Time-honored department store chains Mitsukoshi Ltd., Japan's fourth-largest, and Isetan Co., the fifth, hope their combined strengths will prevail in a highly competitive market that's in the midst of an industry realignment.
The two firms' board approved Thursday plans to integrate operations April 1 under a holding company to create the country's No. 1 department store group.
Mitsukoshi hopes its strength in upscale merchandising combined with Isetan's popularity with trendy young people win the day.
"Mitsukoshi needs help to change its old marketing methods and renovate its stores," said Koichiro Ogawa at Cosmo Securities Co. "Isetan has been successful because it aggressively keeps track of its customers' needs."
With combined consolidated sales of some ¥1.58 trillion for the 2006 business year, Isetan Mitsukoshi Holdings Ltd. would overtake Takashimaya Co., which is leading with sales of ¥1.05 trillion for the year. It would also top J. Front Retailing Co., the behemoth scheduled to emerge in September from the merger of Matsuzakaya Holdings Co. and Daimaru Inc. The two giants chalked up combined sales of ¥1.17 trillion in the latest reporting year.
In addition to J. Front, a new department store group from the Kansai region will be created in October by Hankyu Department Stores Inc. and Hanshin Department Stores Ltd. Two others, Seibu Department Stores Ltd. and Sogo Inc., merged under a holding firm named Millennium Retailing Inc. in 2003.
Mitsukoshi President Kunio Ishizuka will be president of the company while Isetan President Nobukazu Muto will become CEO and chairman.