CORRECTED: 4TH LD: Daiei founder Nakauchi dies of stroke at 83.

OSAKA, Sept. 19 Kyodo

Isao Nakauchi, the founder of Daiei Inc. who turned a small drugstore into Japan's largest supermarket chain and later saw his retail empire crash through over-expansion in the bubble economy years, died of a stroke in Kobe on Monday. He was 83.

The University of Marketing and Distribution Sciences, founded by Nakauchi, said he died at 9:30 a.m. at a Kobe hospital. He had been in a coma since he suffered a stroke late August, the hospital said Thursday.

Nakauchi, a native of Osaka, began selling medical products in Kobe with his father after returning to Japan from the World War II battlefields in the Philippines.

Nakauchi, who later won fame as a pioneer of discount retailing, turned Daiei into the country's biggest retailer in terms of sales in 1972 from a single drugstore he opened in 1957 in Osaka, initially called the Housewives' Store Daiei Co.

In 1980, Daiei became the first Japanese retailer to exceed 1 trillion yen in sales.

Daiei's financial standing rapidly deteriorated after the collapse of the bubble economy. During the asset-inflated economic era in the late 1980s, Daiei aggressively expanded its business -- from the purchase of a professional baseball team to resort hotel management.

Daiei is now rehabilitating under the state-backed Industrial Revitalization Corp. of Japan, concentrating on its supermarket business while backing off from the Nakauchi-era strategy of discounting and nationwide outlet networks.

Nakauchi's policy of selling ''a large amount of good things at cheaper prices'' once served as a driving force in making Daiei Japan's No. 1 retailer but now fails to adequately respond to diversified consumer tastes.

In 2004, Nakauchi sold all his shareholdings in Daiei group companies to take the blame for their financial trouble. He also stepped aside from Daiei's honorary post of ''founder.''

In addition to having taken the post of chairman, president and chief executive officer at Daiei, Nakauchi served as a vice chairman of the Japan Business Federation between 1990 and 1995.

After giving up the right to represent any of the companies in the Daiei group in 2001, Nakauchi had been serving as the head of Nakauchi Gakuen, an educational corporation that runs the university.

Nakauchi suffered a stroke on Aug. 26 and had been undergoing treatment at the Kobe hospital.

He gave the last lecture on July 8 at the university for students wanting to become entrepreneurs, stressing the importance of English and information-technology skills for succeeding after graduation, according to university officials.

A private funeral service only for Nakauchi's relatives will be held, said university officials, adding that it will consider on Tuesday or afterward whether to hold a service on its own.

Commenting on his death, Daiei President Yasuyuki Higuchi and Chairwoman Fumiko Hayashi said in a jointly issued statement that Nakauchi had pursued a ''marketing revolution from the standpoint of consumers.''

They pledged efforts to be made by all Daiei officials and employees as a whole to revive the struggling retailer.

Supermarket chain Ito-Yokado Co. Chairman Toshifumi Suzuki said, ''He was an epoch-making reformer who was the first to foresee the arrival of the mass consumption era, develop the new business of all-around supermarkets and materialize the popular dream of an affluent consumer lifestyle.''

Koshi Mizukoshi, chairman of the Kobe Chamber of Commerce and Industry, where Nakauchi was vice chairman for 12 years from 1979, described hearing the news of his death as like seeing a big falling star since Nakauchi had defined the era of the distribution revolution.