Japanese department stores are recovering from the pandemic slump, with total sales increasing 16% on the year in fiscal 2022, driven by brisk spending by relatively young high-income earners in metropolitan areas.
Combined sales of 167 stores run by 66 operators came to 5.1 trillion yen ($35 billion) for a second consecutive year of growth. Sales recovered to 88% of the level recorded before the pandemic in fiscal 2019.
Isetan Mitsukoshi Holdings’ flagship Isetan department store in Shinjuku, Tokyo, generated sales of 327.6 billion yen in fiscal 2022 — up 29%. The number marks a record high for the store, surpassing the previous record set in fiscal 1991, just before Japan’s economic bubble burst.
Hankyu Department Store’s main location in Osaka saw sales jump 30% to 261 billion yen, also a record high.
Spending by well-off shoppers is the driving force. Japan’s affluent individuals, with financial assets of 100 million to 500 million yen, and its high-net-worth individuals, with assets of 500 million yen or more, increased 17% from 2017 to 2021 to about 1.48 million households, show estimates released in March by the Nomura Research Institute. The tally was the highest since 2005.
“As prices of stocks and other assets rise, asset holdings of the affluent and high-net-worth individuals have increased in value,” the institute said.
In particular, wealthy consumers such as entrepreneurs and investors in their 40s or younger are increasing their presence as high spenders.
At Isetan Shinjuku, which had the country’s highest sales by store in fiscal 2022, purchases via personal shopping service by those in their 40s or younger accounted for 33% of this segment’s sales — up 10 percentage points over fiscal 2020.
Daimaru Matsuzakaya Department Stores also saw purchases through personal shoppers by customers in their 20s to their 40s increase more than 20%. The company says customers in their 20s to their 40s who use the service are increasing year by year.
Daimaru Matsuzakaya parent J. Front Retailing will start a new point system from September at Ginza Six, a group shopping facility in Tokyo’s Ginza area, to further entice wealthy customers who use personal shoppers.
In July, duty-free sales were up 4.2-fold on the year at Daimaru Matsuzakaya and 3.2-fold at Takashimaya. The Chinese government started allowing group tours to Japan for the first time since the pandemic on Aug. 10, likely bringing more foreign visitors in a boost to duty-free sales.
While flagship stores in major urban areas saw strong revenue growth of 19.8% in fiscal 2022, sales at locations in smaller cities and far-flung areas grew a more modest 5.3%. The Ichibata department store in Matsue, the prefectural seat of rural Shimane on the Sea of Japan, has announced that it will shut its doors in January 2024.
Nationwide department store sales for January to June totaled about 2.5 trillion yen, according to the Japan Department Stores Association — up 10% on the year.
Source: Nikkei Asia