Company history

Edion's oldest root is Daiichi Sangyo, set up in Hiroshima in May 1947 to wholesale radio parts by the father of the man who would later run Edion. It moved from wholesaling into general appliance retailing in 1952, grew on the postwar boom in household electricals, and by the late 1970s ranked first in its trade in the 日経流通新聞 specialty-store survey — a shop from one provincial city that had climbed into the national front rank. It was renamed Daiichi in 1986 and Deodeo in 1997, the stores taking the same name.

The second root is in Nagoya, where Eidensha was founded in July 1955, opened its first branch store in 1965 and built a chain across the Chubu region under the Okajima family; it renamed its stores Eiden in 1989, merged with the home-centre operator Sakakiya in 1995, and returned to the name Eiden in 1998. Neither company sold in the other's territory, and both had grown up believing that repair and delivery mattered as much as price — a shared temperament that would matter more than the geography.

The 1990s tested that belief. Discount chains with big-box formats began breaking open regional markets, and Deodeo's stores were mostly under 500 square metres. Kubo Nobutaka, who had succeeded his father, closed and consolidated them into 2,000-square-metre anchor stores — one for each catchment of about 200,000 people, ringed by smaller branches — and built a loyalty card that passed 1.5 million members by 1999. When Best Denki and the fast-growing Yamada Denki attacked Hiroshima with big stores from 1996, in what became known as the Hiroshima appliance war, Deodeo cut prices to match and then won on the ground price could not reach: same-day repair calls, and a policy of doing about 70% of accepted repairs in-house instead of passing them to the manufacturer. The labour cost was absorbed by squeezing procurement. Deodeo came out of the war with a larger share of its own city — and with a conviction that, against the two national leaders, service alone would not be enough without scale.

On 29 March 2002 Deodeo and Eiden executed a share transfer, becoming wholly owned subsidiaries of a new parent, Edion Corporation, capitalised at $31.9M (¥4bn) and listed that month on the first sections of the Tokyo, Osaka and Nagoya exchanges. It was the first combination between major players in the trade, and it created a number three with over ¥400bn of sales holding two blocks that did not overlap: Chugoku and Shikoku from Hiroshima, Chubu from Nagoya. The registered head office went to Shinagawa in Tokyo — neither partner's home — and the reason was explicit. Both chief executives talked about needing a certain scale to survive, but they also set out a target of a tenth of a ¥9tn market and wanted a neutral address that other chains sharing their philosophy could join. The point was not merely to avoid being consolidated; it was to be the one doing the consolidating.

It half worked. In 2005 Edion took full ownership of Midori Denka, the number two chain in the Kansai region, by share exchange; consolidated sales, ¥222.7bn in the first year, ¥434.1bn in the third, jumped to ¥714.6bn in the fifth, and Edion stood second nationally behind Yamada Denki. A joint purchasing group, Voice Network, was formed with Joshin, Denkodo and Thanks to pool buying power. But joint ordering never extended much beyond own-brand goods, and five chains totalling more than ¥1tn of sales did not negotiate like Yamada. Inside Edion the argument shifted: finish integrating the three companies you have, rather than widen a loose alliance.

The invitations, meanwhile, kept being declined. A 2003 combination with the Chubu chain Gigas collapsed within two months over differences of direction, and Gigas went to K's Denki instead. In February 2007 Edion and Bic Camera announced a merger to be completed in two years, only for it to be abandoned by the end of March after reporting that framed Edion as the junior partner provoked resistance inside the company. And the federal structure built to welcome those guests had a price of its own: with each operating company still running its own personnel and administrative departments, selling and administrative expenses ran at 21% of sales in the year to March 2006 — above even the smaller Kojima at 17.8% — and the recurring margin of 2.9% was little more than half Yamada's 4.9%.