Photo/Illutration A poster at the Seibu Ikebukuro main store says it is closed on Aug. 31 due to a strike. (Yuki Shibata)

A labor union of department store operator Sogo-Seibu Co. staged a one-day walkout Aug. 31 to protest the sale of the company.

The management of the Seven & i Holdings Co. parent company failed to reach clear consensus with the workforce or communities in the area as it planned and executed the sale. It is hardly surprising that the labor union took such strong action. Companies should not forget that they are responsible not just to shareholders but also to a wide range of other stakeholders.

Seven & i on Sept 1 sold all shares of subsidiary Sogo-Seibu to Fortress Investment Group, a U.S. investment fund. The decision for the sellout was made just as employees were walking out.

Initially, Seven & i planned to sell the department store chain in February, but the proposal met with strong opposition from the labor union and the local governments, mainly over a plan to allow Yodobashi Holdings Co. to operate its Yodobashi Camera consumer electronics shop in the flagship Seibu Ikebukuro store. As a result, the sale was delayed repeatedly. In the end, Seven & i went ahead with the sale without winning over the dissenting stakeholders.

The labor union, comprised of around 4,000 Sogo-Seibu employees, had been demanding transparency of information about the sale, job security and continued operation of the department store business. According to the labor union, it was only after it acquired the right to strike in late July that Seven & i started explaining to union members the plan for the future of the Seibu Ikebukuro store.

It is easy to imagine the anxiety of employees facing an uncertain future with regard to their jobs and workplaces. The right of workers to strike is guaranteed by the Constitution as part of their right to bargain and act collectively for negotiations with employers.

The walkout has helped attract public attention and support to the employees’ demands, stoking social debate on the matter.

To be fair, department stores are facing a tough business climate. Sales of department stores in Japan have been trending down for years due mainly to growth of online shopping. Sogo-Seibu reported losses for four years in a row.

Seven & i’s decision to sell off its department store business to focus on the convenience store and other profitable operations may be a reasonable strategic move. The U.S. fund’s fundraising power and Yodobashi’s ability to attract customers may contribute to turning around the department store chain.

But the business of a large department store is supported not only by its employees but also local communities, numerous customers and business partners. Such large-scale retailers should spare no efforts in listening humbly to the voices of the various stakeholders and win their support when they plan to make significant changes in their workforces or store operations. If they take an action that is viewed as arrogant disregard for the concerns and interests of stakeholders, their credibility with the public is likely to be damaged.

The Sogo-Seibu management and its new shareholder should seek to build consensus among stakeholders with more humility. In particular, they should make maximum efforts to keep the employees on the payrolls.

Fortress is described as one of the world’s largest real estate investment funds. It should realize that when it bought Sogo-Seibu it acquired not simply the company’s land and buildings but the workplaces of thousands of employees.

--The Asahi Shimbun, Sept. 2

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