Japan - Department Store Sales Fell Sharpest in 10 Years

In December 2008, low consumer confidence as a result of financial recession pushed the sales at department stores in Japan to 10-year steepest fall.

According to the Japan Department Stores Association, department store sales in Japan declined to JPY 794.7 Billion ($8.76 Billion) in December 2008, suffering a YOY fall of 9.4%, the sharpest downturn in the country in over a decade, as reported by RAPAPORT NEWS.

As compared to 2007, sales at Japanese department stores plunged 4.3% to JPY 7.38 Trillion ($81.45 Billion) in 2008. It marked the 12th year in a straight row for the country’s declining department store sales. During the same period, 4.8% decline was recorded in jewelry sales. Sales at Tokyo’s department stores plummeted 10.4% in December 2008, thus resulting in an overall drop of 4.1% in 2008 against 2007.

Department store retail sales declined in the country in December 2008 due to the griming economic recession, which restrained the consumers from spending on discretionary items. Additionally, slowdown in sales of clothing is also a leading cause for the decline as clothes are major sales item in the department stores.

Japanese economy has been in a difficult situation for past several years and the recent recession has aggravated the problems. Upscale retailers are bearing the worse consequences as majority of them are cutting down their profit outlooks. This is due to weak consumer confidence, which sank to the record levels, due to increasing concerns among the Japanese consumers about their job security and income.

Moreover, the impact of low consumer confidence is more prominent on department stores; so they’re losing out to other retail formats. The aging population and increasing preference of consumers to shop at specialty retail stores have already been hitting the business of several Japanese departmental stores since 2007 autumn.

Additionally, the fall of stock market in October 2008 contained the spending of high-end consumers. Afterwards, the financial turmoil extended its reach to the Japanese real economy as several companies are cutting down jobs and reducing production to combat the situation.

According to a Research Analyst at RNCOS, “Low consumer expenditure due to ongoing credit crunch has resulted into the decline in retail sales at the Japanese departmental stores. The industry will continue to experience the recession pain as the present economic conditions are unlikely to improve in near future.”

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