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Department stores are often seen as transformative of both retail and wider social practices. This article offers a comparative analysis of department stores in early twentieth-century Britain and Japan to assess the extent to which there were universal qualities defining the operation, practices, and experience of department stores and to explore the ways in which they might be seen as transforming retailing in the two countries. Despite similarities in their origin, organization, and service to customers, we highlight the greater diversity of British department stores and their incremental development. Japanese stores were a far more powerful force for change because they formed part of a concerted and conscious program of modernization.

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Dry goods stores, the predecessors of Japanese department stores, were forced to modernize and change their business format after the Meiji Restoration in 1868, which led to the demise of their main customers. The largest dry goods store, Mitsukoshi, was the first to learn about modern retailing in the West, and it broke out of the mold of the traditional Japanese retailer in around 1900 in an effort to catch up with Western department stores. Other large dry goods stores were quick to follow its lead: they transformed into department stores and created their own “cathedrals of consumption” in the 1920s, to match those in the West. This new retail format strongly contributed to Japan’s economic growth and to the Westernization of the Japanese lifestyle. Despite numerous publications on the history of department stores, there has been little research on this transfer of Western department stores into a very different world: Japan. Although there are many studies on Japanese department stores in Japanese, focusing on how they were influenced by Western department stores, they are mostly subdivided on the basis of specific topics, such as levels of consumption in the interwar period or their economic impact during Japan’s period of high economic growth. The focus here is on the whole development process of department stores, bridging the gap between Western and Japanese studies on department stores. The first stage in the development of Japanese department stores was in the early 20th century, when Japanese retailers raced to catch up with Western department stores to become modern Western-style retailers themselves; the second stage was in the late 20th century, when these new Japanese stores continued developing along their own unique path in order to target the domestic market during the growth of the Japanese economy, introducing ready-to-wear clothing, luxury brands, and gift products. In this way, Japanese department stores succeeded in increasing their efficiency and establishing a more upmarket image. However, in exchange for this prosperity, department stores also gave up control of their sales floors to the wholesalers and reduced their own merchandising skills. After the economic bubble burst in 1991, Japanese department stores began to suffer from decreased sales and lack of control over the points of sale in their stores.

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Luxury business developed alongside department stores, which created a new market for luxury brands and proved to be a crucial marketing channel for two reasons. First, the highly respected image of department stores enhanced that of their luxury-branded in-house boutiques for a wider range of consumers. Second, department stores used the good reputation of luxury brands to upscale their offering and include high-fashion merchandise. Some department stores have now become tourist attractions for luxury shopping. However, a new trend has appeared in emerging countries: shopping malls have largely taken over the former role of department stores. This chapter examines, from a historical perspective, the major role that department stores have played in the development of luxury business.