hatsuda (1993) focused on the new space of department stores from the perspective of architectural history, and Jinno (1994) investigated how Mitsukoshi created new types of fashion and expanded its customer base. Yamamoto and Nishizawa (1999) researched the media, including fashion magazines and in-house organs, while a special issue of Japanese Research in Business History, the journal of the Business History Society of Japan, more recently featured articles on Japanese department stores including Fujioka (2014), Mitsuzono (2014), and Yamauchi (2014). Most studies, however, are subdivided on the basis of specific topics, such as levels of consumption in the interwar period or the economic impact of these department stores during Japan’s period of high economic growth. Few studies have given attention to how or why Japanese department stores caught up with pioneering Western department stores in terms of their operation, management, customer demand, and the new Japanese lifestyle.

This article will therefore shed light on the development process of Japanese department stores in the 20th century, including the alterations they had to make to the Western business model, and the impact they had on Japanese society and the Japanese economy throughout this period in history. Two stages of development of Japanese department stores will be discussed: the early 20th century, when Japanese retailers raced to catch up with Western department stores to become modern Western-style retailers themselves, and the late 20th century, when these new Japanese stores continued developing along their own unique path in order to target the domestic market during the growth of the Japanese economy. An overview of the whole process of development of the sector from its prosperity to its decline after 1991 will be presented.

Catching Up With Western Department Stores, 1895–1945

Breaking Out of the Mold of the Traditional Retailer

Dry goods stores, the predecessors of Japanese department stores, were fashionable and prestigious stores that dealt in silk draperies in the late Tokugawa era (1751–1867). However, after the Meiji Restoration in 1868, which instigated the recovery of imperial power and brought feudalism and the shogunate system to an end, sales in dry goods stores sharply decreased. The Meiji Restoration led to the demise of the samurai class, who were the main customers of dry goods stores—particularly the largest one, Mitsukoshi. To recover its sales, Mitsukoshi brought in a new director, Yoshio Takahashi, in 1895. This director was a manager of Mitsui Bank (a leading partner organization), who had studied in the United States at Eastman Business College in Poughkeepsie, New York, in 1887. He introduced some sales innovations common to American department stores, including strategies such as window displays, point-of-sale displays, and Western-style double-entry bookkeeping (Takahashi, 1933). Mitsukoshi therefore broke out of the mold of the traditional retailer at the start of the 20th century. Other large dry goods stores such as Shirokiya, Matsuzakaya, Daimaru, and Takashimaya were quick to follow Mitsukoshi’s lead, and also sent managers to the West to learn about modern retailing, so they could start modernizing their own business models.

For two reasons, only the high-performing and firmly established dry goods stores could transform into department stores at the time. First, dry goods stores generally survived longer than other types of stores in the Tokugawa era: between 1684 and 1872 in Japan the average business lifetime of a dry goods store was 33.3 years, while the average business lifetime of a retailer or wholesaler was 15.7 years (Yamamuro, 2015). Among dry goods stores, some were particularly outstanding and ran their businesses for much longer: Matsuzakaya opened its first dry goods store in 1611, Shirokiya in 1662, Mitsukoshi in 1673, and Daimaru in 1717. Mitsukoshi was the largest among them before World War II, and it continued to increase its sales until the mid-18th century. By the 1740s more than 300 employees worked at Mitsukoshi, making it one of the largest stores in the world in the 18th century (Yui, 2012).

Second, these dry goods stores had unique experience in dealing with silk draperies. They catered exclusively to the upper classes and wealthy people, who bought expensive silk draperies for their kimonos. There are many rules for wearing kimonos, such as the traditional styles that should be worn in different seasons and for special occasions such as weddings and funerals, and for ceremonies to celebrate birthdays or anniversaries; the sales assistants could advise customers on these many conventions and strict rules. Furthermore, dry goods stores needed to deal with many wholesalers and manufacturers across Japan because there were different manufacturing clusters for each kind of kimono; only established dry goods stores had an existing network with these businesses and sufficient funds to maintain their relationship with them.

In the 19th century, paying customers were the only people permitted to enter the dry goods store, and these were mainly men, rather than women or children. People were not able to see any goods from outside the stores, because there were no window displays. All that could be seen were curtains, which were hung to obscure the front of the store. Business was always conducted in these exclusive spaces, and customers could purchase goods only under tightly regulated conditions. They would tell the clerk what they wanted to buy, and the clerk would fetch some suitable goods from the storeroom. Clerks felt great pride in their work, as they were incredibly knowledgeable about the products they sold. They were very skilled at providing their customers with exactly what they were looking for.

Mitsukoshi began its process of modernization by converting its dry goods store into a sales area with display cases in 1895. This was the first time that customers in Japan could freely view products for sale within a store and select items without being disturbed by clerks. Shopping quickly became a leisure activity. Customer demand was stimulated by allowing people to view a wide range of products and see the latest fashions on display. Customer demand also increased due to Mitsukoshi’s marketing strategy, which included advertisements and store window displays. These modern stores naturally attracted a vast number of potential customers, as well as paying customers, and as other similar department stores emerged and multiplied they became the driving force of development in modern Japanese retailing (Mitsukoshi, 2005).

Becoming a Modern Western-Style Department Store

Japanese retailers focused on Western department stores as models of modern retailers for them to aspire to. Mitsukoshi, Japan’s leading department store, was the first to announce its intention to become a department store in newspapers in 1905, and it set its sights on Wanamaker’s in the United States as a target for it to reach. In 1888, when Takahashi visited Philadelphia’s Wanamaker’s, the newest and most successful department store at the time, he studied its organization and management in order to implement the same model in his own store; he was particularly inspired to hire female staff (Takahashi, 1933). He completely reformed Mitsukoshi’s structure to transform it into a modern organization, and it became a joint stock company in 1904. As a professional director, Takahashi recruited highly educated graduates from universities and business schools and gave them leadership positions. According to their skills and education, they became the chief clerks of purchasing, design, accounting, and so on, although some of the older employees protested the changes and staged a walkout in 1898. Nevertheless, in 1900 Mitsukoshi forged ahead and began to hire female employees, as Takahashi had seen in Wanamaker’s. He clarified the specific tasks and roles of each unit and each staff member. He also established clear rules of employment and a wage structure (Mitsukoshi, 2005).

Before this restructuring, Mitsukoshi and other dry goods stores had used traditional and patriarchal personnel management since the 17th century. Under this system, a boy aged around 13 was first employed as an apprentice. He would then climb the career ladder within the store step by step until he became a top manager at around the age of 30. During this time, employees were generally obliged to live in a dormitory attached to the store they worked at. They lived here from the time they were hired until they were allowed to spin off to form their own businesses. The store treated all employees like members of a family, providing them with food, clothing, and education. Employees were educated in good manners, social consideration, reading, writing, and arithmetic, in addition to the knowledge and skills needed for their jobs. Salaries were quite low, but the traditional Japanese perception was that companies were not just a means of earning money, but a whole way of life. Employees lived and grew up together harmoniously as a company “family” in Japanese feudalism (Yui, 2012; Kikkawa, 2012). Takahashi’s policy was therefore revolutionary in Japanese society at the time.

Mitsukoshi was also heavily influenced by Harrods in the United Kingdom. The next director, Ohsuke Hibi, who also moved across from Mitsui Bank and became Mitsukoshi’s senior managing director in 1906, went to the United States and Europe to investigate modern department stores in 1906 and 1907, and soon decided to target European department stores, especially Harrods, instead of American department stores. He learned a great deal from Harrods in particular, and while walking around as a customer he carefully studied the layout of the store, its interior and exterior design, its merchandise, and the customer service of its sales assistants. Hibi found that Harrods had a staff handbook that included guidelines for sales clerk etiquette and company procedures, and this inspired him to create a similar handbook for his own staff at Mitsukoshi (Mitsukoshi, 2005). Then he met Harrods’ director, Richard Burbidge, and for the next few days he was given a tour of all its operations; he was shown the financial details of the store and was taught how the whole organization was managed. The two directors also discussed the department store’s social mission as a modern retailer (Hibi, 1912). Hibi thought that Mitsukoshi should provide high-quality products to respond to customer demand and to increase company sales, but he also wanted to instill high-quality customer service and to contribute to the development of Japanese society through modern business practices. He aimed not only for the successful development of Mitsukoshi, but also for the broader advancement and modernization of Japan (Hoshino, 1951).

Hibi tried to use his newfound knowledge to transform his own Mitsukoshi store into Harrods in Tokyo by introducing Western-style organization, management, and customer service, and even Western-style buildings and sales floor layouts. First, Hibi expanded Mitsukoshi’s range of products to include Western goods and provided a spectacular shopping space in order to transform it into a “cathedral of consumption,” as department stores in the West had been named (Zola, 1928; Crossick & Jaumain, 1999). Most of the store’s sales were initially for silk draperies, so Mitsukoshi began diversifying its merchandise. It introduced imported cosmetics and hats in 1905, and later included hair-care products, hair accessories, umbrellas, and stationery. It soon also included imported goods such as clothing, rugs, and blankets that were sold in Western department stores. However, given that Japanese culture and lifestyles were totally different from Western culture and lifestyles, it was difficult to introduce these Western products into Japanese society. Although modern department stores sparked a strong interest in Western products and culture, many Western products were simply not suitable for Japanese customers at the time. For example, with regard to clothing, the standard proportions of Western and Japanese people were very different (Fujioka, 2006).

In order to expand their merchandise with new product lines, department stores therefore needed to begin producing goods themselves. They essentially had to create their own Western-style merchandise for Japanese consumers. To establish its own production system, Mitsukoshi hired Western clothing manufacturing staff in 1906 to create clothing that would better fit Japanese customers. Another leading department store, Takashimaya, sent managers to Europe with its manufacturers to inspect Western goods at expositions in Vienna, London, and Paris, and they learned Western engineering and production skills from European manufacturers that would enable them to create their own merchandise. They also influenced the manufacturing and distribution system in Japan by encouraging manufacturers to learn the advanced skills of Western companies; by doing so, department stores could purchase Western-style products from domestic companies and then advertise and sell them to Japanese customers (Fujioka, 2006).

Second, Mitsukoshi introduced Western culture, particularly that of the United Kingdom, into its stores. After the Meiji Restoration in 1868 Japan opened its doors to the West, and Japanese society changed dramatically. Japanese politicians and bureaucrats began studying abroad and learning not only the Western social system but also Western business practices, which were then adopted across society and industries in Japan. The department stores were the only place where consumers could come into contact with modern Western products and culture, and it was this contact that led the movement toward adopting a more Western lifestyle in Japan.

For example, Hibi arranged for some in-house musicians to wear traditional Scottish military clothing and play Western musical instruments within his stores (in Mitsukoshi’s flagship store in Tokyo in 1909, and in its Osaka branch in 1912). This was a very difficult operation because at the time nobody could play Western instruments. However, Mitsukoshi’s customers enjoyed the new music and seeing a style of clothing that they had never seen before, so many customers were attracted to the stores to see the musical spectacle. Inspired by Harrods, in 1909 Hibi also introduced the idea of giving Western uniforms to its messenger boys, who would deliver products to customers’ homes and take new orders dressed like English palace guards. As a result, Mitsukoshi opened a new window into Western culture (Mitsukoshi, 2005).

Third, Mitsukoshi hosted some events within the stores and provided many reasons to visit the store apart from just to go shopping. This marketing strategy was modeled on the events held at Le Bon Marché in Paris, which displayed various products according to the theme of each event. For example, a very popular event was a “white sale,” which was held regularly since its modern-style store wholly opened in 1887. Customers enjoyed the beautiful spectacle of these “white sales,” during which the entire store was decorated in white: display cases containing white clothes and accessories were covered with white flowers, and white lace was draped over furniture displays; the letters of the store’s name sign, Le Bon Marché, were covered over with white socks, and the aisles and staircases were decorated with white clothes (Miller, 1981; Williams, 1982). These eye-catching events proved to be an effective marketing strategy, and they succeeded in stimulating customer demand (Kashima, 1991); this strategy also proved to be very effective for Mitsukoshi.

Mitsukoshi embraced Western strategies to develop its business, and it hosted many events, such as an American doll exhibition and official launches of new fabric designs for kimonos, which were exhibited at the stores. This was the vision of Harrods that Hibi wanted to share with his customers and to introduce into Japanese society. For these launches Mitsukoshi also organized a review committee composed of scholars, artists, and journalists, who investigated the latest fashion trends in the world and discussed strategies for creating a new consumer culture and working on new product development with managers at Mitsukoshi (Hatsuda, 1993; Jinno, 1994). In addition, Hibi was particularly keen to host events for children at the stores, such as toy exhibitions and painting sessions. The target customers of these events were children and their families, and Mitsukoshi provided a lot of information about the benefits of a Western-style education and lifestyle for children in Japan. Hibi’s aim was to contribute to the development of Japanese culture, while also making loyal customers of the children and their families who enjoyed these events, thereby increasing sales. This was Mitsukoshi’s marketing strategy for building relationships with its customers.

Growing Department Stores in the 1920s and the 1930s

When Mitsukoshi opened its flagship store in Tokyo in 1914, its main customers were upper-class and upper-middle-class customers because most products on sale were very expensive. When the Great Kanto Earthquake—the most destructive earthquake in modern Japanese history—struck the Greater Tokyo area in 1923, however, the business model of Japanese department stores changed dramatically (Mitsukoshi, 2005; Matsuzakaya, 2010; Takashimaya, 1982). The earthquake and subsequent large-scale fires inflicted catastrophic damage on department stores in Tokyo: those of Mitsukoshi, Matsuzakaya, and Takashimaya largely burned down. The following month they began selling essentials such as soap, basic clothing, dishes, cans of food, and rice at temporary stores. Then, stores expanded their scope to cater for a wider and lower economic class of consumers than before. The incomes of these new middle-class consumers also steadily increased, and this combination of factors prompted the popularization of department stores and the beginning of mass consumption in Japan.

Focusing on this wider target, new retailers including new department stores soon became common in many cities in Japan in the 1920s. In addition to the department store format that evolved from dry goods stores, there were various other routes to becoming a department store. For example, Jyuichiya, a store that sold hair accessories, bags, and shoes in Nagoya, transformed into the department store Maruei in 1922; other specialty stores for hair accessories and cosmetics transformed into department stores. Daiwa began by specializing in selling imported products in Kanazawa and became a department store in 1923. And Tenmaya started out as a dealer in ash for building and dyeing materials in Okayama and established itself as a department store in 1925 (Hida, 1998).

Some railway companies also became a uniquely Japanese type of department store. The Hankyu department store, for instance, was established in Osaka in 1929. While other department stores were located on main streets in city centers, Hankyu department stores were located at major train station terminals. Their target customers were urban commuters traveling to and from work between the city center and suburban areas. The founder of Hankyu had shrewdly anticipated that locating stores at train terminals would eliminate the need for advertisements of any kind, because the potential customers were already there. The store mainly sold food, toys, books, household goods, cosmetics, stationery, shoes, and silk draperies, all of which were slightly cheaper and more practical than the more fashionable products sold at Mitsukoshi and Takashimaya (Hankyu, 1976). Keen to take advantage of this newly discovered market, other department stores soon began to open at train station terminals: Takashimaya launched a new store in Osaka in 1930, Toyoko opened its first store in Shibuya in 1934, and Iwataya established its store in Fukuoka in 1936. In this way, the number of department store companies began to increase in the late 1920s and the 1930s.

This growth of department stores meant that they dominated the retail market, completely overwhelming other retailers with the sheer volume of their sales. While there were only 36 department stores in Tokyo, amounting to only 0.027% of the 135,000 total retailers, the sales of department stores amounted to almost 25% of the total sales of all retailers, and 55% of clothing sales in 1932 (Nakanishi, 1937). Japanese department stores had a much greater presence than their counterparts in the West: According to Belisle (2011), “in 1930 department stores captured 14% of retail dollars spent in Canada,” while in the United Kingdom department stores took in only 4% of the total national retail sales in that same year. Department stores became so powerful in Japan that small retailers suffered from the impact of being completely dominated. This brought about a conflict between department stores and small retailers, which resulted in a law being passed in 1937 to restrict the opening of new department stores and the expansion of their activities, including business hours and the extension of sales areas.

Under this law, a department store was defined as a retailer that dealt in a wide range of merchandise including clothing, household furnishings, and food under one roof, in a sales area of at least 16,000 square feet, and at least 32,000 square feet in the six largest cities, including Tokyo and Osaka. This definition was common among Japanese scholars at the time. For example, Matsuda (1931) described the department store as an established retailer that dealt in various products, while Taniguchi (1934) stated that department stores were expected to sell all the products that people needed throughout their entire lives. Fukuda (1930) and Kobayashi (1928) discussed the differences between traditional general stores and department stores, observing that while both stores sold various types of products, department stores sold more than just the basic products that were sold at general stores.

These observations were also based on Nystrom’s work. His research was translated into Japanese, and many scholars in Japan referred to his books in their own research. He defined the department store as “a retailing institution that deals in several lines of goods, each line separated or ‘departmentalized’ from the rest, both in location within the building and in the concern’s accounting and management systems.” (Nystrom, 1919, p. 246) He also described the one-price policy and communication strategies, including advertisements, as modern methods that differentiated department stores from traditional general stores.

Pasdermadjian (1954) also affected the research of Japanese scholars. He investigated the process of merchandise expansion, as he thought this to be the main characteristic of department stores. Le Bon Marché in Paris, for example, began by adding dresses and ladies’ coats to its fabrics department and then expanded into underwear, hats, and shoes. With this expansion in around 1860, the first department store and an entirely new framework for retail distribution were taking shape. Another department store in Paris, the Louvre, went beyond clothing and expanded its home furnishing products as well. These stores were soon followed by department stores in the United States, including Wanamaker’s, which was popularized in the 1870s. Then, large department stores with several departments, such as Harrods (1889), were established in the United Kingdom. Pasdermadjian (1954) also explained the division of labor within department stores, which comprised different specialized sales departments as well as other divisions for purchasing, advertising, customer services, and delivery for the entire store; this was one of the advantages of large-scale retailing compared with specialty stores and other types of stores.

Japanese scholars introduced these works in order to understand modern retailing, and to describe and define what Western department stores were. Japanese retailers strived to catch up with Western department stores to become modern retailers through the introduction of methods such as the one-price policy and departmentalized organization. As a result, a department store was considered to be a large retailer that dealt in a wide range of merchandise, and a modern retailer that followed the path of Western retailers before World War II in Japan.

Driving Forces Behind the Development of Department Stores, 1945–1990

Japanese department stores had already caught up with Western department stores in the 1930s. When the general manager of a large department store, Matsuzakaya, visited the United States and Europe to investigate the latest department stores, he reported the findings of his visit within the firm in 1934. He was particularly struck by the increasing success of supermarkets in the age of chain stores in the United States and noticed the relative decline of department stores; he therefore felt that Western department stores no longer had anything new to offer in terms of advanced skills and operational knowledge that could further the development of Japanese stores (Matsuzakaya, 1934). They were therefore no longer able to be guided by the Western model and were ready to move on to the next stage of their own development.

An important reason for this continued development was that before World War II, department stores were the only large retailers in Japan, but after it there were many other large retailers, such as supermarkets. In order to differentiate themselves from these new competitors and maintain their market share, department stores needed to adopt a new strategy and move forward along their own path. There were three main driving forces behind the development of department stores after World War II: the expansion of ready-to-wear clothing in collaboration with clothing wholesalers, an upscale strategy in collaboration with luxury brands, and the expansion of the gift market.

The Expansion of Ready-to-Wear Clothing

Although the development of department stores during Japan’s period of high economic growth from the 1950s through to the 1970s encompassed the individual development of each department, progress was mainly driven by the clothing department. The combined sales of the clothing departments of all department stores in Japan amounted to 369 billion yen in 1965, increasing to 1,707 billion yen in 1975—4.5 times greater in the space of a decade; in contrast, the combined total sales of all department stores in Japan were only 1.6 times greater over the same decade (Japan Department Stores Association, 2013).

The introduction of ready-to-wear clothes, particularly Western-style ready-to-wear clothes, affected the development of clothing departments in Japanese department stores. Many Japanese people, particularly women, wore kimonos until the 1950s, and they bought fabrics, so they could make their own kimonos. In the mid-1950s, as the Japanese lifestyle became Westernized at an ever-faster pace, more Western-style clothes were purchased than traditional Japanese clothes (Kikkawa & Takaoka, 1997). However, most department store sales came from fabrics, not clothing. As Gordon (2012) described, 75.5% of households in 1955–1956 in Japan had a sewing machine, according to the survey of Economic Planning Agency of Japan, and typical Japanese women would sew their own and their family’s clothing as part of their duties as a housewife. More expensive and professional clothing was tailored in department stores. Clerks in the clothing department would measure the customers and guide them in their choice of design. Clothing departments at this time were therefore more accurately described as fabric departments.

The prevalence of ready-to-wear clothing in the United States grew along with the development of department stores, and ready-to-wear clothes beat the competition from tailor-made clothes in the 1920s (Gamber, 1997). In contrast, ready-to-wear clothing was not launched in Japan until the 1960s, when manufacturers began making dresses using Western sewing systems. Department stores cooperated with manufacturers and wholesalers to introduce a new production system; but because manufacturers worked only with fabrics at the time, they needed to transform their business to work with clothing, using a new production system that included draping.

Daimaru was the first Japanese department store to introduce ready-made clothing in the form of suits for businesspeople in 1959, through the use of new tailoring patterns and American sewing systems (Daimaru, 1967). These new suits made standardized clothing possible, while maintaining the comfort level of quality tailor-made clothing. Japanese consumers initially thought that ready-to-wear clothing would be cheap and uncomfortable, but Daimaru’s private label changed their preconceptions when they found the suits to be reasonably priced and comfortable; consumers then began preferring to conform their body to fit the single size of clothing available, because of its cheaper price. Following the success of the ready-made suit, broader ranges of ready-to-wear clothes were made available in various sizes, including for women and children. The sales floor therefore gradually became dominated by ready-to-wear clothing in the 1960s (Isetan, 1990).

Ready-to-wear clothes brought a new opportunity to increase department store sales. As manufacturers began to mass-produce this clothing, department stores required mass sales to encourage mass consumption. Mass production led to the transformation of personal sales to mass sales, and with the increasing economy that resulted from this large-scale production, the new more affordable products could be sold to a larger market. But as long as department stores depended on tailor-made clothing, clerks were required to provide a one-to-one personal service, and so were not able to meet the demands of mass consumption. Only ready-to-wear clothing was able to welcome more customers. Indeed, the quantitative expansion of the department store would not have been possible without the development of its clothing department. This expansion of the customer base therefore enabled department stores to progress to a new stage of development (Fujioka, 2013b).

Another contribution of ready-to-wear clothing that led to substantial changes within department stores was its dramatic improvement of sales displays. Ready-to-wear clothes made it easier for stores to exhibit their brand concept, to diversify their merchandise, and to create fashion; it was difficult for department stores to do this with tailor-made clothing using only fabrics and store dummies. Because department stores sold ready-to-wear clothes as a substitute for fabrics, they could present their brand concept visually with a variety of merchandise on their sales floors. As a result, with their new sales displays they were able to attract new customers who could now afford these clothes, as well as attracting fashion icons and early adopters of new products (Kinoshita, 2011).

These ready-to-wear clothes brought a new business model to growing wholesalers, and the sales floors of clothing departments soon underwent a fundamental change. Initially, clothing was displayed according to the kind of material and the type of clothing, such as a section for winter skirts, coats, and jackets (all of which were assembled by the wholesalers on each sales floor); but with diversification within the clothing department, stores were obliged to change the structure of their sales floors. As clothing wholesalers grew from the 1960s onward, they took over the department store’s sales displays with their merchandising power, and combined all kinds of items such as skirts, shirts, and coats in order to create a new type of fashion wholly within their brand. Wholesalers coordinated their product lines to appeal to their brand concept alone, and they began to attract customers with their fashionable styles, rather than their types of clothing. They also imposed their strategy on department stores, so the clothing floor was reorganized into sections operated by individual wholesalers (Fujioka, 2016).

In exchange for operating these sections using their own personnel, wholesalers obtained valuable sales data. Department stores accepted their terms because they had a shortage of sales staff during this period of high economic growth and could not find additional staff to hire; wholesalers’ personnel filled this shortage, in addition to contributing to the reduction of costs (Takaoka, 1997). This was why department stores could develop rapidly in terms of quantitative expansion and share the success of the clothing department during this time. In exchange for introducing consignment buying and accepting any unsold returns, wholesalers gained knowledge of fashion trends from the point of sale. Department stores, however, were concerned about losing control over purchasing and merchandising. The conditions of these transactions enabled department stores to reduce dead stock, but they lost their purchasing skills as a result. This brought about changes in the business model of department stores in the late 20th century.

Upscale Strategy With Luxury Brands

While ready-to-wear clothing contributed to the expansion of the customer base to encompass new customers who could now afford to purchase these mass products, department stores also wanted to differentiate themselves from other retailers such as supermarkets and focus on the high-end market in collaboration with luxury brands; their aim was to be at the forefront of fashion trends, which were followed by the wealthiest customers. Although department stores allowed wholesalers to manage the point of sale for mass customers, they strived to create an upscale market to retain their own management of sales floors, which would attract their original wealthy customers.

With the increased incomes of Japanese consumers during Japan’s period of economic growth between 1954 and 1973 and the subsequent increased demand for brand-new products, luxury brands were greatly welcomed by many fashion-conscious customers. Department stores were the only retailers to respond to the demand for luxury brands at the time, especially imported Western luxury brands (Fujioka, Li, & Kaneko, 2018). Mitsukoshi hosted a catwalk fashion show for luxury fashion in 1950 to stimulate consumer demand for Western-style clothing and opened a new sales floor for imported luxury products such as clothing and accessories, which also included a very elegant tea salon, at its flagship store in Tokyo in 1953 (Mitsukoshi, 2005). Daimaru also held Parisian-style fashion shows at high-class hotels in Osaka, Kyoto, and Tokyo, which were supported by Christian Dior in 1953 (Daimaru, 1967).

Imported luxury brands helped to raise department stores’ image, although they did not immediately increase their sales. Instead, department stores introduced licensed products. For example, Daimaru established a license agreement with Christian Dior in 1953, and Takashimaya did the same with Pierre Cardin in 1959. With these agreements, Japanese manufacturers could produce fashionable clothing for department stores’ upmarket customers using the pattern-cutting designs granted to them. They learned advanced skills for producing the latest fashion through these exclusive licensing agreements with European luxury brands. There were two main implications of these licensed products. First, imported Western products did not usually fit Japanese customers, so licensed products that were produced specifically for Japanese customers were very much welcomed. The enhancement of this high-end merchandise brought increased sales for department stores. Second, licensed products were affordable compared with expensive imported luxury products, and so mass customers could enjoy these products. Japanese manufacturers paid Western designers a license fee for their trademark and logo and expanded their range of merchandise to include various household goods such as towels and slippers. As these were very new high-end styles, these fashions were extremely desirable to Japanese customers. Japanese customers in the late 1970s and early 1980s preferred to buy these affordable licensed products, even though Western brands did not design them themselves, but just provided their logos (Fujioka, Li, & Kaneko, 2018).

However, once these licensed products became popular, fashion-conscious customers were no longer satisfied with this type of product and started seeking out more fashionable and exclusive products. Department stores responded to this new demand by increasing their imports of Western products and by upscaling other types of merchandise in addition to clothing, such as accessories, jewelry, watches, bags, and shoes. Department stores further expanded their sales floors by adding established luxury brands, such as Tiffany and Chanel, and they lavishly renovated their points of sale. This high-end market strategy proved to be successful, and sales of luxury brands continued to grow as their reputation became established over the course of the late 1970s and the 1980s. This was also highly beneficial for the luxury brand companies, who were able to use their collaboration with department stores to bypass Japan’s restrictive trading regulations and launch their products into the Japanese market (Donzé & Fujioka, 2015).

This upscaling of department store merchandise greatly enhanced the image of department stores, and this achieved their aim of setting themselves apart from other retailers. However, in order to maintain their market position, department stores needed to always be searching for the latest upcoming designers, so as to meet the expectations of their fashion-conscious customers. Indeed, they introduced many Western luxury brands into the Japanese market, and the sales of these brands increased rapidly. After the Plaza Accord in 1985 the yen became strong against foreign currencies, so department stores were able to purchase imported products at a lower price than before. In the early 1990s, Japan became one of the largest luxury markets in the world. For example, the Japanese market held the largest proportion of sales in the LVMH group by currency between 1991 and 1995 (LVMH, 1989, 1992, and 1996). The sales of imported luxury goods amounted to 446.3 billion yen in 1985 in Japan, increasing to 1,656.7 billion yen in 1990, and peaking at 1,897.1 billion yen in 1996 (Yano Keizai Kenkyusho, 2011). Within this market, department stores were the main outlet for luxury brands. A total of 69.7% of imported bags, for example, were sold through department stores, while only 18.8% were sold through their own stores in Japan in 1992 (Yano Keizai Kenkyusho, 1994). The sales of luxury brands therefore strongly contributed to increase department store sales in Japan.

The Expansion of the Gift Market

The third driving force of department stores’ development was the gift market. In addition to the clothing department, the household department also expanded its range of merchandise, adding Western-style cookware in the late 1960s and 1970s. When the American-style dining and kitchen concept was introduced in the 1960s by the Public Housing Corporation (the government organization for supplying urban housing and for developing residential areas in Japan), customers became curious about Western kitchen products and wanted to buy Western-style cookware with their higher incomes. Traditional Japanese houses consisted only of Japanese-style tatami rooms, within which it was considered practical and elegant to have minimal furniture and simple interior decoration in the Zen spirit. The kitchens had only traditional Japanese-style cookware and tableware appropriate for preparing and consuming Japanese food. But the baby boom saw a movement away from traditional Japanese housing toward Western-style housing, as developed and encouraged by the Public Housing Corporation. Furthermore, as people began to eat a wider variety of international food rather than solely traditional Japanese food, fashion-conscious department store customers wanted the corresponding cookware and tableware that would allow them to prepare and consume this food more authentically. This meant that the dramatic lifestyle changes that had already transformed wealthier Japanese people during the early development of department stores were now transforming and Westernizing the masses in Japan.

Western kitchen products were often bought as gifts, and sales grew markedly along with the economic growth in Japan. The Survey of Household Economy found that each household spent an average of 131 yen a month on gift products in 1965, increasing to 218 yen in 1970, and to 518 yen in 1975—quadrupling in the space of a decade—while total living expenditures grew 3.4 times larger in the same period (Statistics Bureau of the Prime Minister’s Office, 1980). In Japan there is a custom of gift-giving in mid-summer and mid-winter, and also for additional ceremonial occasions such as coming of age, weddings, funerals, and ancestral worship, in addition to personal gifts. Japanese people traditionally send gifts to friends and relatives when someone dies or gets married to commemorate the occasion. Many people buy large amounts of gifts in a single season. Companies also purchase gifts in bulk for their valued customers or associates during gift-giving seasons. Thus, the Japanese are avid consumers of gift products and spend large sums of money on gifts.

During the 1960s and 1970s they gradually began purchasing more and more expensive gifts with their increased incomes, and kitchen products became one of the most suitable gifts to symbolize the new Westernized Japanese lifestyle at the time. Department stores therefore adjusted the sales floors of their household goods departments to cater to this demand for high-quality gift products as well as for personal products, and sales increased further as a result.

Thus, gift products were bought and sold in bulk, which contributed to efficient merchandising. Two organizations contributed to the increasing sales of the household goods department resulting from the expanded market (Fujioka, 2009). The first was the Gaisho department of the department store—a kind of personal shopper that assisted loyal customers with their personal shopping needs; it did not have its own sales floor, but instead conducted business outside stores, such as in the customer’s home or office. Because the Gaisho department had many loyal customers, the household goods department maintained close relationships with it to get introductions to new clients. So, staff from both the household goods and Gaisho departments suggested attractive gifts for these customers, who then ordered the gifts in bulk from their sales representative in the Gaisho department. Sometimes they even designed and produced original tailor-made products for customers in collaboration with their associated manufacturers, in response to the particular requirements of the customer. The Gaisho department successfully linked loyal customers with the household goods department to tap into the new high-end gift market.

The second organization was the household goods wholesaler, which was heavily dependent on the sales of the department store and had to keep up with the store’s development during Japan’s period of high economic growth. The wholesaler expanded its merchandise range—including the suit as a gift product—as a result of manufacturers’ technical advancements that had been made in order to satisfy consumer demand. At the point of sale, household goods wholesalers provided their own personnel, just as clothing wholesalers did, in order to obtain valuable sales data and be able to dictate their merchandising policy. Japanese department stores could therefore expand thanks to the successful establishment of the highly profitable household goods department within the newly expanded gift market, in cooperation with the merchandising techniques and personnel of the household goods wholesalers, although this did mean that they would gradually lose their purchasing skills.

Gift sales were responsible for upscaling the department store’s image, due to the high-quality gifts that were required by Japanese culture. If a gift was elegantly wrapped in the exclusive wrapping paper of the department store, the receiver would be happy to be presented with a gift of assured quality; because there were few branded products in the household department at the time, it was the department store itself that certified the quality of the products it sold. The wrapping paper therefore acted as a kind of brand logo that signified the department store’s seal of approval and quality assurance of the gift contained within it (Fujioka, 2009). Together with this came higher-priced lines of department store merchandise, wealthier customers, and luxuriously renovated sales floors; the introduction of gift products further encouraged the promotion of brand awareness within the department stores. In this way, the department store’s perceived image was elevated, and it successfully developed with its upscaling strategies.

From Prosperity to Decline After 1991

Since their development during Japan’s period of high economic growth, department stores increased their total sales, expanded their total sales areas, and changed their business model substantially toward greater efficiency and high-end merchandise. This development was slow compared with the development of other retailers such as supermarkets and convenience stores; however, they continued to grow in size and quantity between the 1970s and the 1980s. According to the Japan Department Stores Association (2013), when the total sales of Japanese department stores peaked at 9,713 billion yen in 1991, their sales areas expanded to a total of almost 54 million square feet across 113 companies comprising 268 stores, while the number of employees increased to 140,000 across all department stores; this compared to just two decades earlier, with 1,824 billion yen in total sales, and a total of approximately 30 million square feet of sales areas across 120 companies comprising 192 stores in 1970. In addition, Japanese department stores set their eyes on the overseas market and enhanced their range of merchandise with imported products from Western countries, ensuring that they kept current with the latest fashions in the West by always being attentive to up-and-coming designers.

However, after the economic bubble burst in 1991, department store sales steadily decreased. There are three main reasons that sales fell to 6,292 billion yen in 2010, down to the level of sales in 1982 (Fujioka, 2012). First, Japanese department stores had given up the control of their sales floors to clothing and household goods wholesalers, to be able to expand their sales following Japan’s period of high economic growth. In partnership with the wholesalers, department stores were able to increase their sales, and during Japan’s period of economic development, this win-win relationship worked very well. However, the downside was that the wholesalers took control of the point of sale, and department stores reduced their merchandising skills. This happened first with the clothing wholesalers and household wholesalers, and then with the luxury brand subsidiaries. When the domestic market began to shrink, department stores came under pressure within the partnership, as they depended heavily on wholesalers to find a new strategy to increase sales. Furthermore, although Japanese department stores had paid attention to the overseas market since the 1960s and had subsequently launched stores in Europe and Asia, their aim was purely to respond to the demand of their domestic customers; their overseas branches catered solely to Japanese travelers and residents abroad, and their overseas purchase base in the West served only to provide for their high-end domestic customers (Fujioka, 2013a).

Second, while American midrange department stores such as Macy’s and Nordstrom’s were concerned with developing the chain store operation across their branches, Japanese department stores were more concerned with maintaining the prestigious image of a luxury independent store and had not sufficiently standardized the format of their stores to enable efficient chain store organization. Instead, they had moved toward the high end of the market and relied much more on luxury brands in terms of sales. However, department stores soon began sliding into the pitfall that accompanied these luxury brands: as the brands greatly expanded their global market, they began to control their own single brand image worldwide and subsequently established their own subsidiaries in Japan to control the distribution of their own products in the 1990s. As a result, department stores lost their control over the purchasing of the luxury products with the introduction of consignment and concession agreements—the luxury brands effectively began behaving like clothing wholesalers.

Third, some Western department stores pursued mergers and acquisitions and became multichannel retailers. For example, the British department store John Lewis owns the high-end supermarket Waitrose, and American department stores promoted horizontal consolidation: Macy’s was acquired by Federated Department Stores and merged with May Department Stores. However, the Japanese had not consolidated their department stores until Millennium Retailing was born from the merging of Sogo and Seibu department stores in 2003. Consequently, Japanese department stores were continually at risk of slowing their development, and their sales did indeed decrease when the economic situation worsened. The golden age of Japanese department stores ended in around 1991, after which there came a phase of decline.


Before World War II, Japanese department stores had a clear aim to catch up with Western department stores, and they developed and led the process to create a modern consumer market in Japan in a short period of time. Mitsukoshi and other large department stores therefore had a huge impact on Japan’s society and economy, as these stores played an active role in manufacturing, distribution, and consumption. The directors of Mitsukoshi, such as Takahashi and Hibi, were also great intermediaries for connecting Western culture and Japanese culture through the new retail format of the department store. As Benson (1992) pointed out, the success of department stores came not from the growth of consumer demand, but from the great entrepreneurs who established them and had the vision to bring retail innovation to Japan; without these directors, the great success of Japanese department stores would not have been possible.

However, once Japanese department stores had achieved the same level of advanced consumerism as the West in the early 20th century, they then needed to begin developing along their own original path in the second half of the 20th century. During the high economic growth in the 1960s and early 1970s, other large retailers such as supermarkets and convenience stores emerged, so most department stores began to target more high-end customers to differentiate themselves from these new competitors in the retail industry. This Japanese model of development was monodirectional and very different from that of Western department stores, which catered to diverse consumer markets; some introduced chain store operations, some focused on high-end customers, and some launched their own private labels to cater to mass consumption. However, most Japanese department stores looked in the same direction and targeted an upscale market, regardless of their origins and their initial target market. This means that not only did Japanese department stores innovate a hybrid model of a department store combining Western and Japanese features, but every store progressed and developed in the same way to capture a share of the growing domestic market—both the mass market and the high-end market.

This overview of the development of department stores shows how they became the hub of industries and innovations related to the Western-style products they sold. It was because of department stores that clothing companies were established and promoted ready-to-wear clothes, and that manufacturers developed their skills to produce new kitchen products that expanded the Japanese gift market. These significant expansions of the clothing industry and the household industry strongly contributed to Japanese economic growth, as they led to a larger workforce with increasing wages, and subsequently to a growing mass market, which was main target of department stores in Japan. From this perspective, this overview of department store development in Japan contributes to the understanding of Japanese economic growth in the 20th century through retailing.


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