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Nikkei: “Devastation” awaits department stores in 2010

February 10, 2010
By Ken Worsley


The Nikkei certainly isn’t mincing words when it comes to describing the state of Japan’s department store industry. In an article entitled “More Devastation Awaits Dept Stores In ‘10,” the paper made its case for why the department store industry might see a record number of closures over the coming year.

The Nikkei points out that after five department stores had been shutting down each year, that number rose to nine in 2009 and ten are already scheduled to close this year. The current all-time high is 15 closures in 2000. That was the year in which department store giant Sogo collapsed.

According to Teikoku Databank, about 40% of Japan’s 83 department store operators were in the red in 2008. The Nikkei estimates that as many as 90% of those firms could have dipped into the red in 2009.

Although the Nikkei offers little speculation on the future direction of Japan’s department stores, it hints that more of them will simply be renting space to smaller shops in the coming years. Meanwhile, Credit Suisse estimates that over 20% of the 74 department store locations abandoned between 2000 and 2009 remain unoccupied because there simply is not enough demand in “smaller cities” for another retail firm to take on the space.

Most tellingly for department stores could be the situation at Isetan’s Kichijoji location. Since announcing a going-out-of-business sale on January 13, the store has been overrun with shoppers and has already reportedly made 20% of last year’s total sales.

Perhaps the best sales growth strategy for department stores is to hold more closeout sales.

Filed Under Business, Retail 

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Comments

2 Responses to “Nikkei: “Devastation” awaits department stores in 2010”

  1. tokyoitte on February 11th, 2010 12:01 pm

    Department stores are surviving in other parts of the world, they are not
    suffering much!
    Look at Macy’s and Fifth Avenue! They are doing well!

    Dallas, Texas is a good example of department stores surviving!

    Department stores are important for the economy
    We need them, they need us!

    Would really seriously hate to see this world become a poor country with nothing but
    the cheap out there! Going from rich to poor? wake up people!
    Feeling like such a loser :-(

    It’s totally sad we are really that much in the Depression!

  2. TARA TAN KITAOKA. on March 28th, 2010 11:01 pm

    Sometimes, going back to basics is very important. U are not going forward if
    u feel that the things around u that are important to u are disappearing.

    Think, u will get to where things should be. Real work has to be done or…………..
    Japan will be a cold country to live in, because only money lives and human
    beings are a means to it.

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