Nakayamafuku Company Ltd.

1-22-9 Shimanouchi
Chuo-ku
Osaka, 542-0082
Japan
Telephone: (+81 6) 6251 3051
Fax: (+81 6) 6241 1328
Web site: http://www.Nakayamafuku.co.jp/en/

Public Company
Founded:
1925 as Nakayama Fukumatsu Shoten
Incorporated: 1947 as Nakayama Fukumatsu Shoten Co. Ltd.
Employees: 332
Sales: ¥47.4 billion ($446.14 million) (2018)
Stock Exchanges: Tokyo
Ticker Symbol: 7442
NAICS: 423220 Home Furnishing Merchant Wholesalers

Nakayamafuku Company Ltd. is a leading wholesale supplier of domestic products to Japanese supermarkets, home centers, mail-order companies, and other retailers. The Osaka-based company focuses especially on household products, including pots, pans, and other metal cookware; cooking appliances such as rice cookers, electric kettles, coffee makers, and electric pots; cooking utensils, including kitchen knives, timers, teapots, and lunchboxes; dining supplies such as bottles, mugs, glass plates, utensils, and plastic containers; as well as bathroom, laundry, and storage equipment and supplies.

Besides its main operations, Nakayamafuku has five specialized subsidiaries. Bestco Co., Ltd., designs, develops, and imports the Bestco-branded range of household products from contract manufacturers in China and other markets. Greenpal Co., Ltd., focuses on manufacturing and distributing gardening products, as well as outdoor and indoor furniture and other fittings and products. Interform Inc. designs and imports light fittings, clocks, and other products for interior design and decoration. Royal Tsuhan Co., Ltd., specializes in online sales, primarily through the Rakuten marketplace platform. Lastly, Nakayamafuku operates its own transport and delivery business through Nakayamafuku Service Co., Ltd., based at the company's Osaka headquarters. Although primarily focused on Japan, Nakayamafuku has begun efforts to expand as an exporter to China and Southeast Asian countries, under its NF10 strategic plan, launched in 2016. The company is led by President Nobuhiro Ishikawa.

FOUNDING: 1925

The company that later became Nakayamafuku Co. Ltd. was founded as a wholesale distribution company by Fukumatsu Nakayama in Osaka in 1925. The company's evolution, however, into a specialist trader of pots and pans and other metal cookware and household products, began especially in the years after World War II. This transformation was confirmed in 1947, when the company was incorporated as Nakayama Fukumatsu Shoten Co. Ltd., with a capital base of ¥190,000. The company established its headquarters in Minami-ku, Osaka, and initially operated on a regional basis.

COMPANY PERSPECTIVES

Management Philosophy: Coexist with society, and use our business activities as a means of contributing to society by helping our shareholders, suppliers, customers, employees, and other parties we deal with to achieve happiness.

The company's expansion plans took a major step forward in 1962, when the company opened its first office in Tokyo, in the city's Chiyoda-ku district. The following year, the company simplified its name, becoming Nakayamafuku Company Ltd. The Japanese word fuku, which means “joy” or “happiness,” also became part of the company's symbol at this time. In 1966 Nakayamafuku moved its Tokyo office to the Koto-ku ward in Tokyo, and opened the first of its Tokyo branch offices.

Nakayamafuku entered Fukuoka Prefecture in 1970, opening a branch office in Fukuoka City. After adding a second Tokyo branch the following year, the company added branches in Nagoya in 1972 and in Hiroshima, Sendai, and Sapporo in 1975. In order to accommodate its increasingly international distribution, Nakayamafuku acquired a stake in a transport business, which became an affiliate of the company under the name of Nakayamafuku Service KK in 1977. Nakayamafuku acquired 100 percent control of the transport business in 1991.

PUBLIC OFFERING: 1995

Much of Nakayamafuku's growth during this period was driven by Japan's booming economy, which saw the country join the world's industrial and economic powers. At the same time, Nakayamafuku benefited from the growth of Japan's mass retail sector and the appearance of a growing number of nationally operating supermarket, department store, and convenience store chains. Nakayamafuku became a major partner to these retailers and grew into one of the country's leading wholesale suppliers of household goods.

In order to accompany its retail clients, the company continued to expand its own network of branch offices. These included a branch in Kita Kanto, opened in 1981, and a branch office in its home territory of Osaka in 1985. The following year, the company entered Chiba as well, and by the end of the decade, Nakayamafuku's sales rose to ¥28 billion per year.

Nakayamafuku paradoxically prospered as Japan's postwar economic boom came to a crashing halt at the beginning of the 1990s. Despite the country's shrinking economy, exacerbated by the rising valuation of the yen, Nakayamafuku managed to raise its revenues to ¥40 million by the middle of the decade. The company also succeeded in going public, starting with a listing on the Osaka Securities Exchange's Second Section in 1995. The public offering enabled the company to repay its debt and strengthen its finances as it negotiated Japan's changing consumer market into the turn of the century.

Nakayamafuku also took steps to expand its operations. The company marked a major milestone in 1999 with the creation of subsidiary Bestco Co., Ltd. Based at the company's Osaka headquarters, Bestco began designing and developing its own Bestco-branded product range. These were produced by contract manufacturers in China and other low-wage markets, then imported into Japan to be distributed through Nakayamafuku's wholesale network. Like Nakayamafuku itself, Bestco started out by marketing pots, pans, woks, and other metal cookware. The Bestco brand, however, was quickly extended to include numerous other items, including appliances, knives and other kitchen utensils, kettles, glass cookware, and glass jars and other canning supplies.

REBUILDING REVENUES: 2008

The creation of Bestco came as Nakayamafuku at last began to feel the effects of Japan's struggling economy. After reaching a sales high of nearly ¥45 billion, the company's sales faltered, slipping back to around ¥35 billion at the time of global recession in 2001. The company's revenue growth remained weak through the first half of the decade. Nonetheless, the company remained profitable, in part because it had taken steps to reorganize its operations in order to improve its efficiency and reduce its costs. These measures included the merger of the company's Kanto region branches into a single branch office in 2004, resulting in significant saving in logistics costs. The new office took over from the group's former branches in Chiba and Kita Kanto, and its youngest branch, in Atsugi, which had been opened in 2001.

KEY DATES
1925:
The company is founded by Fukumatsu Nakayama.
1947:
The company incorporates as Nakayama Fukumatsu Shoten Co. Ltd.
1963:
The company changes its name to Nakayamafuku Company Ltd.
1995:
Nakayamafuku goes public on the Osaka Stock Exchange.
2018:
The company completes its acquisition of Greenpal Co.

These and other successful products enabled Nakayamafuku to rebuild its sales past ¥40 billion by 2010. By that time, the company had also added a new leg to its national network, opening a branch office in Ibaraki. The company continued its drive into new markets in the second half of the decade, including setting up a branch in Okinawa in 2016. In that year, the company also moved its Tokyo-based operations into a new modern office.

Throughout this period, the company's trade fairs remained an important component in the group's wholesale operations. Nakayamafuku began hosting three trade fairs per year, in the cities of Osaka, Tokyo, and Yokohama. By the second decade of the 21st century the company's trade fairs routinely attracted more than 100 manufacturers.

CHANGING DEMOGRAPHICS AND ACQUISITIONS

Nakayamafuku nonetheless had to contend with the realities of the Japanese consumer market in the early 21st century. For one, the country's birth rate had long slipped into negative growth, meaning fewer prospective consumers in the future. At the same time, the country was contending with the increasing proportion of the elderly in its population. By 2016 people over the age of 65 already accounted for nearly 28 percent of the total population, and that figure was expected to reach as high as 38 percent in the coming decades. The lower consumer spending among the elderly population represented a major challenge to Nakayamafuku and other consumer goods distributors.

Nakayamafuku's initial response to this challenge was to broaden its range of distribution platforms. The growth in online and mail-order sales represented a significant threat to the company's traditional retail clients. In order to position itself in the fast-growing e-commerce sector, Nakayamafuku completed its first acquisition, of Royal Tsuhan Co., Ltd., in 2013. Founded as a mail-order business in 1988, Royal Tsuhan provided the company with a ready-made entry into the e-commerce sector, particularly with its strong presence on the Rakuten online marketplace.

Nakayamafuku's next acquisitions enabled the company to extend its product range. The first of these was of Interform Inc., based in Kobe, Hyogo Prefecture, in 2015. Founded in 1979, Interform specialized in designing and importing light fittings, clocks, and a range of other interior decoration and design products, including rugs, carpets, and storage fittings.

The company's next acquisition took Nakayamafuku outside of the home. In 2016 the company announced it would acquire Greenpal Co., Ltd., founded in 2003 in Sanjo City, Niigata Prefecture. The Greenpal acquisition also marked Nakayamafuku's first direct entry into manufacturing, adding Greenpal's production of gardening products, as well as furniture and interior fittings. The Greenpal acquisition was fully completed in January 2018.

NEW STRATEGY

Nakayamafuku's acquisition spree enabled the company to drive up its revenues to ¥48.5 billion by 2016. In that year, the company launched a new medium-term strategy, called NF10, designed to transform the company into a ¥100 billion company by the time of its 100th anniversary in 2025. To achieve this goal, the plan set out four strategic objectives, including expanding its share of the shrinking Japanese market, largely through a war of attrition; extending the company's effort to develop new sales channels, through Royal Tsuhan and other internet-based sales initiatives; expanding its manufacturing component while extending the Bestco and other brand ranges; and broadening its operations into other Asian and international markets.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Bestco Co., Ltd.; Greenpal Co., Ltd.; Interform Inc.; Nakayamafuku Service Co., Ltd.; Royal Tsuhan Co., Ltd.

PRINCIPAL COMPETITORS

Lilycolor Company Ltd.; Marusho Hotta Company Ltd.; Ryohin Keikaku Company Ltd.; Sankyo Seiko Co., Ltd.; Sanyei Corp.

FURTHER READING

“Fast Boiling, Low Energy Kettle.” Cosmetics and Toiletries and Household Products Marketing News in Japan, March 25, 2007.

Lo, Jennifer. “Cross-Border E-tailing Has Bright Future in China: William Ding Lei, CEO of NetEase.” Nikkei Asian Review, November 19, 2015.

“Temperature Controlling Cookware.” Cosmetics and Toiletries and Household Products Marketing News in Japan, November 25, 2004.