Japan is experiencing a rare strike as workers witness a protest sell-out at a supermarket

  • The hit is the first of its kind by a major Japanese department store in 61 years
  • The union is protesting the sale of Sogo & Seibu’s unit to a US fund
  • The decision to sell will be finalized on Thursday – source

TOKYO (Reuters) – Workers at a Tokyo supermarket went on strike on Thursday after talks broke down with management over a planned sale of their company, the country’s first major strike in decades.

About 900 workers at a Seibu flagship store in the bustling Ikebukuro district are protesting the planned sale of their company Sogo & Seibu, a unit of retail giant Seven & I (3382.T), to the US-based Fortress Investment Group.

They are looking for guarantees of business and business continuity, unhappy with the announced plans of electronics retailer Yodobashi Holdings to take over nearly half of the store. Critics, including Ikebukuro officials, say such a change, which would replace many of the store’s individual stores, would also reduce the store’s image.

Strikes are extremely rare in Japan, where negotiations over wages and working conditions are usually agreed upon amicably. The one-day strike – the first at a major Japanese supermarket in 61 years – came after months of negotiations between Sogo & Seibu’s management and the labor union.

On Thursday morning, Cebu workers protested in front of the store while members of various other unions distributed flyers in support despite the summer heat, and television crews and photographers swarmed.

Satomi Saito, who did some shopping at the store on Wednesday evening after hearing of the strike, expressed his sympathy.

“I don’t know if their voices will be heard, but I think it is important that they act,” she said.

Seven & I apologized for the strike and said the subsidiary would continue to hold talks with the union. Other Cebu and Sogo stores were open for business as usual.

Fortress declined to comment. A representative for Yodobashi, Fortress’ partner in the deal, could not immediately be reached for comment.

Despite the strike, Seven & i plans to officially announce the sale later on Thursday at a price lower than the 250 billion yen ($1.7 billion) originally set, according to a source familiar with the matter. Seven and I said nothing has been decided.

Buyer’s responsibility

The strike comes amid a very tight labor market in Japan, where workers at major firms won the biggest pay rises in three decades in labor negotiations this spring. But these gains were eroded by inflation, which reached a 41-year high, and wages in real terms continued to fall.

The Sogo & Seibu workers have the support of labor groups from rival department stores Takashimaya, Isetan Mitsukoshi (3099.T), Daimaru Matsuzakaya and Hankyu Hanshin, who attended a press conference this week announcing their intention to strike.

“I think many workers got some encouragement from this issue,” said Wakana Shoto, a professor at Rikkyo University who specializes in labor issues.

“Considering the difficulties faced by the industry, the conditions in Sogo and Cebu are not unique.”

Seibu Ikebukuro is Japan’s third largest department store by sales, according to media reports, but its owner Sogo & Seibu has been in the red for the past four years and has debts of about 300 billion yen.

Stephen Givens, a Tokyo-based corporate lawyer, said that for offshore funds looking to restructure Japanese brands, the withdrawal raises the specter of similar hurdles.

“You can take over a Japanese company, as a foreigner, through brute force, and it won’t do you any good if the people who actually run the Japanese company and work for the Japanese company are not happy with the results.” He said.

“This is one of the cautions that all potential foreign acquirers should keep in mind.”

The strike is another headache for Seven & i, operator of the world’s largest convenience store chain 7-Eleven, which is facing demands from foreign investors to improve its profits.

The company in May fended off an attempt to change its management by US-based ValueAct Capital, which had pressured the company for years to sell underperforming supermarket and convenience store units.

($1 = 145.8500 yen)

(Reporting by Retsuko Shimizu, Mariko Katsumura, Kaori Kaneko and Rocky Swift; Reporting by Mohamed for the Arabic Bulletin) Writing by Chang Ran Kim. Editing by Edwina Gibbs and Stephen Coates

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