The five-company merger of equals: founding Jusco and “federated management” (1970)

A design that reconciled devolution with going national

The heart of this decision was not the merger itself but how it was designed. The wall a mid-sized regional supermarket could not clear alone — purchasing scale — Takuya Okada set out to clear by merger. But rather than the absorption Daiei preached, he chose a merger of equals that dropped the founding family’s name from the corporate name and kept the former managements on as presidents of the regional operating companies. Bundle the scale into one, yet leave each region’s decisions to the locals — this double structure, named renpo keiei, softened the resistance of the managers folding in and, in practice, made store-opening negotiations with local communities easier to advance.

Federated management was an attempt to reconcile going national with devolution inside a single organization. The head office gathered purchasing and capital while the regional companies handled store openings and sales — a vessel that could absorb the run of mergers from 1972 in short order. It also anticipated the later shape of the company: in taking in Mycal and Daiei, and in moving to a pure holding company in 2008, Aeon repeatedly bound rescued firms into the group while leaving their banners and local character intact. The balance of devolution and integration that the 1970 merger drew remains, even now with sales past ¥9 trillion, the standing question of how much to gather at the centre and how much to leave to the regions.