From the 1960s right up until 2007, METI conducted its Census of Commerce, regularly updating the world on the minutiae of the distribution sector – and making a case for protection of small, largely uncompetitive players who supported the ruling party. That motivation has now been largely overtaken by political reality and the Census has been subsumed into the Economic Census, the latest results for which were released in November.
METI released results for the 2012 Economic Census in November, including the now subsumed Census of Commerce. It is the first full survey of distribution since 2007 but previous trends in the retail and wholesale sectors, of declining sales and store numbers, remain unchanged. Overall retail store numbers fell 9.2% in the five years to 2012, pulling down national retail sales by 14.7% and sales space by 11.2%.
The figures are out of sync with METI’s monthly estimates of retail sales which concentrate on extrapolating total sales based on a region by region survey of mostly larger, corporate distributors. The Census focuses more on independent retailing. While the monthly survey put total retail sales in 2012 at ¥137 trillion, up 1.4% on 2007, the Economic Census figures stand in stark contrast, with sales down to just ¥114.8 trillion. The difference, pretty large though it is, is due to the survey methods.
The Census attempts to survey every single retail store, later splitting these figures into both incorporated and independent stores. In the five years to 2012, independent stores declined by 21.1%, a fall of 120,000 stores or a net 66 stores a day going out of business. This is actually a partial slowing of the decline in store numbers since the 2007 survey, but sales at independent retail businesses are now declining much faster, down to ¥7.2 trillion in 2012, 38.8% lower than in 2007.
In other words, Japan now has a thoroughly corporate retail industry. The number of stores run by incorporated retail businesses grew by 3% (although sales at these businesses did fall overall by 16% due to bankruptcies and consolidation). Corporate retail stores now outnumber independents for the first time, with corporations operating 56% of all stores, a jump of more than 6 points since 2007, and accounting for 94% of sales, an increase of 2 points.
While the number of stores fell overall, the number of corporate operated retail stores increased in 30 of the 47 prefectures. In both Okinawa and Wakayama, two of the most provincial and traditional places in terms of retailing, the number of corporate stores increased by more than 10%. Similarly, in Nara, Shiga and Saitama the number increased by 8% or more.
These increases were not matched by the number of employees or sales space, with fewer independents meaning an overall decrease in sales space of 11.2% and falls in every prefecture, and a drop in retail employees nationwide of 2.3%. The number of employees did increase in five prefectures, Ibaraki, Saitama, Kanagawa, Shiga and Tokyo – the last of these seeing retail employee numbers jump by 11.1% since 2007.
As already noted, overall sales fell nationwide due to the fall in independent store numbers. The best performance was in prefectures that saw the biggest jumps in corporate retail stores, notably Saitama and Shiga, although sales in Iwate, Ehime, Yamanashi and Kumamoto also fell slightly less, again due to the increased pace of corporate retail expansion.
While corporate retailing grew overall, M&A and store closures led to a fall for department stores alone. Sales for these and the larger GMS stores were ¥10.8 trillion, less than a tenth of the total and a massive 36% lower than in 2007. At the same time, while sales per retail store jumped 19.2% to an average of ¥141.1 million per year, sales densities fell by 9.1% on average to just ¥600,000 per sqm per year.
There are still just over 1 million shops in Japan in total, but the number continues to decline and at a rapid rate, with a switch to both more corporate and larger stores. This trend will continue for the time being, but some analysts already predict that the fall in store numbers will further increase as e-commerce takes over as the latest, easiest means of shopping.
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