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Isetan Mitsukoshi's new chief seeks to repeat Malaysia success

Toshiyuki Hosoya tapped to lead Japanese department store chain into digital age

Isetan Mitsukoshi Holdings CEO Toshihiko Sugie, left, bumps fists with his successor, Toshiyuki Hosoya. Hosoya is the best in the company at reviving struggling operations, Sugie said.

TOKYO -- With the coronavirus chill hanging over Japanese brick-and-mortar retail, department store operator Isetan Mitsukoshi Holdings has named one of its star executives who rebuilt operations in Malaysia and Japan to lead the company into the digital age.

Toshiyuki Hosoya, 56, will succeed Toshihiko Sugie as group CEO effective April 1, Isetan Mitsukoshi said Friday. Though Hosoya, who is now president of Fukuoka-based unit Iwataya Mitsukoshi, expressed his enthusiasm for expanding the group's digital operations, he also acknowledged the challenges traditional department stores face amid the pandemic and the rise of online rivals.

"I wonder if consumers no longer accept department stores as a business model," Hosoya said.

Hosoya joined Isetan, one of the company's predecessors, in 1987 after graduating from Waseda University. "He's light-footed and decisive," said a colleague -- a common observation among those who know him.

He began his career working in women's clothing and accessories, one of the most coveted departments in the company, and quickly emerged as a star player.

But it was during a stint in Malaysia where he truly proved his leadership mettle. Hosoya, who was in his late 30s at the time, completely revamped a struggling branch in the Southeast Asian country from the ground up, including an overhaul of its sales structure and customer service, and led the store to eventual success.

Since becoming president of Iwataya Mitsukoshi in 2018, he has made it a point to speak directly with its over 1,000 employees at roundtable discussions and other events. He also met with every manager one-on-one over the course of a year, something nobody else in his position had ever done.

"He's the easiest president to talk to that we've ever had," an Iwataya employee said.

Hosoya also embraced change in the operations. Under his leadership, Iwataya ahead of the rest of the group launched a unified, cross-department database for customer information, and entrusted employees with a range of responsibilities from customer service to inventory management. Both measures were later adopted by parent Isetan Mitsukoshi.

Iwataya logged an 80% jump in operating profit after Hosoya's first year. "He undeniably has the best track record in the company when it comes to rebuilding struggling operations," said Sugie.

But Hosoya's problem-solving abilities will face an even greater test as he takes the reins from Sugie.

Isetan Mitsukoshi relies on its department stores for about 90% of its income, unlike many of its competitors that have diversified into new fields like property rentals. This means it was hit especially hard by the pandemic, which has kept both Japanese shoppers and foreign tourists at home. The company is expected to log a 45 billion yen ($422 million) net loss for the fiscal year ending March.

The company did go through some structural reforms, like closing unprofitable locations under Sugie, who became CEO with the support of the company's labor union after his predecessor was pushed out in 2017. But the coronavirus has thrown a wrench into such efforts.

Embracing e-commerce is considered crucial to Isetan Mitsukoshi's recovery. Online sales currently contribute less than 10% of its total sales, but the chain began offering every product at Isetan's flagship Shinjuku store and other outlets for purchase online in November.

"I hope to connect with every customer digitally," Hosoya said. "I want to propose a variety of new ideas."

Isetan Mitsukoshi's digital operations are still in their fledgling stages, and contribute little to groupwide earnings. Hosoya faces a delicate balancing act to ensure the company can meet its full digital potential.

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