S ame-store sales at department stores within the Japan Department Stores Association rose for the first time in 16 years in calendar year 2012. Although overall sales fell 0.1%, same-store sales rose 0.3% to ¥6.14 trillion.
The slight rise was the result of some recovery from the 3/11 triple disaster, but all the major chains have worked hard to achieve it. New levels of consumer spending on premium products, as well as a general rise in consumption, also helped boost the numbers. Retail sales rose 2.2% in 2012, the second-highest increase in more than a decade.
Apart from Sendai, where same-store sales rose 7.7%, Tokyo led with sales rising 2.1%, followed by Kobe up 1.4% and Yokohama up 1.3%. Figures for all other major cities were negative. Hiroshima was down 2.7%, while Osaka and Kyoto declined 0.8% and 0.3%, respectively. By category, menswear sales rose 1.5%, womenswear 0.9%, accessories 1.0%, cosmetics 2.5% and art/jewellery 3.4%.
Overall department store sales are expected to decline further in the coming years because the sector built up excess capacity in the 1990s, and more stores must be closed or converted into shopping buildings. Most analysts expect combined sales to drop to ¥5 trillion in the medium term – it is significant that this number is the current total for the top seven chains alone.
Much of the pain is being felt in the regions where the bridge zone shops that sit uncomfortably between GMS’s (general merchandise stores) and department stores are being hammered from all sides. Meanwhile, leading chains and some redoubtable regional fiefdoms are fighting back through more imaginative store investment, expansion of own brands, diversification and overseas expansion.
For years, the outlook for the sector was bleak, but always with the proviso that, because of the latent value of the brands, the fantastic locations and ongoing demand for premium shopping in Japan, an opportunity existed if only management would grasp it. There are bound to be years of negative same-store sales growth ahead because of the format’s sensitivity to macroeconomic trends, but the relentless decline of the last 16 years for the better chains may well be over.