Masatoshi Ito
| Masatoshi Ito | |
|---|---|
| 伊藤 雅俊 | |
| Born | April 30, 1924 Tokyo, Japan |
| Died | March 10, 2023(aged 98) |
| Nationality | Japanese |
| Citizenship | Japan |
| Education | Yokohama City University |
| Occupation | Retail executive |
| Years active | 1956–2023 |
| Employer | Ito-Yokado |
| Company | Ito-Yokado; Seven & i Holdings |
| Title | Founder and honorary chairman of Ito-Yokado, later Seven & i Holdings |
| Known for | Building Ito-Yokado and bringing 7-Eleven to Japan, then acquiring its American parent |
| Net worth | About US$4 billion at his death |
| Children | 3, including Junro Ito |
| Parents | Senzo Ito Yuki Ito |
Masatoshi Ito (伊藤 雅俊; 30 April 1924 to 10 March 2023) was a Japanese retail executive who built his family's small Tokyo clothing shop into Ito-Yokado, later Seven & i Holdings, and who brought the 7-Eleven convenience store format to Japan before ultimately buying the American company that created it.
The reversal is the part of his career most often noted. Ito-Yokado took a licence from the American chain Southland Corporation in 1973 and opened the first Japanese 7-Eleven at Toyosu in Tokyo in May 1974. Japanese operators then refined the format so thoroughly that it bore little resemblance to its American parent, and when Southland fell into difficulty, Ito-Yokado bought a 70 percent interest in it in 1991 for about US$430 million, completing the acquisition in 2005. The licensee had acquired the licensor.
Ito's own contribution was less the convenience store, which was proposed to him by his subordinate Toshifumi Suzuki, than the judgment to back it and the retail organization capable of executing it. He had spent the 1960s building Ito-Yokado into a chain of general merchandise stores modelled on American supermarkets, an unfamiliar format in a country where food retail was still dominated by small specialist shops.
At its height the group he founded was among the largest retailers in the world, with annual revenues above US$28 billion, more than 125,000 employees, and interests extending well beyond convenience stores into department stores, superstores, restaurants and speciality retail, including the Japanese franchises for Denny's and Oshman's Sporting Goods. Seven & i today operates more than 80,000 7-Eleven stores worldwide, over 21,000 of them in Japan.
He resigned as president in 1992 after allegations that company staff had made payments to organised crime. Ito denied knowledge of the payments, though some of the money had come from his wife's bank account, and accepted responsibility. He returned as honorary chairman later in the decade and held the title until his death.
He was a substantial benefactor of the Peter F. Drucker and Masatoshi Ito Graduate School of Management at Claremont Graduate University in California, which bears his name. He died on 10 March 2023 at the age of 98.
Background: Japanese retail
The small-shop economy
Japanese retailing after the Second World War was fragmented to a degree that has no close parallel in other developed economies. Food was bought from specialist shops, a fishmonger, a greengrocer, a rice dealer, each occupying a few square metres and serving a neighbourhood. Households shopped daily because kitchens were small, refrigerators were small or absent, and the distances involved were short.
The structure was protected politically. Small retailers were numerous, organised and electorally significant, and successive legislation, most importantly the Large-Scale Retail Store Law, gave local shopkeepers an effective veto over the opening of large stores nearby. Any Japanese retailer attempting to build at scale had to work within that constraint.
The supermarket wave
American-style self-service retailing reached Japan in the late 1950s and expanded through the 1960s, led by Daiei, Ito-Yokado, Jusco and Seiyu. These were general merchandise stores, selling clothing and household goods alongside food, and they grew rapidly as incomes rose and as households acquired the refrigerators that made weekly shopping possible.
Ito-Yokado's position within that group was built on operational discipline rather than on aggressive expansion. Where Daiei grew fastest and eventually collapsed under debt, Ito-Yokado grew more slowly and remained profitable, a distinction that determined which of them survived the 1990s.
Why the convenience store worked in Japan
The American convenience store was designed for a suburban, car-owning population: a place to buy a small number of items quickly when the supermarket was closed or far away.
The Japanese version became something else. Population density meant a store could survive on a very small catchment reached on foot. Small homes with little storage encouraged frequent small purchases. Long working hours created demand for prepared food at all hours. And the density of stores made frequent replenishment economic, which in turn allowed a small shop to carry fresh food with a shelf life measured in hours.
The result was a format with roughly three deliveries a day, a product range revised continuously on the basis of point-of-sale data, own-brand prepared food produced by dedicated suppliers, and a range of services, bill payment, parcel collection, banking and ticketing, that made the store part of the infrastructure of daily life. By the 2000s Japanese convenience stores were being studied by retailers worldwide, and the American parent had been absorbed by its Japanese licensee.
Early life
Masatoshi Ito was born in Tokyo on 30 April 1924 to Senzo and Yuki Ito, who ran a dry goods shop named Yokado.
He finished high school and served briefly in the Japanese military at the end of the Second World War, then worked at the company that became Mitsubishi Materials before returning to the family business.
The shop was destroyed in the wartime bombing of Tokyo and rebuilt afterwards as a small clothing store. Ito worked in it alongside his mother and his elder brother.
His brother died in 1956, and Ito took over the business.
Career
Ito-Yokado
Ito renamed the company Ito-Yokado and set about converting a single clothing shop into a chain.
Through the 1960s he expanded into general merchandise on the American supermarket model, opening larger stores selling food, clothing and household goods together. The company grew steadily through the period of high Japanese economic growth, and by the 1970s was among the country's larger retailers.
Ito's management emphasis was on the discipline of individual stores rather than on the rate of expansion. He was known for insisting that growth be funded from operations and for a conservative attitude to debt, positions that appeared unambitious during the 1980s and proved decisive when the asset price bubble collapsed and heavily borrowed competitors failed.
7-Eleven in Japan
The convenience store arrived through a subordinate. Toshifumi Suzuki, an Ito-Yokado executive, travelled to the United States in the early 1970s in connection with a Denny's licence and encountered 7-Eleven, then operated by the Southland Corporation of Dallas. Nothing comparable existed in Japan, and Suzuki pressed Ito to take a licence.
Ito was persuaded, and Ito-Yokado concluded an agreement with Southland in 1973. The first Japanese 7-Eleven opened in Toyosu, in Tokyo's Kōtō ward, in May 1974, the first full-fledged franchised convenience store in the country.
Seven-Eleven Japan expanded rapidly, and under Suzuki's operational direction developed the practices that distinguished it from the American original: the dominance strategy of saturating one district before entering the next, deliveries several times daily, temperature-separated distribution, continuous product turnover driven by point-of-sale analysis, and own-brand prepared food.
By the 1980s the Japanese operation was more profitable than its American licensor, and by the 1990s it was substantially larger.
The acquisition of Southland
Southland was taken private in a leveraged buyout in 1987 and did not recover from the debt. Facing bankruptcy, it turned to its Japanese licensee.
Ito-Yokado acquired about 70 percent of Southland in 1991 for a reported US$430 million, and completed the acquisition of the remainder in 2005. The Japanese company thereby took ownership of the brand it had been licensing for eighteen years, together with the North American store estate.
The reversal is frequently cited in business teaching as an illustration of how an adopted format can be improved beyond its origin, and of the risk a franchisor takes when a licensee understands the business better than it does.
Scale and structure
At its height the Ito-Yokado group encompassed more than 10,000 7-Eleven stores in Japan and around 5,800 in North America, together with some 1,000 other stores, department stores, restaurants, speciality shops, supermarkets and superstores. It held the Japanese franchises for Denny's restaurants and Oshman's Sporting Goods, and the Robinson's department store name.
Sales approached US$30 billion, employment exceeded 125,000, and the group was among the two largest retailing organisations in the world. It later reorganised as Seven & i Holdings, and expanded into China.
Resignation and later role
Ito resigned as president of Ito-Yokado in 1992 following allegations that company staff had made payments to sōkaiya, racketeers who extort companies by threatening to disrupt shareholder meetings.
Ito said he had not known of the payments. Some of the money had come from his wife's bank account, and he accepted responsibility and stepped down. Toshifumi Suzuki succeeded him and led the group for the following two decades.
Ito returned in the late 1990s as honorary chairman, a position without executive authority that he held until his death.
Business philosophy
Ito's approach was built on a small number of positions that he restated over decades.
The first was that a retailer's obligation runs to the customer and that everything else follows from it. He was associated with the phrase that a business exists because customers permit it to, and treated declining sales as evidence that the company had stopped deserving them rather than as a market condition to be waited out.
The second was financial conservatism. He funded growth from operations, resisted the leverage that Japanese retailers took on during the 1980s, and emerged from the collapse of the bubble economy in a position to buy assets from competitors who had not.
The third was that operational detail is the business. The convenience store model that Seven-Eleven Japan built rests on measurement of what sells, in what quantity, at what hour, in each individual store, and on the willingness to change the range continuously in response. Ito supported the investment in the information systems that made this possible at a time when few retailers anywhere were making it.
He was a close reader of Peter Drucker and knew him personally, a relationship reflected in his later endowment of the Drucker School.
Philanthropy
Ito was a significant benefactor of the Peter F. Drucker Graduate School of Management at Claremont Graduate University in California, giving an initial US$3 million toward its building and a subsequent US$20 million. The school was renamed the Peter F. Drucker and Masatoshi Ito Graduate School of Management in recognition.
His son Junro took an MBA at the school in 1989 and was active in its Japanese alumni association.
Personal life
Ito was married and had three children. His son Junro Ito held senior positions at Seven & i Holdings.
He kept a low public profile, gave few interviews, and continued to hold the honorary chairmanship into his nineties. His estimated net worth at his death was around US$4 billion.
Death and legacy
Ito died on 10 March 2023 at the age of 98.
The businesses he founded remain among the largest retail operations in the world. Seven & i Holdings operates more than 80,000 7-Eleven stores globally, over 21,000 of them in Japan, and the convenience store as developed in Japan has been exported across Asia and studied by retailers everywhere.
The company he left has since been the subject of takeover interest, including a proposal involving his son Junro, a development that placed the family's founding role back in the news three decades after his resignation.
Assessments of Ito distinguish between the two things he is credited with. The convenience store idea was not his, and the operational system that made it work was principally Toshifumi Suzuki's. What was his was the retail organisation capable of executing it, the judgment to authorise it, the financial discipline that kept the group solvent when its competitors were not, and the decision to buy the American parent when the opportunity came.
See also
References