Company history

Sogo began in 1830, when Sogo Ihei — the second son of a silk dealer from Yamato — hung out the sign of “Yamatoya Ihei” beside the Ikasuri shrine in Osaka and sold clothing. What he sold was mostly furute: secondhand silk and cotton. That choice mattered more than it looks. The respectable front street of new kimono goods was held by long-established houses; the back street where pedlars and brokers brought used clothes had almost no barrier to entry, and a man with little capital could accumulate credit and cash there slowly. Three generations of Ihei kept the trade, and the company crest — the maru-chikiri, a loom part — still recorded where the money had come from.

After the Meiji Restoration the house made the first of two upgrades: out of used clothes into new kimono goods, and out of the back street onto Shinsaibashi-suji, where the family opened a purpose-built store in 1877. It carried the full range, from luxury silks to everyday cloth, and the Sogo name spread quickly. A Kyoto branch followed in 1885, giving it a buying post outside Osaka; in 1897 the family business was reorganized as the partnership Sogo Gofukuten with capital of ¥150,000, later raised to ¥500,000, and a Kobe branch opened in 1899.

By the 1910s the shelves no longer held kimono alone. Sundries and some art goods had been added, the Osaka store had been rebuilt and extended, and what had been a cloth merchant was already taking the shape of a department store — the second upgrade, waiting only for the corporate form that came in 1919.

Sogo Gofukuten was incorporated in December 1919 and absorbed the old partnership the following spring, lifting capital to ¥3 million. A children’s department came in 1921, a Western-clothing department in 1923, and the store kept adding floors of merchandise. Then came the building that would define it: from 1931 the company spent six years and three phases on a marble-and-glass block spanning Shinsaibashi-suji and Midosuji, eight storeys above ground and three below, designed by Murano Togo and finished in December 1937.

The ambition outran the balance sheet. Construction costs and land purchases piled up just as the company took a large leased store at the new Hanshin Sannomiya terminal in Kobe in 1933, and funding by borrowing and share issues ran out of road. In 1935 the Sogo family sold its holdings and, 105 years after the first Ihei, control passed to the Itaya family — the founding house was gone from the decision-making long before the business was. Wartime controls then hollowed the stores out: the Kyoto branch, open since 1885, was closed in April 1940 for rationalization, and in the same month the company took the name it would carry from then on, Sogo Co., Ltd.

In May 1946 the Occupation requisitioned the whole Shinsaibashi building for use as a PX, and Sogo spent six years scattered across small outlets — Namba, Umeda, Abeno — with only the Kobe store looking like a department store at all. The building came back in 1952, and the company tried to make up the lost years in one push: Kobe was doubled in 1956, and in 1957 a Tokyo branch opened in the Yomiuri Kaikan at Yurakucho on a lease, without buying land. It backfired. From the year to February 1958 Sogo ran five straight years of losses and suspended its dividend; the Tokyo store itself would stay in the red for forty years, until it closed in 2000.

With the founding family long gone, Sogo’s presidents were chosen by its big shareholders, and in 1962 the creditor banks installed Mizushima Hiroo, a man from the Industrial Bank of Japan, as an arbitrator between feuding shareholders rather than for any vision. He stayed more than thirty years. He announced a thorough rationalization in 1963, pulled the company clear of the crisis by 1965, and rebuilt Kobe in 1966 — but what he had really brought from the bank was a low opinion of department-store managers, whom he called salarymen guarding a shop curtain, and a method for expanding without asking them, or their banks, for permission.

The method arrived with Chiba Sogo in 1967. Each new store was a separate company, co-funded with local capital and built on local bank loans; only the listed parent, with its three stores in Osaka, Kobe and Tokyo, appeared on the exchange. Chiba Sogo — half owned by Mizushima personally — sat at the centre of a web of cross-shareholdings, the group dealt with some 160 financial institutions, and the parent lent its affiliates ¥255 billion. Land around each site was bought cheaply in advance, then revalued once a Sogo opening lifted the neighbourhood, and the paper gain erased the store’s accumulated losses. On that circuit Sogo opened the biggest store in town, one town at a time: Kashiwa 1973, Hiroshima 1974, Funabashi 1981, Omiya and Yokohama 1987, Tama 1989, Seishin 1990, Fukuyama 1992.

In 1992 the group reached $11.1B (¥1.4tn) in sales across 35 stores and became the largest department-store group in Japan. That was the year the banks asked Mizushima to sell land and he refused — selling now, he argued, would hand most of the gain to the tax office, and in five years land and banks would revive. They did not. The Kobe store collapsed in the 1995 earthquake and the parent posted a ¥36.9bn net loss that February, ending Mizushima’s presidency; by the interim close of 1999 group borrowings stood at ¥1.727 trillion, thirteen of twenty-nine domestic stores were losing money at the operating line, and a new plan under president Yamada Kyoichi set out to cut 2,450 staff in two years.