The department store was a major format that dominated the retail world before the Second World War; it provided modern, Western-style shopping experiences by opening up modern buildings full of modern technologies, introducing modern store operations and inspiring images of the current Western lifestyle, although the products handled were mixed collections of traditional and modern Western styles. This chapter will consider the birth and development of Japanese department stores before the Second World War, mainly focusing on the leading department store, Mitsukoshi. In contrast with the famous ‘wheel of retailing’ model (McNair 1931, Hollander 1960) (innovative retailers entering the market as lowstatus, low-margin, low-price operators, and ‘trading up’ the quality of merchandising handled, to mature as high-cost, high-price merchants), the Japanese department store originally appeared as a high-status, high-price, full-service retailer, and ‘traded down’ its merchandise in competition with other department stores, resulting in price-conscious marketing. This chapter will explore how the Japanese department store emerged as a high-status retailer who appealed with modern Western images to upper middle class consumers, and how it became popularised and spread beyond both the limited class and the big cities. In the process of development, the department store became the social institution that diffused the new shopping style and experiences to a much wider consumer base and included provincial cities.