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

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.

Japan convenience store sales up 4.2% in June, higher sales projected for July

While sales at both department stores and supermarkets continued to flounder in June, sales at convenience stores rose 4.2% year-on-year in June after having posted a 3.7% increase in May. According to data released by the Japan Franchise Association, sales at the nation’s convenience stores came to 648.7 billion yen in June, which was just lower than the 648.8 billion yen seen in May.

The future looks even brighter for convenience store sales. Reuters is reporting that the Taspo ID system, which must now be used nationwide to purchase tobacco products at vending machines, is providing a boost to tobacco sales at convenience stores. July’s sales increases are projected to surge into the double digit range.

Share prices at major supermarket chains Family Mart and Lawson are up 22% over the past quarter, as the market anticipates what could be the highest sales growth posted in the past decade at many convenience store operators.

One interesting part of the Reuters article: While department stores and supermarkets continue to blame bad weather for their decline in sales, “price hikes at supermarkets and favourable weather have helped sales [at convenience stores].”

Of course, growth from tobacco sales will be filtered out of the system in a year’s time, and Japan’s convenience store chains are still going to have to find ways to continue increasing revenue, which means we still expect to see Japanese convenience store firms make further attempts to establish overseas operations.

Japan’s June supermarket sales down 0.9%

Japan’s supermarket sales fell for the third consecutive month in June, sliding 0.9% to 1.08 trillion yen, according to the Japan Chain Stores Association. These figures follow a 1.1% fall in May. Actually, when new shops (those opened within the past year) are included in the data, supermarkets saw a 5.0% decline in sales.

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

• Food: +2.4%, 62.0% of total revenue
• Household Products: -4.5%, 19.6% of total revenue
• Clothing: -9.8%, 12.2% of total revenue
• Miscellaneous Items: +2.0%, 5.9% of total revenue
• Services: +0.2%, 0.4% of total revenue

Sales per square meter fell 2.8% to 47,745 yen. Read more

Japan’s department store sales down 7.6% in June

Despite strong gains in department store sales in Shinjuku immediately following the opening of the new Fukutoshin subway line on June 14, department store sales fell 7.4% in Tokyo and 7.6% nationwide in June. According to the Japan Department Stores Association, 588 billion yen in sales were rung up across the country in June, at 280 department stores owned by 93 companies.

June was the fourth consecutive month with a decline in sales, and five out of the first six months of this year have seen a decline so far. Once again, the JDSA is citing bad weather as a reason for the decline in sales. Here’s a breakdown for June sales figures by category: Read more

Gift certificates, gas coupons, expensive school lunches and reduced houshold spending

A few stories concerning consumer spending and behavior caught my eye today. First, the Japan Times tells us that an increasing number of shoppers are buying discount gift certificates for themselves, in order to cut down on food and clothing costs. According to the paper, gift certificates can be usually be bought for as much as a 2% discount on their face value, though department store gift certificates are selling at shops in Shimbashi for as much as a 5% discount.

Then, we hear from the Nikkei that supermarket giant Ito Yokado plans to hand out gasoline coupons starting tomorrow. The campaign will last until next Monday, and each shopper who spends over 5,000 yen will receive a coupon good for 10 yen off per liter of gas, up to 50 liters. Each customer is limited to two coupons. Read more

Retail Roundup: Seiyu announces more changes to come

Let’s start by looking at Seiyu, a firm that has been much discussed on this website over the past year or so. According to the Nikkei, Seiyu intends to renovate about 90 of its locations over the coming two years, at a cost of over 30 billion yen.

Seiyu lost about 20 billion yen in fiscal 2007 and has been in the red for six straight years. The Nikkei tells us that Seiyu intends to sell more Wal-Mart brand casual clothing at its shops, despite the fact that clothing sales at supermarkets continues to fall - they were down 8.6% in May alone. Seiyu also intends to link up further with Wal-Mart in terms of sourcing products from China. Although this might make economic sense, it also bucks the trend of consumer mistrust of goods produced in China.

Finally, we see that Seiyu intends to carry an “expanded lineup” of flat-panel TVs. Again, supermarkets are generally selling less of this kind of stuff, and it’s hard to imagine Seiyu outpricing, let alone out-marketing the Yodabashi, Bic Cameras and Kojima Denki shops in this area.

Finally, sales per square meter continue to decline at Japan’s supermarkets. Yet again, Seiyu intends to focus its renovation efforts on its larger locations, with 6,000 to 10,000 square meters of shop space.

Japan supermarket sales fall 1.1% in May

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: Read more

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: Read more

Japan supermarket sales show first rise in 26 months in February

In January, we saw Japan’s supermarket sales fall for the 25th consecutive month and wondered when this site would finally be able to report a rise in sales. It has finally happened: According to data released by the Japan Chain Stores Association, supermarket sales in Japan were up 1.9% in February on a year-on-year basis.

It’s way too soon to say we have an uptrend, as supermarket sales have still fallen in 46 of the past 48 months. We are also suspicious that rising prices might have more to do with the increase than a pickup in consumer spending, though we will have to wait until the end of this week to see the data on household spending for February.

Here’s a breakdown of sales by category in February: Read more

Strong food sales push up Japan’s February department store sales

After having fallen 2.1% in January, Japan’s nationwide department store sales grew 0.9% in February, according to the Japan Department Stores Association. The survey covered 279 shops operated by 93 firms that were open for at least one year.

By category, here’s a breakdown for February sales figures: Read more

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