Reorganization of Shiseido’s Distribution Framework after the Great Kanto Earthquake

Implementation of Two Systems for the Cosmetics and Soap Businesses

Abstract

Shiseido used the Great Kanto Earthquake as an opportunity to reorganize its distribution framework based on a new system for its cosmetics and soap businesses, despite the risk that sales channel restrictions may lead to lost sales opportunities. This study examines the objectives and significance of Shiseido’s reorganization of its distribution arrangements after the Great Kanto Earthquake.

To clarify the challenges faced by Shiseido in reorganizing its distribution framework and its intentions in introducing this system, it is necessary to examine the historical developments at the company prior to the earthquake. Therefore, this study focuses on aspects that have received less attention in previous studies: the entrepreneurial capabilities of Shiseido’s managers, their role in reorganizing the distribution framework for the cosmetics and soap businesses, and Shiseido’s relationships with other companies.

The context to the introduction of the distribution system for cosmetics lies in the initiatives put in place by the company’s founder, Arinobu Fukuhara, who focused on increasing collaborations with retailers to solve business issues. The system adopted by Shinzo Fukuhara and Noboru Matsumoto was a method that was ideal to manage distribution difficulties after the Great Kanto Earthquake. Participants in the distribution network were required to adhere to a fixed price policy; however, the most important objective was to organize a retail and distribution system that could make meaningful contributions to the development of Shiseido’s businesses.

Shiseido introduced a new system for the distribution of soap, and sales of soap exceeded those of cosmetics. The simultaneous operation of these businesses acted as a hedge against business-related risks. In addition, selling soap led to the expansion of the distribution system for cosmetics.

The distribution framework for the cosmetics and soap businesses, thus, laid the foundations for Shiseido’s subsequent development.