The “expanded department store”, and a golf-course venture that spent ¥58bn on land alone (1988)

The right question, answered with land, for ten years

For a company drawing 75% of its profit from a single store, wanting a source of earnings outside that store was in itself the right problem to set. When Sakakura Yoshiaki raised the “expanded department store” in the late 1980s — when the “comprehensive lifestyle industry” was in fashion and rivals were extending around their core — he was choosing what the rest of the industry chose. The miscalculation lay less in optimistic forecasts than in the form of the answer. Hotels, sports facilities and golf courses were all businesses of acquiring land and putting up buildings: investment that never came back to the substance of a department store, its assortment and its service.

That said, ¥58bn of losses alone did not sink Mitsukoshi. The ¥36.4bn special loss in the year to February 1999 was a provision against accumulated subsidiary deficits, and a part-time ratio of about 15% against more than 40% at Isetan and Takashimaya was a weight that had piled up with no connection to golf courses at all. In a company where an investment can run for ten years without the previous chairman knowing of it, nobody’s choice is ever checked. The core of the failure lies less in the decision to diversify than in the absence of any mechanism that could stop it.