Lessons from Yokado’s Massive Store Closures and Delayed Adaptation: Transferring 9 Stores to Other Companies, Strengthening Focus on the Tokyo Metropolitan Area.

On February 9, Ito-Yokado announced plans to transfer its “Ito-Yokado” stores in Hokkaido, Tohoku, and Chubu regions to other companies, emphasizing a concentration of stores in the Tokyo metropolitan area. The decision, part of a business restructuring outlined in the mid-term management plan by parent company Seven & i Holdings, involves contracts signed with OIC Group, York-Benimaru, Daiichi, and others for business succession. The move, disclosed after considerations for regional economic impact, aligns with the strategy to accelerate focus on the Tokyo metropolitan area, as outlined in the company’s update on March 9, 2023.

Ito-Yokado, a major supermarket under Seven & i Holdings, announced a restructuring plan in March 2023, involving a nearly 30% reduction in store numbers. Despite its past success, the company faced challenges due to a delayed response to changing consumer trends. President Ryuichi Isaka attributed the poor performance to a failure in narrowing down business areas and locations for effective structural reforms. The restructuring includes a focus on the food business, withdrawing from the original apparel business, and is in response to shareholder demands for withdrawal or sale. The situation reflects a defensive stance and highlights the need for clear future vision to satisfy stakeholders.

The Business Innovation Council (Gyokaku) became a guiding principle in the retail industry. With this management approach, Ito-Yokado achieved industry-leading consolidated operating revenue, including Seven-Eleven, in the fiscal year 1998, growing into Japan’s largest retailer.

However, from the 2000s, the company experienced a shrinking trend. Comprehensive supermarkets offering clothing, miscellaneous goods, and food became mismatched with changing consumer needs. In the era of deflation, customers shifted to low-cost, high-quality options like Uniqlo and Nitori.

Issues in group management also played a role. With the growth business of Seven-Eleven and a lack of crisis awareness, anticipated synergies with department stores such as Sogo-Seibu failed to materialize.

Combined with Japanese employment practices and being a high-profit group, the company ultimately engaged in prolonged incremental restructuring. The policy of deferring issues failed to demonstrate future possibilities to both shareholders and employees.

Source:ITOYOKADO Press release 9th February, Nikkei 26th March