Browse > Home / Business, Department Stores, Retail / Japan’s department stores out of ideas, intend to target young customers

Japan’s department stores out of ideas, intend to target young customers

August 18, 2008
By Ken Worsley


Japan’s nationwide department store sales have declined for eleven years in a row. In June, they fell 7.6% year-on-year, and in May they slid 2.7%. February is the only month so far in 2008 to have seen a rise in department store sales, and that was by less than one percent. It seems to safe to say that 2008 is not going to be the year when department store sales turn around.

Yet, food sales have been rising month after month. In June, food sales made up 28.4% of all sales at departments stores, comprising the second largest category after clothing, which represented 34.0% of all sales in June. Sales of clothing fell 14.0% against June of 2007.

With clothing sales being pounded over recent months, department store operators in Tokyo have been pouring massive investments into their stores in order to upgrade facilities. Some of this - particularly in Tokyo’s Ikebukuro, Shinjuku and Shibuya areas - has been motivated by the opening a new subway line. Yet, the approaches taken have been inconsistent. Some department stores have declared that capital investments were being made to cater to senior citizens, others have announced upgraded areas for women’s clothing.

One might think simply, “They don’t know what to do.” Today’s Nikkei seemed to confirm that suspicion with the headline Department Stores Plan Renovations To Lure The Young.

This seems as though a move from beyond desperation. The Nikkei puts it simply:

Department store operators tend to cater to middle-aged and older consumers. Faced with sluggish sales of relatively expensive items, however, these retailers will now offer more products that younger consumers can afford.

Ouch.

Shibuya’s Tokyu Department store is spending 180 million yen for a renovation that it believes will lead to a 10% increase in sales. Generally, department stores who have announced this strategy appear to be targeting women in their 20s. Shinjuku’s Odakyu department store is spending 150 million yen - a fraction of the 8.5 billion yen it intends to spend overall by the end of fiscal 2009 - in order to create a new section of products designed to appeal to women in their 20s.

We would love to see the reports leading to the conclusion that such a move could result in a 10% increase in sales. With the way that declining department store sales are blamed on bad weather by the Japan Department Stores Association month after month, it would almost seem to make more sense to invest the money in a weather control machine at this point.

Or they could invest in new brands to open as small, niche-based shops. Nah.

Filed Under Business, Department Stores, Retail 

Social Bookmarks:
del.icio.us:Japan's department stores out of ideas, intend to target young customers digg:Japan's department stores out of ideas, intend to target young customers newsvine:Japan's department stores out of ideas, intend to target young customers furl:Japan's department stores out of ideas, intend to target young customers reddit:Japan's department stores out of ideas, intend to target young customers
Related Posts:
Tokyo, Nationwide Department Store Sales Down in July
Japan’s April Department Store Sales Down 1.3%
Japan’s Department Store Sales Down 1.5% in March
Strong food sales push up Japan’s February department store sales
Japan’s Department Stores see Surge in June Sales

Comments

5 Responses to “Japan’s department stores out of ideas, intend to target young customers”

  1. Contrarian on August 19th, 2008 7:18 am

    I can’t believe that they weren’t already trying to cater to young women.

  2. Ken Worsley on August 19th, 2008 11:26 am

    Almost nothing about the article seems to make much sense. It reads like a PR piece reminding the public that department stores still exist.

  3. RMilner on August 19th, 2008 6:33 pm

    Given Japan’s ageing demographic and increasing resistance of its young people to the traditional sarariman lifestyle, it seems like a bad long term strategy to focus marketing efforts on this particular segment.

  4. Ken Worsley on August 19th, 2008 11:11 pm

    RMilner, I agree fully, and that was pretty much what I was thinking when I read the article. But the problem is I don’t know if it’s even true. We’ve heard figures in the billions of yen projected for department store improvements over the coming 5-10 year period, and thus far the target market has always been stated to be seniors and middle aged people.

    Suddenly we hear that department stores are making a push for younger shoppers and plan to spend something in the range of 150 million yen? It doesn’t add up.

  5. WG on August 21st, 2008 2:01 pm

    I doubt this is serious. If there’s one market demographic that has no money, it’s young people. Department stores in Tokyo don’t have either the cool factor nor the price factor that their competitors will.

Got something to say?