Japan’s Department Store Chains Consolidate in Big Cities in Attempt to Halt Sliding Revenue

Sales Decline at 53 of the 78 Department Store Chains

Overall sales at Japan’s 78 department store chains fell by 0.087% to ¥5.99 trillion in 2018, marking the second straight annual decline. Although less serious than the 3.1% fall in 2017, nothing seems to be stemming falling revenue. Reduced costs, however, meant that the industry made an overall profit of ¥17 billion in 2018, compared with a loss of ¥4.6 billion the previous year.

Among the 78 chains, 25 saw year-on-year revenue gains, while the remaining 53 posted lower revenue than in the previous year. In other words, a relatively small minority of chains posted strong results that lifted the industry as a whole, whereas roughly 70%, saw year-on-year drops in revenue.

Takashimaya Leads the Pack for Sales

The leader in sales for 2018 was Takashimaya, a nationwide department store centered in the Tokyo metropolitan and Kansai areas. The company’s cumulative sales for the year were ¥724.6 billion, a 3.06% year-on-year increase. Sogō & Seibu was the runner-up with ¥685.9 billion in sales, followed by Isetan Mitsukoshi Holdings at ¥673.9 billion, and Daimaru Matsuzakaya Department Stores at ¥673.1 billion.

Top Selling Japanese Department Store Chains in 2018

Compiled by Nippon.com based on data from Tokyo Shōkō Research.

Major Firms Concentrating Resources in Flagship Stores

Nationwide department store chains are scrambling to restructure slumping stores located in regional cities. They are concentrating their resources at flagship stores in central Tokyo, where demand is expected from the upcoming Olympics and from foreign tourists and visitors, and in some cases, this has led to an upturn in business performance. Meanwhile, revenue has been falling among many of the independent local department stores that have long been familiar to area residents. A disproportionate number of these stores are in the red.

Over the past few years, department stores located in suburbs and regional cities have been steadily closing. Shuttered department stores since 2018 include the Isetan store in Matsudo, the Seibu stores in Funabashi and Odawara, and the Maruei store in Nagoya. Already in 2019, the decision has been made to close the Isetan stores in Fuchū and Sagamihara, and the Mitsukoshi store in Niigata.

Some of the factors underlying the struggles of regional department stores include the extended slump in spending among consumers, the spread of e-commerce, and changing trends in consumption. Another problem has been the shift to suburban shopping malls as population decline has contributed to a hollowing out of the central districts of some regional cities.  

(Translated from Japanese. Banner photo: A cosmetic counter at the Matsuya Ginza store in Tokyo. Photo taken on February 6, 2019. © Jiji.)