In 2012 department store same store sales rose for the first time in 16 years, but this was partly because of a rebound from the impact of the 2011 earthquake. The uptick in overall sales this year, however, shows both the strength of premium markets at the moment, as well as a decline in store closures.
In calendar 2013 both same store and overall department store sales rose year on year, the first time since 1997. The rise in sales reflects not only the continued buoyancy in luxury markets, but also the slowing pace of group restructuring, which in previous years has meant year on year falls in sales. The Japan Department Store Association (JDSA) says sales hit ¥6.22 trillion in 2013, up 1.2%. This is still almost 40% less than the peak of ¥9.7 billion in 1991, but any growth after 16 years of falling sales is to be welcomed.
The key factors other than the fewer store closures, were strong sales on watch & jewellery floors across almost all department stores, consumer demand for international luxury brands, sales space expansion at city centre stores, and refurbishment and refocusing of regional stores. Jewellery & Watch sales nationally were often as much as 20% higher year on year in some key months and a huge 14.8% for the year. Accessories sales rose for 14 straight months through December and were up 4.4% in 2013 overall thanks to both more transactions as well as higher per ticket values. Cosmetics sales climbed 1.8%, and even furniture – one of the worst category performers in the last decade – rose 3.3%. Restaurant turnover was up 1.4%, indicative of the greater footfall as well as the increased investment in dining by department stores.
City stores outperformed the regions by far. City-based stores rose 3% but regional stores fell 1.7%. The best results came from Osaka, up 5.4%, and Nagoya up 5.2%. Sales in Tokyo for the first 11 months were up 3.5% on a same store basis and 3% overall, lifted by the same factors as nationally, but also better sales of accessories and apparel, especially outerwear. (Nationally, however, apparel continues to decline in share of total department store turnover, from 40% in the past to 34.2%.) The rapid growth in tourism also helped larger department stores, with many seeing tourist sales jump 70% year on year in the months since May.
For this year most department stores, and indeed most retailers in fashion and lifestyle, expect the first six months to be negative on the year, but hope sales will recover in the second half depending on the government’s success in convincing companies to increase wages.
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