1998 Volume 6 Issue 1 Pages 45-66
This paper compares two industry leaders, namely Daiei and Itoyokado, with the aim of identifying how structural reforms fit into the overall management of large supermarkets and explaining the management systems that make high earnings possible.
Large supermarkets emerged as a new retail force during the recovery of the Japanese economy following World War II. They rode the wave of rapid growth and in no time joined the ranks of Japan's major enterprises. In the first half of the 1980s, however, economic recession and new types of competition took their toll on the industry. Sales plummeted and the big chill set in.
Large supermarkets launched structural reform movements(so-called “Gyoukaku”) to meet the changes in the business environment, enabling them to avoid any major crises. But overall performance after the reforms was less than stellar. Only Itoyokado managed to achieve high earnings. Daiei, for example, was not able to perform as well.
The factor directly impacting the earnings of each supermarket was the extent to which each improved its technology for managing inventory item by item. Such improvement in itemized control technology is the second of three stages in the reform movement mentioned above. What enabled Itoyokado to achieve high earnings was the redesign of its management systems around operational control for the execution of its strategy in its stores.
