Retail Business
Keiji Tanaka

Keiji Tanaka has primarily worked in the textile sector since joining the company in 1983. After various postings that included serving as president of a business company, he was appointed General Manager of the Lifestyle & Retail Business Division in April 2014. Looking back, he regards Milan as his toughest assignment thus far. “In my early 30s, I was posted to Italy as our first representative there in the textile/fashion sector as the Company sought to ‘venture into unknown markets.’ Starting from scratch, we struggled day and night, operating by trial and error and getting up again after every failure to give it another try. Having to learn the local language, culture and customs on top of all this, I felt driven and desperate in a way that I can never forget.” He points out that the experience of having overcome these difficulties offers him comfort even now. Tanaka postulates that trading companies in future will need the ability to resolve social issues. “Contributing to society by resolving issues and thereby creating new business models is a cycle that I would like to help establish.”

Developing distinctive retail businesses in various sectors

The film “Supermarket Woman” released in 1996 tells the story of a supermarket on the verge of bankruptcy making a comeback by adopting a customer perspective. Although it could not aspire to becoming Japan’s largest or top-selling supermarket, it could strive to become Japan’s most customer-oriented grocery store. With this goal in mind, the meat, fish, produce and other sections as well as storage areas were given dramatic makeovers, purchasing was revamped, and the quality of prepared foods improved. All of these efforts designed to make fresher foods available at lower prices ultimately helped the supermarket succeed in restoring the confidence of customers.

The Sumitomo Corporation Group company Summit extended every possible cooperation in the making of this movie. The film portrayed details likely to be understood only by viewers well-versed in grocery store operations and management, and were all based on the experiences of actual supermarkets.

Summit opened its very first store in 1963, more than a half-century ago, and now has 113 stores in the Tokyo metropolitan area that give it the highest sales of any supermarket chain in Tokyo. At the time it was considered quite extraordinary for an integrated trading company whose primary livelihood was trade to seriously engage in a retail business involving direct interaction with consumers.

“This was an era that saw supermarkets based on the US model rise to prominence and garner attention. We became interested in giving them a try ourselves, and the business we thus launched is still a going concern today,” says Keiji Tanaka, General Manager of Lifestyle & Retail Business Division Manager. The Lifestyle & Retail Business Division’s role is to oversee a variety of retail businesses such as Summit.

“Some of the other retail businesses besides Summit that fall under the purview of our Division are Tomod’s, a drug store chain, Jupiter Shop Channel, the largest-selling TV shopping channel in Japan, and Soukai Drug, an e-commerce site for daily necessities, and we are also engaged in import sales for the overseas fashion brands Feiler, Naracamicie, and Marc Jacobs. Each of these businesses ranks in the top class in the specialized segments in which they display their strengths, so I call them ‘niche giants’.”

Summit operates 113 stores in the Tokyo metropolitan area (as of the end of 2015) and is the top-selling supermarket chain in Tokyo, known for being thoroughly particular about the freshness of food items. The store name “Summit” was selected both because of its meaning of “pinnacle” and because it closely resembles the first five letters of “Sumitomo.”

Leveraging know-how cultivated in Japan to succeed overseas

Tomod’s, a chain of drug stores featuring dispensing pharmacies, opened its first store in 1994. The chain has now expanded to 147 stores centered on the Tokyo metropolitan area.

“Three years ago we began expanding to Taiwan, under the same Tomod’s brand used in Japan. Leveraging the management know-how we have cultivated in Japan, we have been adhering to the concept of creating bright, eye-friendly, clean and tidy stores. Polite customer interaction and extensive product lineups have been well-received in the Taiwan market as well, and we have increased our number of stores to 15, most of them in Taipei.”

Jupiter Shop Channel, Sumitomo Corporation’s TV shopping business, started in 1996. It was the first dedicated shopping channel in Japan to incorporate live broadcasts, and it now broadcasts 24 hours a day year-round.

“28.71 million households nationwide have access to the Shop Channel through cable and satellite broadcasts. Approximately 700 products carefully selected from around the world, including fashion items, cosmetics, household goods, and health-enhancing products, are introduced each week, and sales have been growing for 18 years straight since the business was established. We also began expanding to Thailand in 2013.”

Jupiter Shop Channel is one of Japan’s largest TV shopping channels, each week introducing and selling about 700 items on real-time programs with a live atmosphere

Wholly-owned outlets for Naracamicie, an Italian brand of women’s blouses, and Feiler, a German brand of quality fabrics, both brands being promoted by Sumisho Brand Management, a business company of the Lifestyle & Retail Business Division

Delivering good-quality products via “invisible integrated corporate strength”

The strength of the Sumitomo Corporation Group’s retail businesses does not lie solely in the various sales routes and items they possess. A key characteristic of these businesses is that they take full advantage of the integrated corporate strength distinctive to integrated trading companies and actively pursue collaboration between businesses.

For example, products from Feiler and Naracamicie are sold not only through directly-managed stores and department stores but also through the Jupiter Shop Channel. Group companies are even involved in manufacturing some of these brand products. A vertically-integrated model has been established in which Group companies are responsible for the greater part of the apparel value chain process from planning/manufacture and purchasing to sale.

Summit’s business also operates on a model in which integrated corporate strength is exerted through in-house collaboration. In-house sales organizations team up to support Summit in procuring such products as bananas and pork in which Sumitomo Corporation can bring particular strength to bear and in operating logistics centers, developing store properties and repairing/maintaining systems. Multilayered activities are undertaken to deliver good-quality products to consumers. The lineup of fresh products on offer at Summit storefronts every day can be attributed in great part to this “invisible integrated corporate strength.”

Dynamic personnel rotation to recycle experience

Given that Sumitomo Corporation generally engages in B-to-B business, the Lifestyle & Retail Business Division is quite a standout, doing business in direct contact with end-user consumers. On the advantages of having a retail business within the Head Office, Tanaka says: “Sumitomo Corporation has sent employees on loan -to both Summit and Tomod’s. The first things these dispatched employees do are go to stores and work cash registers, stock products on shelves, cut fish, prepare ready-made dishes, and directly handle customer complaints. We think that having employees themselves engage in such work and getting a direct grasp of customer needs will give them a good feel for consumer sentiment that they usually cannot get from doing B-to-B business.”

To turn experience gained through consumer contact into a Group-wide asset, this experience must be conveyed across organizational boundaries. Sumitomo Corporation’s own human resources rotation scheme is designed to do just that.

A pencil stand presented to Tanaka before returning home at the end of his Milan posting that he still fondly uses on his company desk

“New employees in the Lifestyle & Retail Business Division spend their first few years at the Head Office, learning the know-how and logic of running retail businesses from a macro perspective. They are then seconded to business companies to gain on-the-job experience and perform the duties of store managers, allowing them to get a first-hand feel for the true nature of retail operations. They can then utilize this on-the-ground experience later when working in non-store organizations or at the Head Office. Even if they are transferred to a non-retail business sector, they will be able to bring consumer perspectives to the realm of B-to-B business.”

Transferring employees who have accumulated retail experience to other business sectors to spread their experience value will extend the “consumer perspective” throughout Sumitomo Corporation, whose core operations are B-to-B businesses, and bolster its integrated corporate strength. Tanaka points to this as the chief significance of having a B-to-C sector within the Group.

Tomod’s is a chain of drug stores featuring dispensing pharmacies. The name of the chain was selected from among numerous suggestions received from employees, and comprises the “tomo” of “Sumitomo” and the “d” and “s” from “drugstore,” with an additional allusion to being a “tomo” (“friend” in Japanese) to local residents.

Human resources to generate integrated corporate strength

“In one regard, an integrated trading company is a training institution for experts, as it needs knowledgeable employees with expertise in specific business sectors to compete in these sectors. As society grows increasingly complex from here on out, though, expertise alone may not be enough to succeed. Employees will also be required to possess knowledge of a variety of business sectors and have a broad perspective encompassing the flow of value chains as a whole. Training specialists with extensive experience and a wide field of vision is thus my mission in leading the Division,” asserts Tanaka, who takes great pleasure in watching his subordinates develop. He declares that he would happily give everything that he has now to ensure their growth.

Integrated trading companies are essentially aggregations of various businesses, each of which is underpinned by the efforts and skills of diverse human resources. From this standpoint, human resources might well be equated with the integrated corporate strength of an integrated trading company. Bringing together the capabilities of individual employees that constitute the Group’s strength and exercising the resulting integrated corporate strength to continue providing reliable value to an ever-changing society are approaches that Sumitomo Corporation will be pursuing far into the future with no goal line in sight.

(posted in February 2016)

The Sumisho Scrum concept

Leveraging the integrated corporate strength of Sumitomo Corporation in various domains, this is the Sumisho Scrum.

“I sense that the spirit of altruism is thoroughly alive in Sumitomo Corporation. Sharing information with other organizations and working with a ‘For the Company’ mindset will eventually come back around to us. It is this chain of cooperation that is the backbone of Sumitomo Corporation’s business.”
──-Keiji Tanaka, General Manager, Lifestyle & Retail Business Division

Keiji Tanaka, General Manager, Lifestyle & Retail Business Division
Etsuko Komiya’s perspective

Etsuko Komiya’s perspective

Residents of the Tokyo metropolitan area who have never shopped at a Summit or a Tomod’s must surely be in the minority. I was somewhat surprised to learn that Sumitomo Corporation, an integrated trading company, operates these stores that have become such an integral part of our day-to-day lives. Even more surprising was that Sumitomo Corporation employees are not just managing store operations but are working cash registers, cutting fish in the kitchen, and otherwise spending their workdays in direct contact with customers. Interacting with products from the same viewpoint as we consumers and absorbing the views of consumers will undoubtedly make their businesses more prosperous. I hope to see Sumitomo Corporation continue to be an integrated trading company that does not forget consumer sentiment.

A scrum that will change the world

People are the bridge that links the future Sumitomo Corporation