Japanese Department Store Sales Fall by a Third in 20 Years

Japanese department stores had another disappointing year in 2018. According to figures compiled by the Japan Department Stores Association, sales for retailers totaled ¥5.887 trillion, marking a 0.8% year-on-year decline. Factors contributing to the decrease in sales include diminished personal consumption due to a string of natural disasters since the summer season, including landslides and floods in Western Japan and a major earthquake in Hokkaidō.

Department stores sales have continued to edge downward and have remained under ¥6 trillion for the past three years, a far cry from the more than ¥9 trillion logged in 1998. Some experts point to slumping sales as proof that department stores must revamp their business models to meet changes in the consumer market or risk closing their doors for good.

Department stores once occupied a prestigious position in the retail industry, but have had their value eroded by the spread of online shopping. So-called ekinaka outlets, shopping complexes inside train stations, have also eaten into department store profits. These markets primarily sell food and specialty items, and have expanded sales by tapping into the diverse consumer needs of Japanese commuters.

Apparel sales at departments stores were down year-on-year by 3.1%, household goods fell by 5.7%, and factors like the growing popularity of ekinaka complexes contributed to a 1.9% decline in food sales. One bright spot has been cosmetics, which rose year-on-year by 9.5%, bolstered by strong demand from foreign tourists.

Japan welcomed a record number of foreign tourists in 2018, and shopper from overseas accounted for a greater number of customers at department stores, rising by 28.6% to 5.24 million. Spending by foreign travelers increased by 25.8%, reaching a record ¥339.6 billion.

(Translated from Japanese. Banner photo © Jiji.)