Has the demise of the department store finally arrived in Japan, which has held on to them longer than most?<\/p>\n
The news of the impending closure of the Seibu store in Shibuya, the dense part of central Tokyo that\u2019s home to the famed Scramble Crossing, marks the end of an era. Department stores are credited with transforming the area from a sleepy black-market backwater to the world-famous home of youth subculture, with Seibu\u2019s arrival in 1968 triggering a battle for control.<\/p>\n
With Shibuya in the midst of a two-decade reconstruction, many thought that Seibu would be one of the few landmarks to survive. Yet owners Fortress Investment Group were unable to renew terms with the landowners, and it will close its doors in September after nearly 60 years.\u00a0<\/p>\n
The department store is in trouble everywhere. Even the term itself has a bit of a Mad Men-era air to it. Saks Global is in bankruptcy\u00a0protection, and the UK\u2019s Debenhams has closed. Now it seems those trends have come for Japan: While sales may have recovered to pre-Covid levels, that\u2019s in large part thanks to duty-free purchases\u00a0by tourists, and revenue remains well under half the 1990s peak.<\/p>\n
It\u2019s not hard to see why. E-commerce retail globally is set to rise to $5.5 trillion in 2027, growing 14% a year, and Japan is no exception. \u201cIn Asia, where department stores like Sogo and Takashimaya once reigned supreme, the landscape is changing rapidly,\u201d according to a report from market researcher Kadence, with younger consumers \u201cgravitating towards digital platforms.\u201d Perhaps even the depaato can no longer compete with Amazon and local rival Rakuten, to say nothing of Temu and Shein.\u00a0<\/p>\n
A few years back, I wrote how the history of the Sogo-Seibu chain was\u00a0itself a chronicle of Japanese capitalism, from Sogo\u2019s bankruptcy in 2000 and subsequent merger with Seibu, to the activist-prompted\u00a0sale\u00a0to foreign capital by Seven & i Holdings Co. in 2023. Perhaps the shift to digital marks a new chapter.<\/p>\n
Department stores in Japan are frequently linked to railway operators, who build them around transport hubs with captive audiences. But Seibu is a little different. Railways and stores were part of postwar tycoon Yasujiro Tsutsumi\u2019s empire;\u00a0however, they were divided after his death between\u00a0sons Yoshiaki and Seiji. The former controlled the trains, and his half-brother the department stores.<\/p>\n
The two had a rivalry to put Succession to shame: Seiji would go on to lead a retail group that at one point included what is now Muji, FamilyMart and Intercontinental Hotels, while Yoshiaki would be listed as the world\u2019s richest man for years, thanks to his real estate holdings. Both would also face significant legal troubles, which would lead to the Seibu group\u2019s downfall.\u00a0Seiji took Seibu department stores into an area where the business\u00a0had no railway presence: Shibuya, dominated by Tokyu Corp., which controls railways extending into residential west Tokyo.\u00a0<\/p>\n
Seibu\u2019s entry triggered a decades-long battle\u00a0for dominance. It ran ads featuring Woody Allen and pushing youth culture to attract the growing sector of baby boomers. Tokyu fired back, and the contest\u00a0helped breed the stores that would attract the Shibuya sub-culture that captivated the country, and later the world.<\/p>\n
But Seibu\u2019s sales have fallen as competition in Shibuya expanded. Even as surrounding\u00a0streets became thronged with tourists, its upper floors were often deserted. Tokyu won by abandoning the department store model: It has closed both of its Shibuya stores in favor of newer mixed-use buildings that combine shops, office space and hotels.<\/p>\n
Yet I\u2019m not convinced this marks the end of the physical store. Across Tokyo, new developments such as Takanawa Gateway, an East Japan Railway Co.-led mixed development, are attracting shoppers. On a recent trip to Ginza in search of a pair of Swiss brand\u00a0On sneakers, I found a queue of close to 100 people\u00a0just to get a ticket to enter the store later. In the US, the slow death of the mall is now being reversed, thanks to \u201cmallmaxxing\u201d Gen Z. Younger generations are returning\u00a0to the analog, mirroring their embrace of vinyl records, film cameras and board games.\u00a0<\/p>\n
\u201cIf you\u2019re just doing the same things as everyone else, there\u2019s no progress,\u201d\u00a0said Seiichi Mizuno, then a Seibu executive, in 1987. \u201cYou have to constantly try to grasp something new, and have the courage to step forward.\u201d<\/p>\n
Shibuya might be losing a landmark. But in a world where AI is becoming all-pervasive, the personal touch of human taste is going to matter more than ever. The growth of agentic shopping is going to be bad news for generic retailers. But those who create an experience may find themselves more in demand than ever. That\u2019s exactly what the department store, at its best, offers: Hand-curated, human-selected, the things you never know you needed until you laid eyes on them.\u00a0<\/p>\n
More From Bloomberg Opinion:\u00a0<\/p>\n
This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.<\/p>\n
Gearoid Reidy is a Bloomberg Opinion columnist covering Japan and the Koreas. He previously led the breaking news team in North Asia, and was the Tokyo deputy bureau chief.<\/p>\n
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