Company history

In May 1953 Shimamura Tsunetoshi incorporated his family’s kimono business in Ogawa, a small town in Saitama, as Shimamura Gofukuten — and at the same moment widened it beyond kimono cloth into ready-made clothing. Japanese apparel retailing then ran in three separate layers — kimono shops, Western-wear shops, department stores — and in a provincial town the kimono shop was effectively the only place to buy clothes at all. Nobody was yet buying in volume and selling cheap.

Selling bolts of cloth across a counter meant serving one customer at a time and carrying whatever failed to sell. Shimamura’s answer was to invert it. Working from the principle that the assortment should be built around inventory turnover, he introduced self-service in April 1957: buyers chose the goods, and the customer read the price tag and chose for herself. For a kimono shop, whose entire craft was the conversation across the counter, this was the opposite of the business it had been.

The second store, opened in Higashimatsuyama in 1961, became the real headquarters of the business. Buying was split from selling and centralized, and the company adopted the chain-store theory that Atsumi Shunichi was then teaching through the Pegasus Club. In 1970 the head office moved to Higashimatsuyama, and in 1972 the name Shimamura Gofukuten was retired for Shimamura. In under twenty years the unit of the business had been rebuilt from the store to the chain.

A store in a town of 50,000 people will never ring up much, so the only way to keep selling clothes cheaply is to take the cost out of running it — and anything handed to an outside contractor takes a margin with it. From 1975 Shimamura therefore built its own machinery. It began computerizing merchandise control in house that May, and in August switched from freight forwarders to chartered dedicated delivery. By September 1981 every store was online for single-SKU control; barcode tags followed in 1987. Very few Japanese chains had all-store item-level control that early.

The rest of the cost structure was rebuilt the same way. A distribution centre at Kawaguchi (1984) brought scheduled overnight delivery and let the company abolish purchase slips and the receiving work that went with them. In 1986 the M-shain system standardized store work so far that a store could be run entirely by fixed-hours part-time staff under a single manager — turning payroll into a variable cost and making small-town openings quick and cheap. Fujiwara Hidejiro, who became the second president in 1990, codified all of this into a doctrine of self-reliance and low cost, and is remembered as the company’s second founder.

With the machine built, the map could be filled in. Shimamura listed on the Tokyo Stock Exchange second section in December 1988 and moved to the first section in 1991; regional distribution centres opened at Fukushima (1993), Okayama (1994) and Inuyama (1994) as the country was divided into six delivery regions. The 500th store opened in 1997. The apparel chain Avail was acquired in 1996, Taiwan entered in 1998, and the accessories chain Chambre and the baby-and-child chain Birthday both launched in 2000 — several formats clustered on one cheap roadside site to lift the sales any single location could produce. In October 2002, with a store in Nago, Okinawa, Shimamura reached all 47 prefectures.

Scale came fast once the format was settled. The group passed 1,000 stores in October 2003 and 1,500 in July 2008, with the Shimamura chain alone crossing 1,000 in 2006. Fujiwara handed the presidency to Nonaka Masato, a 1971 recruit, in 2005. Mainland China was tried from 2011 through a Shanghai subsidiary, but Shimamura never bridged the gap in trade practice and taste there, and closed every Chinese store in 2020.

The year to February 2017 was the high-water mark: revenue of $5.0B (¥566bn), operating profit of $435.1M (¥49bn) and an 8.6% operating margin — volume and margin reconciled at last. And it was at exactly that point that the company turned its rationalizing habit on its own sales floor. The “2016 format”, rolled out chain-wide, was designed with 25% fewer items than the layout it replaced. It was easier to shop. It was also thinner.

What went with the clutter was the reason customers came. Rummaging through a deep, disorderly assortment for a find — shima-patrol, as shoppers called it — was the pleasure Shimamura sold, and GU and Workman were waiting to take the traffic. Operating profit fell 12.1% in the year to February 2018, another 40.8% the year after, and again the year after that: three consecutive years of decline, leaving profit less than half the 2017 peak. Kitajima Tsuneyoshi took over in 2018 — he had at first refused the job — and named the cause plainly: the company had cut the range too far and tidied up too much. Nonaka, on stepping down, was blunter still, calling his later years a rehash of the year before. Kitajima lasted two years, an unusually short tenure for a major retailer, and 1,500 stores of fixed cost turned from an achievement into a weight.

Suzuki Makoto, who joined in 1989 and rose through logistics, became president in February 2020 — a man who knew the self-built machinery from the inside. His mid-term plan, Re-Born (2021–2023), was not a new growth story but a reversal: restore the depth of the assortment, raise the share of the private label CLOSSHI and of jointly developed supplier brands, move promotion from flyers to digital. His formulation was that even the things that should never have been changed would be changed back.

It worked quickly. Operating profit rose 65.4% in the year to February 2021 and kept rising for four consecutive years, passing the old 2017 record. E-commerce, opened as a direct online store in October 2020 and extended to the Avail and Chambre formats in 2022, grew from ¥4.1bn to ¥12.9bn over the plan. The difference from the expansion decades was deliberate: net store openings were held back and capital went into remodelling what already existed.

With the repair done, Suzuki turned back toward growth. Next Challenge 2027 (2024) was raised again in April 2025 to ¥725.0bn of revenue, ¥66.5bn of operating profit and an ROE above 9%, funded from roughly ¥150bn of three-year operating cash flow. The year to February 2025 set records across the board — revenue $4.4B (¥665bn) and operating profit $395.6M (¥59bn), comfortably past 2017. In February 2025 Takahashi Iichiro, a 1999 recruit from the merchandising and marketing side, became the sixth president, with Suzuki as chairman, and set the next problem: breaking the dependence on the Shimamura format, which still supplies about three-quarters of group revenue. Seventy-two years after a kimono shop rebuilt itself into a self-service chain, the company is once again rearranging what it is.