Price destruction and the chain: passing Mitsukoshi to lead Japanese retail (1972)

Where did cheapness stop being the point and become scale?

The core of this strategy can be read as pulling the power to set prices — until then held by the manufacturers — over to the side of the retailer and the consumer, and doing it not by argument but by building a system: a multi-store chain plus own-brand goods. The discounting that started with beef was never a one-off low price; it grew into a single model running from purchasing through the shop floor, store openings and the raising of capital. The year Daiei passed Mitsukoshi, 1972, was the point at which that system rewrote an order built around department stores, and it coincided with a change in who the main character of Japanese consumption was. There are only a handful of cases in postwar industrial history of a company reaching the summit of Japanese retailing that fast on nothing more than “cheap, in volume.”

And yet, at the moment it reached the top, the same model already contained the seeds of obsolescence and over-investment. An advantage built on price was copied by those who came after; management that chased scale on the security of land turned into a burden as land prices fell; and concentration of authority in one strong individual kept the company running with no mechanism for stopping. At what point did “good goods, cheaper” turn into the pursuit of scale for its own sake? Daiei’s price destruction leaves that question in the record of Japanese distribution — the question of how the strength that produces growth becomes, unchanged, the weakness that ends it.