Mao in the Supermarket

What is a true bastion of iron? It is the masses, the millions upon millions of people who genuinely support the revolution.

--Mao Tse-tung

Replace "the revolution" with the term sound merchandising, and that quotation becomes a guide to success in capitalist retailing. So claims Isao Nakauchi, head of Japan's fastest-growing store chain and an admitted admirer of Mao, even though he himself is a political conservative. By following the Chairman's strategic principles, Nakauchi has built his 14-year-old Daiei, Inc., into a 63-store chain that in 1970 grossed $415 million, second only to the volume of the Mitsukoshi department stores. This year Nakauchi expects to become No. 1 by pushing Daiei's sales to $556 million.

Aiding Mamma-san. Nakauchi, 48, has been leading something of a revolution in the stiffly cartelized world of Japanese retailing. The country has 1.2 million mostly tiny stores, many of which cooperate in keeping prices high enough to enable all to stay in business. "Even our barbers and laundries have self-protective cartels," complains Nakauchi. He supports Mao's "bastion of iron" principle, which he interprets to mean that the masses (i.e., consumers) should be kings, and the retailer should serve them by selling at the lowest possible prices.

Accordingly, Nakauchi pioneered in bringing the American-style supermarket to Japan in 1957. He is opening four new stores this month and plans another nine by year's end, mostly in Japan's mushrooming suburban areas -- following Mao's precept to "take small and medium cities first, take big cities later." Defying pressure from Japan's protectionist agricultural bureaucrats, who have burdened him with red tape, Nakauchi imports the cheapest foreign food that he can find: cattle and onions from Australia, oranges and grapefruit from the U.S. He has turned his retail outlets into small department stores, selling not only food but Chinese pajamas, Korean shirts and, if the price is right, even Japanese-made goods. Last winter, when outraged mammasans boycotted Japanese-made color TV sets that were being sold domestically for prices higher than those charged in the U.S., Nakauchi made a deal with a medium-size manufacturer, Shinnihon Denki Co., to market a color set in Daiei's stores for $160 -- about half the going price. The publicity helped force the big manufacturers to cut their domestic prices by as much as 22%.

New Long March. Nakauchi is about as popular in the Japanese business establishment as Mao would be in the U.S. National Association of Manufacturers. Smashing up the cartels, Nakauchi admits, will take many years -- so many that "I am constantly reminded of Mao's Long March." In order to shorten the time, Nakauchi intends to open a "university" for his store chiefs by year's end. The atmosphere will be more like that of a Maoist commune than of a school; managers will live together in barracks and intersperse their studies with marches and drills. A veteran of World War II service in the Japanese army, Nakauchi views business as combat: "We must inculcate in our managers a brute force for beating down all our rivals." But the round-faced, spectacled market magnate also has milder moods. While listening to the cash registers ring at a recent store opening, he forgot Mao long enough to echo unconsciously a far different cultural influence. "That," he said, "is the sweetest music this side of heaven."

This file is automatically generated by a robot program, so reader's discretion is required.