Japan supermarket sales fall 1.1% in May

June 23, 2008
By Ken Worsley

Japan’s supermarket sales fell for the second consecutive month in May, dipping 1.1% to 1.095 trillion yen, according to the Japan Chain Stores Association. These figures follow a 0.8% fall in April. Actually, when new shops (those opened within the past year) are included in the data, supermarkets saw a 6.4% decline in sales.

As we are seeing almost every month, outside of food sales, supermarkets are not doing very well at all. Here is a breakdown of May’s adjusted figures:

Food: +1.2%, 62.0% of total revenue
Household Products: -3.8, 20.2% of total revenue
Clothing: -8.6%, 11.7% of total revenue
Miscellaneous Items: +2.3%, 5.8% of total revenue
Services: -10.4%, 0.3% of total revenue

Sales per square meter fell 3.2% to 48,559 yen.

First reaction: Supermarket sales and department store sales for May show quite a few parallels. Both saw an increase in food sales (1.2% at supermarkets and 2.4% at department stores), while both saw decreases in clothing sales (-8.6% at supermarkets and -5.8% at department stores). Both also saw declines in sales of household goods and products (-3.8% at supermarkets and -5.4% at department stores).

Although we do not yet have household spending data for May, it seems more and more clear that increased energy and food costs are causing households to hold back on other parts of their budgets. While we are already seeing this effect in terms of reduced spending on durable and semi-durable goods - and more recently, services, such purse-tightening plainly appears to be spilling over into the clothing and household goods categories.

Firms have taken notice of these trends: a recent survey jointly carried out by the Cabinet Office and Ministry of Finance saw sentiment amongst Japan’s large firms hitting an all-time low (this poll has been carried out since 2004).

Side note: Back in April we noted that Seven-Eleven Japan had raised its percentage of domestically-sourced vegetables for its bento meals to 93%. Earlier this month, we heard that Seven & i Holdings, the parent company of Seven-Eleven, intends to go into the farming business by itself. Seven-Eleven’s publicly stated goal: “We hope to contribute to raising Japan’s food self-sufficiency.”

Not a word yet about saving their own supermarket operations.

Filed Under Economic Reports, Retail, Supermarkets