Hankyu Department Stores, Inc

International Directory of Company Histories, Volume 62 (1991) by Rachel Loos, Christina Stansell

Hankyu Department Stores, Inc.

8-7 Kakuda-cho Kita-ku Osaka 530-8350 Japan Telephone: ( 06) 361 1381 Fax: ( 06) 367 2943 Web site: http://www.hankyu-dept.co.jp

Public Company Incorporated: 1947 Employees: 6,501 Sales: ¥395 billion ($3.68 billion) (2003) Stock Exchanges: Tokyo Ticker Symbol: 8242 NAIC: 452110 Department Stores

Hankyu Department Stores, Inc. is one of Japan's leading department store chains. The company's stores can be found in the Japanese cities of Osaka, Toyonaka, Kawanishi, Kyoto, Kobe, Takarazuka, Tokyo, and Yokohama. Hankyu and its peers in the retail industry were hit hard by Japan's sluggish economy and drop-off in consumer spending during the 1990s. The company launched a major restructuring effort in 2000 that included selling off subsidiaries, cutting costs, and developing a new management system in order to bolster sales and profits.

Early History

Although the first Hankyu Department Store did not open until 1929, the history of the company dates back to 1907, when Japanese entrepreneur Ichizo Kobayashi helped found the Mino-Arima Electric Railway Company, the forerunner to the Hankyu Corporation. To promote the use of the railway, Kobayashi developed a number of leisure facilities at sites along the track. The foremost of these was the Takarazuka Resort, famous for its Girl's Revue, an all-women theater troupe whose international reputation gained the company much valuable publicity. In 1918, Kobayashi attempted to expand the Mino-Arima railway company to run trains from Mino-Arima to Kobe. Unable to acquire permission to do so, he had to settle for a line from Osaka to Kobe. It was at this time that the company changed its name to Hankyu Corporation. The name Hankyu derived from a combination of the Chinese characters for Osaka, which can be read as the words "Han" and "Kyu," the latter of which means express.

To promote the use of the railway further, Kobayashi opened the first Hankyu department store at Umeda railway station in the city of Osaka in 1929. It became the first railway terminal department store, designed to serve several hundred thousand daily commuters, and as such heralded a new movement among Japanese retailers. This movement was characterized by the opening of department stores by railroad companies on prime sites along the railway lines, in particular at important terminals and main interchange stations, using capital from their parent companies. The railway lines often originated within the stores themselves.

Hankyu Department Stores opened its second store in 1936 in Kobe, but growth soon came to a virtual standstill because of World War II. During the war, the company was enlisted to help the cause of the Japanese army. It donated money, and the escalators and lifts of the stores were stripped to provide the army with much-needed metal. During World War II, the department stores also became focal points for control and distribution of all consumer goods by the government. The store in Osaka was damaged by an Allied bombing raid.

Postwar Growth

After the war, the American forces who were now occupying Japan also used Hankyu and other department stores as distribution points for food and clothing, which were in short supply. In 1947, the Hankyu Corporation was reorganized into two smaller companies on the instructions of the U.S. occupying forces who were looking to reduce the power of Japan's big conglomerates in the wake of the war. The transport group became Hankyu Corporation and the retail business became Hankyu Department Stores, Inc. This breakup was seen to be in Hankyu Department Stores' favor, as the transport side of the company was facing a series of strikes by railwaymen demanding better conditions. This industrial action might have affected the department stores had they remained within the same group.

It was not until Japan's postwar boom years that Hankyu Department Stores really began to prosper. This was a time when Japan was experiencing rapid growth in income levels, personal consumption, and its general standard of living. Together with the system of floating exchange rates and the resultant appreciation of the yen, which made imported goods cheaper and therefore more competitive, Japan's retail industry expanded, opening it to a wider variety of consumer goods, including imports. Between 1953 and 1959, Hankyu Department Stores opened three more stores: Tokyo Oi in 1953, Sukiyabashi Hankyu in 1956, and, in the United States, Los Angeles Hankyu in 1967.

The Tokyo Oi store was a landmark in the company's development, taking the reputation of Hankyu Department Stores out of the suburbs and placing it firmly in the city. This standing was enhanced by the opening of a second Tokyo store in 1956.

Los Angeles Hankyu was originally a retail store, but because of the appreciation of the yen it became too expensive to maintain import goods from Japan. Los Angeles Hankyu therefore became a buying center for the Japanese stores and remained as such. The next boom in Hankyu Department Stores' history took place in the 1970s, when additional stores were opened: Senri Hankyu in Senri, a satellite town of Osaka, in 1970 and Shijo-Kawaramachi Hankyu in Kyoto in 1976.