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An unusual situation happened in which one of the largest department stores in Japan was temporarily closed due to a strike. The management and the labor union need to face each other in a sincere manner and quickly settle the matter.
On Aug. 31, the Seibu Ikebukuro department store in Toshima Ward, Tokyo, the flagship store operated by Sogo & Seibu Co. under the umbrella of Seven & i Holdings Co., halted all in-store operations due to the strike. This was the first walkout at a major Japanese department store in 61 years. The last such strike was staged in 1962 at a predecessor of Hankyu Hanshin Department Stores Inc.
The Seibu Ikebukuro department store has annual sales exceeding ¥170 billion, the third largest in the industry. It can be described as the “face” of the Ikebukuro district in Tokyo. The sudden suspension of operations at the department store likely left many customers puzzled.
The reason for the strike was that the labor union of Sogo & Seibu fears possible job losses following the sale of the operator to an investment fund.
In November last year, Seven & i decided on a basic policy to sell the struggling Sogo & Seibu to a U.S. investment fund. The investment fund has put forward a plan to open outlets of home electronics retailer Yodobashi Holdings Inc. in the Seibu Ikebukuro department store and elsewhere, using investment of its own and of Yodobashi Holdings.
In response, the labor union has protested that if Yodobashi occupies much of the space, it will reduce the department store’s own sales floor space for clothing and other items, depriving employees of their jobs.
The sale of Sogo & Seibu, originally scheduled for February this year, was postponed twice. However, on Aug. 31, the day of the strike, Seven & i officially decided to sell Sogo & Seibu on Sept. 1.
Until July this year, when the labor union internally established its right to strike, the management at Seven & i and others reportedly did not provide the labor union with sufficient explanations on measures to maintain employment and other matters. Was there really no room for compromise between the labor union and the management?
Millennium Retailing Inc., the predecessor of Sogo & Seibu, became a subsidiary of Seven & i in 2006. Sogo & Seibu now has 10 stores, but its performance has been sluggish amid a department store recession, and it has continued to operate in the red in recent years.
The strike this time could worsen the corporate image. There is also a risk that it could push more customers away from department stores. Labor and management must cooperate to rebuild Sogo & Seibu’s management and make efforts to create an attractive store.
Another U.S. investment fund, which is a shareholder in Seven & i, has urged the company to concentrate on its convenience store business and sell off unprofitable businesses such as supermarkets. It has even urged President Ryuichi Isaka to step down. This is likely why Seven & i was in a hurry to sell Sogo & Seibu.
The government of Toshima Ward, where the department store is located, is also concerned that the plan for the Seibu Ikebukuro department store following the sale could have an impact on urban development in the district.
On matters such as the sale of a business, corporate executives should make every possible effort to coordinate opinions with many people concerned, including shareholders, employees, business partners and customers.
