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Japan’s nationwide department store sales down 2.7% in May

With the balance of assets at Japan’s households reported to have declined 3.6% in fiscal 2007, consumer confidence near all-time lows, and household spending sluggish, it comes as no surprise that Japan’s nationwide department store sales registered a 2.7% decline in May. Japan’s department store sales have been posting declines since February, when they registered a 0.9% gain on the back of strong food sales. As January’s sales were down 2.1%, February is thus the only month this year to have seen a rise in sales, and even that was less than one percent. Japan’s department store sales have fallen for eleven consecutive years on a nationwide basis.

Before we get into anything else, here’s a breakdown for May sales figures by category:

• Clothing: 37.7% of total sales, down 5.8%
• Personal Effects: 13.7% of total sales, down 5.8%
• Miscellaneous Goods: 15.0% of total sales, down 2.0%
• Household Goods: 5.4% of total sales, down 3.5%
• Food: 22.7% of total sales, up 2.4%
• Services: 1.1% of total sales, up 0.3%
• Other: 1.6% of total sales, down 7.3%

What we see here is that food is the only major category helping to prop up department store sales at all. In the wake of the past year’s worth of food scandals, could it be that Japanese consumers see department stores as trustworthy places to buy food?

(On a side note, we learned today that Seven & i Holdings, the parent company of convenience store chain Seven-Eleven and supermarket operator Ito Yokado, intends to set up its own farms in order to grow food that it can guarantee the safety of. Seven & i plans to set up about ten farming companies in order to supply its Ito Yokado outlets.)

Back to department store sales: Aside from food, they are dismal, and have been so for some time. However, every time there are negative department store sales we hear the same old tired excuses from the Japan Department Stores Association: Bad weather conditions. Recently, the JDSA has been citing economic conditions and weakened consumer sentiment as factors leading to the decline in sales, which they both certainly are. The weather excuse, however, seems disingenuous, and one is forced to wonder why major media continues to report it uncritically. The JDSA must be aware of longer-term trends at work in the market (the decline in population and the fact that the number of single-person households is growing), as well as other factors more grounded in the here-and-now (the move toward high-street shopping and mixed-use facilities in the major cities, as well as the growth in the “outlet” industry (yes, “outlet” is in quotes for a reason)).

As noted on the most recent BizCast Japan, department stores in the Ikebukuro, Shinjuku and Shibuya areas of Tokyo have made massive investments in facility upgrades over the past few years, all in anticipation of an influx of customers from Tokyo Metro’s newly-opened Fukutoshin Line. That could help make the next few months worth of statistics interesting to watch. Take note: in May, sales at the 28 major department stores in Tokyo fell 2.3%.

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