【Are AOKI and Aoyama brothers?】 Record profits amid the headwind of 'suit abandonment' (a financial report that later proved otherwise). A thorough dissection of the unknown history and 'post-suit' survival strategies of the two giants.
Note (November 13, 2025): During the writing of this article, both companies released their financial results; Aoyama, which had fallen into the red, saw its deficit expand by 850 million yen.
News came in that AOKI managed to stay in the black despite a decline in profits, whereas this article assumed both would have 'smooth profit forecasts.' Since the results were completely off the mark, I will write a follow-up soon! It is interesting why the forecasts were so wrong, isn't it?
How is everyone doing?
I am Twi-dori, a trader from the Hokuriku region.
It is November 2025.
Here in Hokuriku, it has become the season where the thunder of 'yuki-okoshi' (snow-awakening) rings out, signaling the arrival of full-scale winter.
I have also pulled out my thick coat from the back of my closet and am fully prepared for the cold as I go about my work.
Now, as my main business is trading, when I have business negotiations with overseas buyers or visit domestic clients,I still often wear a suit.
Of course, business casual has become more common recently, but for important occasions, tying a necktie really helps me get into the right mindset.
At such times, I am sometimes asked the following question by young staff members or people from other industries:
'Twi-dori-san, this is a simple question, but...are AOKI and Aoyama group companies?'
Ah, I see, I think to myself.
Indeed, one would think so.
Both have stores all over the country, and both sell suits for businessmen.
And above all, both start with the word 'Ao'.
The logo colors are also blue with yellow for AOKI, and blue with white for Aoyama.
It is no wonder that they are misunderstood as brothers or relatives.
However, let me start with the conclusion.
Aoyama Trading (Aoyama Tailor) and AOKI Holdings are completely separate companies.
On the contrary, they have been fated rivals that have been engaged in a fierce battle for hegemony in the Japanese suit market for nearly half a century.
Both companies are currently attracting significant attention in the business world.
'Why, despite the 'suit abandonment' trend? Men's clothing industry leaders Aoyama and AOKI report solid performance'
Following the COVID-19 pandemic, remote work has become established, and the casualization of business attire has accelerated.
Amidst headwinds where it is even said that 'suits are a thing of the past,' both companies have achieved increased revenue and profit, with AOKI reportedly on track to hit record-high profits.
What exactly is going on here?
The secret lies in the fact that they are no longer just 'suit shops'.
About half of AOKI's sales come from things other than suits.
Their internet cafe chain 'Kaikatsu CLUB' and karaoke parlors are their primary earners.
Meanwhile, Aoyama is also generating revenue through the operation of 'Yakiniku King' and the recycling shop 'Second Street'.
This vivid transformation is not merely a success story of the apparel industry.
How do you interpret changes in the market environment?
How do you leverage your company's 'true strengths'?
And how do you escape the 'curse of the core business' to chart a new growth trajectory?
It contains universal survival strategies that we, as small and medium-sized business owners and all business professionals, should learn from.
In this article, I intend to thoroughly delve into the history and strategies of these two giants, 'AOKI and Aoyama', which are similar yet different.
Where were they born, how did they become rivals, and why are they now achieving success on completely different paths?
I will mobilize the perspective I have cultivated as a trader and my analytical skills as a business analyst to unravel this mystery.
It will be a long journey, but please stay with me until the end.
This story will surely provide significant insights for thinking about the future of your business.
Chapter 1: Kimono Shops and Clothing Stores—The Unknown Founding Story and the Mystery of 'Ao'
AOKI and Aoyama.
How were these two giants born?
By exploring their roots, the differences in their corporate cultures and strategies become clear.
And let's delve into the mystery of 'Ao'.
📜 1-1. The Roots of AOKI: Breaking Away from a Shinshu 'Kimono Shop'
The history of AOKI Holdings began in 1958 in Shinonoi City, Nagano Prefecture (now Nagano City).
Founder Hironori Aoki started the individual store 'Yofuku no Aoki'.
What is interesting is that Aoki's family home was a well-known local kimono shop.
At that time, Japan was still in an era where traditional Japanese clothing was mainstream.
However, Aoki was convinced that the era of Western clothing, especially suits, was coming.
He jumped out of the stable family business of a kimono shop and tried to ride the wave of a new era.
At the time of founding, he struggled with cash flow, carrying products by bicycle himself, visiting customers' homes, and conducting 'installment sales' through steady, diligent efforts.
His business philosophy was to 'pursue customer joy'.
He also upheld the principles of 'pursuing sociality,' 'pursuing public interest,' and 'pursuing public nature,' which are similar to the Omi merchant's 'three-way satisfaction' (sanpo yoshi).
The company name AOKI (formerly Aoki International) is, of course, derived from the founder's name 'Aoki,' but it is said that it also contains the wish to be a 'blue tree,' meaning a company that continues to grow forever.
📜 1-2. The Roots of Aoyama: The 'Clothing Store' in Hiroshima and the Birth of a Revolutionary
Meanwhile, the history of Aoyama Trading, which operates Aoyama Tailor, began a little later than AOKI, in 1964 in Fuchu City, Hiroshima Prefecture.
The founder is Mr. Goro Aoyama.
Unlike AOKI, Mr. Aoyama's family business was a clothing store.
In other words, they were dealing in clothing from the very beginning.
From the start, Mr. Aoyama was a 'revolutionary' who broke the conventional wisdom of the industry at the time.
Back then, it was standard to buy suits at department stores or specialty shops, and they were extremely expensive.
Moreover, cash payment in full was the norm.
In response, Mr. Aoyama focused his target on the average salaryman, aiming to 'provide high-quality suits at affordable prices.'
And, just like AOKI, he introduced 'installment sales,' creating a system where anyone could buy a suit.
The company name, Aoyama, is of course derived from the founder's name, 'Aoyama'.
However, there is an interesting episode here as well.
It is said that while other company names were considered at the time of founding, the sense of cleanliness and the urban image associated with the name 'Aoyama' were judged to be appropriate for business wear in a new era.
📜 1-3. The Mystery of 'Ao'—The Fated Rivals Created by Coincidence
Now, let's return to the initial question.
'AOKI and Aoyama, why do both start with 'Ao'?'
The answer is, 'pure coincidence'.
AOKI is from Nagano, and Aoyama is from Hiroshima. Their founding periods also differ.
There is no blood relationship between the two founders.
It just so happened that the names of the two founders who would go on to lead the Japanese suit industry both started with 'Ao'.
However, since this coincidence determined the brand image of both companies and symbolized their long-standing rivalry, fate is truly stranger than fiction.
If their names had been 'Tanaka' and 'Suzuki', the industry landscape today might have been completely different.
📜 1-4. The Era of High Economic Growth and the Birth of the 'Salaryman'
The 1960s, when both companies were founded, was a time when Japan was in the midst of high economic growth.
Under the 'Income Doubling Plan' by the Hayato Ikeda cabinet, the Japanese economy expanded rapidly.
Office buildings lined the urban areas, and the number of salarymen, known as 'corporate warriors' or the 'suit-wearing tribe', surged.
For them, a suit was not just work attire, but a symbol of prosperity and a 'battle uniform' that indicated social status.
Riding this wave of explosive demand, AOKI and Aoyama steadily grew in their respective territories.
However, for them to truly become 'giants' of the industry, a revolutionary strategy was necessary.
That was the 'Roadside Strategy' that would change the landscape of Japan.
✅ Summary of Chapter 1
🔥 Key Point 1: The Founding Roots of AOKI and Aoyama
AOKI was founded by Mr. Aoki, who came from a 'kimono shop' in Nagano, with an eye toward the future era of Western-style clothing (suits). Aoyama was founded by Mr. Aoyama, who came from a 'haberdashery' in Hiroshima, and was a 'revolutionary' who brought expensive suits to salarymen.
🤝 Key Point 2: The mystery of 'Ao' is a 'complete coincidence'
The founding locations and periods of both companies are different, and there is no blood relationship. The fact that the founders' names (Aoki and Aoyama) coincidentally both started with 'Ao' became a symbol of their fated rivalry.
📈 Key Point 3: The tailwind of high economic growth
In the 1960s, the rapid increase in salarymen, known as the 'suit tribe,' created explosive demand for suits, and both companies rode the wave of growth.
Chapter 2: The Battle for Roadside Supremacy—A History of Fierce Rivalry
Having survived their founding periods, AOKI and Aoyama rapidly expanded nationwide from the 1970s onward, riding the wave of Japan's motorization (the shift to a car-based society).
The stage for this was the suburban roadside.
This strategy was what propelled them to become giants in the industry and marked the beginning of their fierce rivalry.
🚗 2-1. The distribution revolution sparked by 'Aoyama Tailoring'
It was Aoyama that pioneered this suburban roadside store strategy.
In 1974, Aoyama opened the industry's first suburban-style store in Saijo-cho, Hiroshima Prefecture (now Higashihiroshima City).
This was a revolutionary event that overturned the common sense of the time.
Back then, it was standard for men's clothing stores to be located in prime spots near train stations or in shopping districts.
However, such locations had high rent, making it difficult to secure a large sales floor area.
Naturally, those costs were passed on to the price of the products.
Goro Aoyama noticed this.
“As car culture advances, people will live in the suburbs and drive to go shopping.If we set up large stores in the suburbs where rent is cheap, we can keep costs down and, in turn, offer products at lower prices.”
This prediction hit the mark perfectly.
Boasting large parking lots and a rich selection of goods, 'Aoyama Tailor' garnered overwhelming support from families and salarymen who drove to the stores.
This was not merely a success in store opening strategy.
It was also the beginning of 'price destruction' that had a major impact on the entire Japanese retail industry.
🚗 2-2. AOKI's Fierce Pursuit and the Outbreak of the 'First Suit War'
Seeing Aoyama's success, AOKI immediately followed suit.
They opened their first suburban-style store in 1976 and accelerated their nationwide expansion.
From here, a fierce 'territorial battle' between the two companies began.
Intense competition for store openings unfolded, targeting prime locations with high traffic, such as along major national highways and near highway interchanges.
I am sure many of you have seen the sight of an 'AOKI' sign right next to an 'Aoyama Tailor' sign while driving.
That is truly a remnant of the history of this competition.
This competition was beneficial for consumers.
Because as the number of stores increased and price competition progressed, suits became more accessible.
🚗 2-3. In the Shadow of the Bubble Economy and the 'DC Brand' Boom
In the late 1980s, Japan reached the peak of its bubble economy.
The world was obsessed with luxury, and 'DC brands' (Designers & Characters brands) became a huge trend in the fashion industry.
High-end overseas brands like Armani and Versace also gained popularity.
During this period, AOKI and Aoyama were sometimes seen as somewhat 'outdated'.
What they offered were strictly practical business suits, and fashion-conscious young people did not even look at their stores.
However, they did not get swept up in trends and continued to refine their own business models.
The key to this was the construction of the 'SPA (Specialty Store Retailer of Private Label Apparel)' model.
🚗 2-4. Why Were They Able to Dominate the Market? The Weapon Known as the SPA Model
SPA is a business model that handles everything from product planning and manufacturing to sales.
While Uniqlo and ZARA are famous for this,the men's clothing industry had actually built a system close to the SPA model even before that.
They kept manufacturing costs down by dealing directly with overseas factories and mass-producing items.
And by selling directly at their own stores without going through wholesalers, they reduced intermediate margins.
Even from my perspective as a trade merchant, this system is extremely powerful.
Market needs can be quickly reflected in product planning, and inventory management can be streamlined.
And above all, overwhelming cost competitiveness can be achieved.
In the eyewear industry, companies like JINS and Zoff have been using this model since before the 80s, which is truly impressive.
This SPA model was the greatest weapon that allowed AOKI and Aoyama to leave others behind and monopolize the market.
🚗 2-5. The Bursting of the Bubble and the Deflationary Era—An Era Where 'Price' Decides Everything
Entering the 1990s, when the bubble economy burst, the situation changed completely.
Japan entered a long period of deflation, and consumers became extremely sensitive to 'price'.
The luxury brand boom faded, and companies that sold 'low prices' rose to prominence instead.
Amidst the trends of this era, AOKI and Aoyama once again found themselves in the spotlight.
The era had arrived where the cost competitiveness they had cultivated for years through the SPA model could be utilized to its fullest extent.
And an event that symbolized this deflationary era was the emergence of 'two-price suits'.
This was a sales method that narrowed down the suits in the store to two price ranges, such as '20,000 yen' and '40,000 yen,' which provided consumers with clarity and affordability, becoming a huge hit.
In this way, AOKI and Aoyama solidified their position as the 'two giants' in the Japanese suit market.
However, that era of glory did not last long.
Beneath their feet, a dramatic change in the market environment was quietly progressing.
✅ A brief summary of Chapter 2
🏆 Key Point 1: Aoyama's 'Roadside Revolution'
In 1974, Aoyama pioneered the 'suburban roadside store' strategy in the industry. By setting up large stores with parking lots in the suburbs where rent was cheap, they achieved 'price destruction' and rode the wave of motorization to great success.
⚔️ Key Point 2: The ultimate weapon, the SPA model
AOKI followed suit, and the two companies engaged in fierce competition for store openings. Even during the bubble era, they did not get swept up in trends, instead building an 'SPA model' that integrated planning, manufacturing, and sales. This allowed them to gain overwhelming cost competitiveness and dominate the market.
💰 Key Point 3: Becoming the champions of the deflationary era
After the bubble burst, during the deflationary era, their SPA model proved its true worth. As 'low prices' were in demand, products like 'two-price suits' became hits, establishing their status as the two major giants.
Chapter 3: The 'Silent Crisis' of the Suit Market and the Struggles of Both Companies
Since the 2000s, AOKI and Aoyama appeared to continue growing steadily.
However, behind the scenes, structural changes were underway that would shake their business models to their core.
That is the irresistible trend of 'moving away from suits'.
📉 3-1. Cool Biz, casualization, and the threat of Uniqlo
The first sign of this began in 2005 withthe 'Cool Biz' campaign.
As lighter summer attire was encouraged, demand for ties and jackets declined.
Furthermore, the rise of IT companies and the diversification of work styles led to the casualization of business attire.
More companies stopped requiring suits, and the 'jacket and pants' style became widespread.
And the greatest threat to them became the rise of fast fashion companies, starting with Uniqlo.
Uniqlo entered not only the casual wear market using high-performance materials but also the affordable business wear market.
Their overwhelming scale and efficient supply chain became a major threat to AOKI and Aoyama as well.
📉 3-2. Population Decline and Market Shrinkage—An Unavoidable Reality
Furthermore, from a macro perspective, the population decline due to the aging society with a low birthrate also accelerated the shrinkage of the suit market.
If the working-age population that wears suits decreases, it is a natural consequence that the market size will shrink.
Looking at the data, this trend is clear.
It is said that the domestic suit market size exceeded 800 billion yen at its peak, butit is estimated to have shrunk to less than half of that in recent years.
📉 3-3. The COVID-19 Pandemic as the Decisive Blow—The Impact of Remote Work
And then, 2020.
The COVID-19 pandemic dealt a decisive blow to the stagnant suit market.
Due to the state of emergency, people refrained from going out, and remote work spread rapidly.
There is no need to wear a suit to work from home.
A new common sense was born: 'If you are on screen, you only need to look professional from the waist up.'
During this period, both AOKI and Aoyama faced the greatest crisis since their founding.
Sales plummeted, resulting in massive deficits. They were forced to close unprofitable stores.
The entire industry was enveloped in a sense of despair, wondering if suits were no longer necessary.
📉 3-4. Struggling in the Core Business: Focusing on Made-to-Measure Suits and Women's Wear
Of course, they were not just sitting idly by.
They also implemented various countermeasures in their core suit business.
One of these was focusing on the 'made-to-measure suit' market.
While demand for off-the-rack suits is declining, there is a deep-rooted need for 'a special suit just for me.'
Made-to-measure suits have a higher unit price and can deepen relationships with customers, so improvements in profitability can be expected.
Another was strengthening the 'women's' market.
As women's participation in society advances, demand for business wear for women is expanding.
By developing this market, which had previously been underserved, they attempted to capture a new customer base.
Furthermore, they worked on developing products with new, relaxed concepts that cater to remote work demand, such as the 'Pajama Suit' launched by AOKI.
These efforts achieved a certain level of success.
As the COVID-19 pandemic settled down and foot traffic recovered, the performance of the suit business is also on a recovery trend.
However, the management teams of both companies were looking at reality calmly.
"The suit market will never return to the scale it once had."
It was this harsh recognition of reality that drove them toward the bold strategy of 'post-suit' operations.
✅ Chapter 3 Summary
🌪️ Point 1: The Triple Hardship of 'Suit Abandonment'
Since the 2000s, the suit market began to shrink due to 'Cool Biz,' the shift to business casual, and the 'threat of Uniqlo.'
💣 Point 2: The Decisive Blow of the COVID-19 Pandemic
The 2020 pandemic and the spread of remote work dealt a devastating blow to suit demand, and both companies faced a crisis unprecedented since their founding.
🧗 Point 3: Countermeasures in the Core Business and 'Harsh Recognition of Reality'
While countering with custom-made suits, strengthening women's lines, and developing pajama suits, management faced the reality that 'the suit market will never return to what it was.' This triggered the 'post-suit' strategy.
Chapter 4: AOKI's 'Entertainment Space' Strategy—The Day Kaikatsu CLUB Surpasses the Core Business
Amid the headwinds of a shrinking suit market, AOKI Holdings has undergone a surprising transformation.
They are no longer just a 'suit shop'.
They have evolved into a company that provides 'entertainment spaces'.
The symbol of this is the internet cafe 'Kaikatsu CLUB'.
🎰 4-1. Diversification Ahead of Its Time and 'Selection and Concentration'
In fact, AOKI's history of diversification is far older than Aoyama's.
Founder Hironori Aoki was eager to diversify the business from an early stage.
In the 1980s, they had already entered the karaoke business (Cote D'Azur) and the bridal business (Anniversaire).
This was a manifestation of his management philosophy of 'anticipating changes in the times'. He saw that the suit market would not grow forever and was searching for the next pillar of revenue.
He saw that the suit market would not grow forever and was searching for the next pillar of revenue.
However, early diversification was not always smooth sailing.
Due in part to the collapse of the bubble economy, management deteriorated at one point. There was a period when they were forced to carry out restructuring and focus on 'selection and concentration' of their businesses.
What AOKI learned from this experience was the importance of 'synergy with the core business' and 'competitive advantage in the market'.
🎰 4-2. The Impact of 'Kaikatsu CLUB'—The Secret to Success That Overturned Industry Common Sense
The biggest hit in AOKI's diversification strategy was the complex cafe 'Kaikatsu CLUB'.
In 2003, AOKI acquired Valic (now Kaikatsu Frontier), the company that operates 'Kaikatsu CLUB'.
Initially, it was expected to be the second pillar following the suit business, and although it declined significantly during the COVID-19 pandemic, it has now grown far beyond those expectations into the group's primary earnings driver.
Kaikatsu CLUB operates approximately 500 stores nationwide and boasts the top market share in the internet cafe industry.
Why has Kaikatsu CLUB been so successful?
The reason lies in the provision of innovative services that overturned the conventional image of internet cafes.
🌴 The 'Bali Resort' Concept
It dispelled the negative 'dark' and 'cramped' images associated with traditional internet cafes and provided a bright, clean space.
🔐 Introduction of 'Fully Private Rooms with Locks'
Capturing the needs of customers who prioritize privacy, this was introduced ahead of the industry. This led to telework demand during the COVID-19 pandemic and the acquisition of female customers.
🎯 Diverse Content
In addition to manga and the internet, they introduced various amusement facilities such as darts, billiards, and karaoke (One-Two Karaoke), establishing their position as a 'time-consumption' leisure facility.
Kaikatsu CLUB succeeded in providing a 'comfortable space' that can accommodate various purposes, rather than just a place to 'kill time'.
🎰 4-3. The 'Entertainment Business' Driving Performance
Looking at the latest earnings trends of AOKI Holdings, the transformation is clear.
Of the group's total sales, the ratio of the fashion business to the entertainment business, which includes Kaikatsu CLUB and Côte d'Azur, has become nearly half and half.
However, what is noteworthy is the profit composition.
It is not uncommon for the operating profit of the entertainment business to exceed that of the fashion business.
AOKI has successfully achieved 'independence from suits' and built a stable revenue base.
🎰 4-4. AOKI's True Strength: Maximizing 'Location' and 'Know-How'
The cleverness of AOKI's diversification strategy lies in the fact that they thoroughly pursue synergies with their core business.
They utilize the site selection know-how they cultivated through the development of roadside stores for opening Kaikatsu CLUB and karaoke locations.
Furthermore, in a very interesting strategy, they are also advancing a plan to convert surplus space in existing suit stores or unprofitable locations into Kaikatsu CLUB or the 24-hour fitness gym 'FiT24'.
By doing this, they are maximizing the use of their existing infrastructure and achieving efficient business expansion.
AOKI redefined their strength not as 'selling suits,' but as 'developing stores and operating comfortable spaces.'
This shift in perspective can be said to be the key to their success.
✅ Chapter 4 Summary
🚀 Point 1: AOKI Transforms into an 'Entertainment Space' Company
Overcoming the slump in the suit business, AOKI has evolved into an entertainment company that operates 'Kaikatsu CLUB' and karaoke businesses. Today, the entertainment business has become a major earner, matching or even exceeding the suit business in both sales and profit.
🔑 Point 2: The Innovative Success of 'Kaikatsu CLUB'
'Kaikatsu CLUB,' acquired in 2003, overturned the conventional wisdom of internet cafes with innovations such as 'Bali-style resorts,' 'lockable private rooms,' and 'diverse content,' establishing the top market share in the industry.
💡 Key Point 3: Redefining Strengths and Synergy
The key to AOKI's success was leveraging the 'roadside store location selection know-how' cultivated in its core suit business for its diversified businesses. By converting unprofitable stores into Kaikatsu CLUB, they redefined their core strength as 'store development and space management,' creating maximum synergy.
Chapter 5: Aoyama's 'Franchise' Strategy—The Reason for Developing Yakiniku King and 2nd Street
While AOKI adopted a 'self-sufficiency' strategy of launching and operating its own entertainment businesses, Aoyama Trading pursued diversification with a completely different approach.
That is the 'franchise (FC)' strategy.
Why did Aoyama embark on operating 'Yakiniku King' and '2nd Street'?
Behind this lay their own meticulous calculations.
🤝 5-1. Differences from AOKI—Not 'Self-Sufficiency' but 'Relying on Others'?
The characteristic of Aoyama Trading's diversification strategy is that it joins franchises of other companies with growth potential and focuses entirely on their operation.
Currently, the main FC businesses they are involved in are as follows.
🔥 Yakiniku King, Yuzu-an (Monogatari Corporation)
A popular all-you-can-eat yakiniku restaurant, and a sushi and shabu-shabu restaurant.
♻️ 2nd Street (Geo Holdings)
A general reuse shop dealing in clothing, miscellaneous goods, etc.
🏋️ Anytime Fitness (Fast Fitness Japan)
A 24-hour fitness gym.
These are all powerful brands that boast top-class market share and growth potential in their respective industries.
"Why don't you launch a new brand in-house?"
"Aren't you just using someone else's success to your advantage?"
You might think so.
However, this franchise strategy has clear advantages.
🤝 5-2. Advantages of the franchise strategy: A low-risk, high-efficiency growth model
Launching a new business from scratch involves enormous time, cost, and risk.
Building a brand, developing products or services, and establishing operations.
If you fail in that process, you will suffer significant losses.
On the other hand, with a franchise strategy, you can leverage an already established brand and a business model with proven success.
Since you can also receive support from the headquarters, the hurdle for new entry is significantly lowered.
By choosing this franchise strategy, Aoyama succeeded in efficiently expanding its business domain while keeping risks low.
🤝 5-3. Aoyama's "true strength": A professional group of store operators
So, is Aoyama just relying entirely on the franchise headquarters?
That is absolutely not the case.
They possessed a powerful weapon to make their franchise strategy a success.
That was the 'store development and management know-how' they had cultivated through years of selling suits.
Site selection, store design, staff recruitment and training, and daily operations.
These fundamentals remain the same whether it is a store selling suits, a restaurant grilling yakiniku, or a shop handling recycled goods.
Aoyama understood that their core competence lay in 'store management.'
And it was the franchise strategy that allowed them to maximize that strength.
In fact, it is said that the 'Yakiniku King' and 'Second Street' stores operated by Aoyama boast higher sales and profit margins compared to stores operated by other franchisees.
They are truly a 'professional group of store operators'.
🤝 5-4. Contribution to Performance and Promotion of 'Portfolio Management'
This franchise strategy has also contributed significantly to Aoyama's performance.
The food service business, which operates 'Yakiniku King' and others, and the reuse business, which operates 'Second Street' and others, performed steadily even during the COVID-19 pandemic, playing a role in covering the decline in the suit business.
Aoyama has set forth the 'promotion of business portfolio management' in its medium-term management plan.
This is the concept of aiming for stable growth by diversifying risks through a combination of multiple businesses, rather than relying on a specific one.
The franchise strategy has become an important pillar for realizing this portfolio management.
🤝 5-5. Challenging In-House Brands—Seeds for New Growth
Of course, Aoyama does not rely solely on its franchise strategy.
For example, in its business wear segment, it has developed new concept stores targeting younger demographics, such as 'THE SUIT COMPANY'.
It is also working to strengthen its own brands, such as by acquiring the custom suit specialty store 'Azabu Tailor'.
Furthermore, it has recently begun venturing into new fields, such as self-developed casual clothing brands and shared office businesses.
By leveraging the know-how and revenue base cultivated through its franchise strategy, it is sowing the seeds for its next phase of growth.
AOKI's 'In-House Principle' vs. Aoyama's 'Franchise Strategy'
Neither is necessarily superior to the other.
What is important is to choose the optimal strategy that aligns with your company's strengths and the market environment.
In the next chapter, let's consider the lessons we as small and medium-sized enterprises should learn from the examples of these two companies.
✅ Chapter 5 Summary
💡 Key Point 1: Aoyama's 'Franchise (FC)' Strategy
In contrast to AOKI's 'in-house principle,' Aoyama chose a strategy of becoming a franchisee for powerful third-party brands, such as 'Yakiniku King' and 'Second Street'.
📉 Key Point 2: Low-Risk, High-Efficiency Growth
The advantage of a franchise strategy is that it allows you to leverage established brands and business models, thereby significantly reducing the risks and costs of new ventures and efficiently expanding your business domain.
💪 Key Point 3: The True Strength Lies in 'Store Management Know-How'
Aoyama's success stems from horizontally deploying their core competence—'store development and management' cultivated through years of suit sales—into their franchise business. As 'professionals in store management,' they achieved high performance and built a stable portfolio that covers the decline in their suit business.
Chapter 6: [Lessons for Managers] How We Small and Medium-Sized Enterprises (Individuals) Should Act
AOKI and Aoyama.
The brilliant survival strategies demonstrated by these two giants offer many insights for us as small and medium-sized enterprise managers and sole proprietors.
What should we learn to ride out the rough waves of changing market environments?
🔑 6-1. Escape the 'Curse of the Core Business'—Redefining Your Business Domain
The most important lesson is to escape the 'curse of the core business'.
Many managers are bound by the stereotype that 'we are a [specific] shop,' which tends to narrow their company's potential.
If AOKI and Aoyama had also clung to the perception that 'we are a suit shop,' they would not have achieved today's success.
They redefined their business domains (business areas).
AOKI shifted from a 'company that sells suits' to a 'company that provides entertainment spaces.'
Aoyama shifted from a 'company that sells suits' to a 'professional group of store managers.'
This shift in thinking is what led them onto a new growth trajectory.
What is your company's 'core business'?
Is that truly the value your customers are seeking?
Are you clinging to an outdated sign?
Sometimes, you need the courage to discard past success stories and re-examine your company's reason for existence from a zero-base.
🔑 6-2. Identify Your Company's 'True Strengths (Core Competencies)'
To succeed in diversification, it is essential to identify your company's 'true strengths,' or core competencies.
What AOKI and Aoyama had in common was the strength of their 'store development and operation know-how'.
They increased their probability of success by expanding into fields where they could leverage this strength (internet cafes, yakiniku restaurants, and recycle shops).
If they had ventured into areas completely unrelated to their strengths, such as IT ventures or real estate development, they would likely have failed.
What is your company's 'true strength'?
Is it something that can be leveraged in other industries or fields?
Objectively analyze your company's strengths and choose a 'battlefield' where they can be utilized.
That is the first step in a diversification strategy.
🔑 6-3. 'In-house Development' or 'Leveraging External Resources'—Choosing a Strategy
When pursuing diversification, should you take the 'in-house' approach of launching brands yourself like AOKI, or the 'leveraging external resources' approach of using franchises like Aoyama?
This is an important strategic choice.
🚀 Self-Reliance Model (AOKI Model)
Pros: High profit margins, ability to control the brand, and accumulation of unique know-how.
Cons: High risk, time-consuming, and large initial investment.
🤝 Leveraging Others (Aoyama Model)
Pros: Low risk, ability to expand the business in a short period, and utilization of an established business model.
Cons: Low profit margins, dependence on headquarters, and low level of freedom.
Neither is necessarily the 'correct' answer.
It is necessary to choose the optimal strategy based on your company's management resources (people, goods, and money) and the vision you aim to achieve.
For small and medium-sized enterprises, it can also be effective to start with the low-risk 'leveraging others' approach, and then use the know-how and capital gained there to challenge the 'self-reliance' model in the future.
🔑 6-4. Do Not Fear Change—Jump Before You Become a 'Boiling Frog'
Finally, the most important thing is not to fear change.
The suit market shrank slowly over time.
Amid such gradual changes, many companies feel a sense of crisis but are unable to take drastic measures, eventually becoming too late.
This is called the 'Boiling Frog Syndrome'.
AOKI and Aoyama made the decision to jump out of the boiling water themselves before they became 'boiled frogs'.
That courage and ability to execute are their greatest keys to success.
Change is always happening.
Only companies that can adapt to those changes and continue to transform themselves can survive.
✅ Chapter 6 Summary
💡 Key Point 1: Escape the 'Curse of the Core Business' and Redefine Your Strengths
AOKI redefined its business domain as 'space provision,' while Aoyama redefined its as 'store operations.' It is crucial to discard the fixed idea that 'we are just a [product] shop' and identify what your company's 'true strength (core competence)' really is.
⚖️ Key Point 2: Choose Between 'In-House Development' or 'Leveraging External Resources'
AOKI (in-house development) is high-risk, high-return. Aoyama (utilizing franchises) is low-risk, low-return. It is not about which is superior, but about choosing a strategy that aligns with your company's management resources and vision.
🏃 Key Point 3: Don't Fear Change; Act Before You Become a 'Boiling Frog'
Faced with the crisis of a slowly shrinking market (the move away from suits), both companies embarked on bold diversification before it was too late. The courage and execution power to adapt without fearing change are the keys to survival.
🏁 Epilogue: Change is the Condition for Survival—The Courage to Take Down the 'Suit Shop' Sign
Well, thank you for staying with me for so long.
'Are AOKI and Aoyama part of the same group?'
This journey began with that simple question.
Behind it lies the story of the transition of Japan's economic society from the period of high economic growth through the bubble era and the deflationary period, all the way to the COVID-19 pandemic, and the story of two companies that survived shrewdly while being tossed about by these changes.
Their history offers us an important lesson.
As Darwin's theory of evolution suggests,
'It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.'
That is what it means.
No matter how robust a business model may be, it becomes obsolete as times change.
If you cling to past successes and refuse to change, decline is inevitable.
AOKI and Aoyama sought to survive by going beyond the framework of being 'suit shops,' redefining their strengths, and challenging new markets.
Their strategies were contrasting, but the 'adaptability to change' at their core is common to both.
This also applies to each and every one of us.
In an era of rapid change, we must continue to learn and keep transforming ourselves.
Now, why don't we also stop fearing change and start taking on new challenges?
I hope today's story serves as a hint for doing just that.
✍️ A word from Twi-Tori
If you found this article helpful, I would be encouraged if you could support me with a 'Like' or 'Follow'.
I share deeper, more timely economic analysis and the behind-the-scenes of business that cannot be written publicly exclusively for members.
【Information on Twi-Tori's Exclusive Community 'Ura-Yakitori Yokocho'】
In this article, I have delved into the theme of 'AOKI and Aoyama's Survival Strategies' from both historical and strategic perspectives.
However, there are still many points that have not been fully discussed.
For example,
Concrete examples of 'mini-diversification strategies' that small and medium-sized enterprises can implement
How to identify your 'core competence'? Practical frameworks
Future predictions for roadside businesses and the next growth sectors
and other deeper, more practical information will be released in membership-exclusive articles.
In my membership program, 'Ura-Yakitori Yokocho' (Hidden Yakitori Alley), I share information that cannot be made public, insights useful on the front lines of business, and analyses mixed with my own real-life failures.
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【Author Profile】
I, Twi-dori, also known as 'Cokumu George,' run a trading business in the Hokuriku region while working on projects that shed light on the 'gaps' in society, as written about in this article.
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[Special Free Report] Introduction
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[Author Introduction]
The author of this article, 'Kokumu-George' (also known as 'Twi-Tori'), is a trader who, in his daily life, imports products and plans merchandise while communicating with vendors from various countries in the Hokuriku region.
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Also, as a business copywriter, I am involved in the production of product copy and descriptions. However, the case studies and commentary introduced here are structured based on the unique perspective of 'Twi-tori'—leveraging insights into the latest technology and AI, conducting research through academic papers and research reports, drafting, and brainstorming. Since much of the content within the article is AI-generated, this is not traditional copywriting work, but rather an activity as a different type of author.
Furthermore, Twi-tori also regularly introduces the latest papers, research results, and case studies on X (formerly Twitter, https://x.com/596), allowing readers to freely enjoy new insights and inspiration. This note contains a variety of content created through the collaboration of AI and humans. As a new form of next-generation reading material, please take a look at other articles, follow me, and enjoy the latest information.
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[About the content generation of this article]As mentioned in the author introduction, this article also utilizes advanced AI tools such as ChatGPT (OpenAI), Claude (Anthropic), and Gemini (Google) to conduct research on academic papers and research reports, as well as for drafting and brainstorming. The generated text is used as a first draft in accordance with the terms of service of each respective service.
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My heartfelt thanks to each of the AI tools that contributed significantly to the generation of this article. And my heartfelt thanks to the readers who have read this far.
[Important Notes]
1. The content of this article includes the author's personal views and hypotheses. These may not necessarily align with general perceptions or the opinions of experts.
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