Flagship Sogo & Seibu dept. store in Tokyo closes due to labor strike

    Labor union members at Japanese department store operator Sogo & Seibu Co. went on strike at its flagship Tokyo store Thursday in a rare work stoppage amid job security concerns stemming from the parent company’s plan to sell the chain to a U.S. fund.

    Despite the first strike by a major department store union in 61 years amid an intensifying labor dispute, the parent Seven & i Holdings Co. said it decided at an extraordinary meeting the same day to sell the struggling department store chain to Fortress Investment Group LLC on Friday.

    Some 900 workers staged a walkout from the Seibu Ikebukuro store, while 300 people held a protest rally at a nearby park joined by members from labor unions of other department stores.

    It was a premature (decision.) It is disappointing,” union head Yasuhiro Teraoka told reporters following the board approval by the Japanese retail giant.

    Seeking support over the labor union’s decision to strike, he said, “The shutters could never go up again (because of the buyout). It gives me pain, but I hope (our action) will be understood.”

    The union said it is worried that the U.S. fund’s plan to make its partner electronics retailer, Yodobashi Camera Co., a major tenant of the Seibu Ikebukuro store would force out current tenants and reduce its store footprint.

    The store is a leading profit maker among the chain’s 10 outlets, and concerns have mounted that if the plan goes ahead, employees at the location could lose their jobs if sales fall due to the changes, the union said.

    At the Seibu Ikebukuro store, where posters were put up notifying the public of the closure due to the strike, union supporters gathered around the entrance holding up signs, saying, “Let’s fight together.”

    Some passersby also said they backed the labor union’s decision.

    “The labor union demonstrated the stance it will protest and fight, rather than giving in silently and obey what the management says,” said Tokyo resident Yumiko Hara, 58.

    “When the cost of living is high due to price hikes, I hope the strike will provide an opportunity for people to become aware of the importance of workers uniting and raising their voices,” she said.

    Seven & i, which also operates the convenience store chain Seven-Eleven Japan Co., plans to waive around 90 billion yen ($620 million) of some 170 billion yen it has lent to Sogo & Seibu in the hope of aiding the restructuring of its department store business.

    The company said it is scrutinizing the sales value of the business to the U.S. investment fund, but sources close to the matter said it is expected to be around 220 billion yen.

    Seven & i first announced the sale in November, with plans to complete the transaction in February. It had been twice postponed as stakeholders, including the local ward, signaled their disapproval.

    The labor union had demanded the parent company not go ahead with the sale as a condition for calling off the strike. It notified management Monday about the strike, which went ahead after the failure of negotiations through Wednesday morning.

    The planned sale comes as Seven & i starts restructuring its businesses in the face of increasing pressure from shareholders.

    For the fiscal year through February 2023, Sogo & Seibu fell into the red to the tune of 13 billion yen, expanding from a net loss of 8.8 billion yen the previous year.

    The earnings sharply contrasted with rivals J. Front Retailing Co., the operator of the Matsuzakaya and Daimaru department stores, and Takashimaya Co., which saw profits, benefiting from duty-free sales after inbound travelers returned to Japan due to eased coronavirus border restrictions.

    Seven & i also outlined a plan in March to cut the number of its Ito-Yokado supermarket stores by a quarter and quit its apparel business to focus more on its convenience store operations.

    According to industrial union UA Zensen, the last strike by a major department store union in Japan occurred in 1962.

    Strikes in Japan have been becoming increasingly uncommon since peaking in the mid-1970s.

    The number of strikes lasting more than half a day has stood at 50 or less a year since 2009, according to the Ministry of Health, Labor and Welfare.

    By Usmana Kousar