AEON Co., Ltd. - AEON in the 21st Century

AEON in the 21st Century

As Takuya Okada predicted, the Japanese retail industry did undergo significant change, but the forces of change arrived earlier than he anticipated. By the end of the 1990s, Japanese retailers faced competitive pressures that they never had to face before. Legislation that barred foreign retailers from entering the Japanese market no longer offered such protection. Foreign competitors such as France-based Carrefour and U.S.-based Wal-Mart Stores began building a presence in Japan, presenting Japanese retailers with a formidable new threat. The threat was met by Okada's son, Motoya Okada, who succeeded his father as president in 1997. The response to the incursion of foreign competitors was aggressive expansion, a plan of action the younger Okada pursued with zeal.

Okada, who earned his MBA at Babson College in Massachusetts, employed a strategy used by his father, one that was uncommon in Japan's retail sector. In 1997, Takuya Okada purchased a financially moribund supermarket company named Yaohan, a purchase that netted the AEON group 36 stores. At the time, Japanese retailers were not known to acquire failing or failed companies, but Motoya Okada followed his father's lead and began increasing the size of the company through the purchase of troubled retailers. AEON, which became the official name of the company in 2001, ranked as the fourth-largest retailer in Japan during the late 1980s. By 2000, the company had risen to the industry's number-two position. In December 2003, after acquiring the financially ailing Mycal Ltd., a combination that gave AEON a total of 1,053 supermarket stores, the company became the largest retailer in Japan, passing Ito-Yokado Co. in the sales rankings.

Through numerous acquisitions and internal expansion, AEON's progress from the number-four position to market dominance was achieved. However, Motoya Okada's ambitions did not end there. The AEON leader intended to make the company one of the ten largest retail concerns in the world by 2010, an objective that promised a slew of acquisitions, mergers, and joint venture partnerships in the coming years. At the start of the 21st century, AEON comprised a collection of companies that together represented considerable financial might. In the future, the company appeared likely to aggrandize its massive stature and rank as one of premier retailers in the world.