23 | History of Glass: Kimoto Glass's Challenge and Glass Manufacturing Story 6

Hello everyone🎵

Last week, we took a break from this blog for the Obon holidays, as the Kimoto family cherishes our ancestors. We believe that we exist because of our ancestors, and it is our responsibility to continue this tradition.

On New Year's Day, the family exchanges greetings, eats ozoni, and first visits the grave to pay respects to our ancestors and pray for the family's health and business prosperity for the year. During the spring and autumn equinoxes, and during Obon, we visit our ancestors in July for the new Obon in Tokyo, and again in August for the old Obon in Ibaraki, where our family grave is located. We always bring our children and grandchildren to express our gratitude and greetings to our ancestors.

In the previous blog, I wrote about the start of Kimoto Glass's transformation from a department store wholesaler to a supermarket wholesaler. From now on, I plan to inform you about three main topics from the 1990s to 2020: ① Changes in distribution (the transformation of retail from department stores to mass merchandisers and online businesses), ② Changes in global and Japanese glass manufacturers, and ③ Kimoto Glass's business model changes, which were a "metamorphic challenge" to survive the drastic changes in distribution and the environment surrounding manufacturers.

First, I'd like to start with ① the changes in the retail industry. Born in the 1950s, I have fond memories of going to Mitsukoshi Nihonbashi with my grandfather, eating a children's lunch at the restaurant, playing at the rooftop amusement park, endlessly comparing toys in the toy department, and having as many sweets as I wanted from the rotating display in the basement confectionery section. Going to Mitsukoshi felt like a special occasion, for special shopping or celebratory days.

Department store sales peaked in 1991 at 9.7 trillion yen, with 268 stores. Many local department stores existed in various regions. At that time, supermarkets like Daiei, JUSCO, and Ito-Yokado, along with numerous local supermarkets, emerged across the country. However, they operated in a challenging business environment where many appeared and quickly disappeared, and the image of "cheap and shoddy" was still strong. Major manufacturers were hesitant to sell their products in supermarkets, limiting sales or offering different brands or qualities for department store and supermarket products.

The "Daiei-Matsushita War," which erupted between then-Matsushita Electric Industrial (now Panasonic) and Daiei (now Aeon), was a conflict over product pricing that lasted for 30 years from 1964. Konosuke Matsushita advocated for fixed pricing (manufacturer's suggested retail price), believing that "manufacturers and retailers earning appropriate profits through fixed pricing leads to societal prosperity." However, Daiei's founder, Isao Nakauchi, maintained his stance that "Daiei can sell at any price it chooses, and manufacturers have no right to complain." This led Daiei to easily sell its own private-label (PB) televisions. After both their deaths, a reconciliation led to the current sales system.

I believe it was a battle to determine the champion of distribution. Daiei's Nakauchi's idea of "providing good products to consumers at increasingly lower prices" was the very logic of supermarkets, and it was incompatible with the existing logic of manufacturers and department stores selling quality items at fixed prices.

However, with motorization, the decline of shopping streets and areas around train stations, changes in consumption patterns, and the opening of convenience stores (the first Seven-Eleven store opened in 1974), the way customers shopped changed significantly. From 1990 to 2000, e-commerce businesses had not yet emerged. To be continued.