Has the demise of the department store finally arrived in Japan, which has held on to them longer than most?
The news of the impending closure of the Seibu store in Shibuya, the dense part of central Tokyo that’s 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’s arrival in 1968 triggering a battle for control.
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.
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 protection, and the UK’s Debenhams has closed. Now it seems those trends have come for Japan: While sales may have recovered to pre-Covid levels, that’s in large part thanks to duty-free purchases by tourists, and revenue remains well under half the 1990s peak.
It’s 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. “In Asia, where department stores like Sogo and Takashimaya once reigned supreme, the landscape is changing rapidly,” according to a report from market researcher Kadence, with younger consumers “gravitating towards digital platforms.” Perhaps even the depaato can no longer compete with Amazon and local rival Rakuten, to say nothing of Temu and Shein.
A few years back, I wrote how the history of the Sogo-Seibu chain was itself a chronicle of Japanese capitalism, from Sogo’s bankruptcy in 2000 and subsequent merger with Seibu, to the activist-prompted sale to foreign capital by Seven & i Holdings Co. in 2023. Perhaps the shift to digital marks a new chapter.
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’s empire; however, they were divided after his death between sons Yoshiaki and Seiji. The former controlled the trains, and his half-brother the department stores.
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’s richest man for years, thanks to his real estate holdings. Both would also face significant legal troubles, which would lead to the Seibu group’s downfall. Seiji took Seibu department stores into an area where the business had no railway presence: Shibuya, dominated by Tokyu Corp., which controls railways extending into residential west Tokyo.
Seibu’s entry triggered a decades-long battle for 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 helped breed the stores that would attract the Shibuya sub-culture that captivated the country, and later the world.
But Seibu’s sales have fallen as competition in Shibuya expanded. Even as surrounding streets 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.
Yet I’m 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 On sneakers, I found a queue of close to 100 people just to get a ticket to enter the store later. In the US, the slow death of the mall is now being reversed, thanks to “mallmaxxing” Gen Z. Younger generations are returning to the analog, mirroring their embrace of vinyl records, film cameras and board games.
“If you’re just doing the same things as everyone else, there’s no progress,” said Seiichi Mizuno, then a Seibu executive, in 1987. “You have to constantly try to grasp something new, and have the courage to step forward.”
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’s 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.
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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.
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.
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