Nakauchi, Isao

▪ 1996

      Isao Nakauchi was a retailer who had always wanted to end the traditional right of Japanese manufacturers to determine what products made it to the market and how much they would cost. Pushing for change and the interests of consumers, Nakauchi became not only a maverick in the retail establishment but chairman and controlling shareholder of the country's largest supermarket chain.

      Nakauchi's severe criticism of the government's inept response to the Great Hanshin Earthquake, which struck the Kobe area on Jan. 17, 1995, was well in keeping with his long-held views on the need for deregulation. Ordering his employees to immediately deliver relief goods to the disaster area, Nakauchi earned praise and respect. To be sure, it was a cause close to his heart as well as his pocketbook.

      Nakauchi was born in Kobe on Aug. 2, 1922, and it was in the nearby town of Senri that he opened his first Daiei Housewives Store in 1957. The Great Hanshin Earthquake caused about $500 million in damage to his outlets and inflicted the first financial loss ever on the Daiei empire. Nakauchi soon had his business on the road to recovery by keeping his stores open round-the-clock in defiance of regulations. Fearful that the Great Hanshin disaster might reverse the trend toward the liberalization he eagerly championed, he resigned from the prestigious post of vice-chairman of Keidanren (the Federation of Economic Organizations). He explained that he was fed up with making proposals to a government in whose ability to act he no longer had any confidence. The bureaucrats "hold meetings but nobody assumes responsibility," he complained.

      Nakauchi's views were shaped by his constantly battling authorities, making them eventually accept his markdowns and unorthodox trading activities. By pioneering the development of private-brand products as a strategy for checking large manufacturers, he changed the power relationship between providers and retailers. Some chose to categorize Nakauchi's business philosophy as ruthless "survival of the fittest," but by his own accord he wanted to double disposable incomes by slashing consumer prices in half. That, he believed, could be accomplished in less than 20 years by removing government regulations that stifled competition and increased costs. While maintaining that "only manufacturers worry about price-cutting," Nakauchi proposed that the Japanese would have to start learning how to acquire interests other than their jobs if falling prices produced a shift in industrial structure and unemployment. "We must discard our conventional ways of thinking," he insisted. (GERD LARSSON)

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