Retail sales surge in March

So, with the consumption tax introduced on 1 April, just how well did retailers do in March? On the whole, the situation was similar to the last increase back in 1997, but with far greater buying of high end items and, for some categories, sales increases that were as high as the month before the tax was first introduced in 1989. Supermarkets expect the consequent downturn to last no longer than April and May.

To no one’s surprise, retail sales surged in March as people rushed to stock up prior to the consumption tax increase. The Japan Shopping Centre Council reported same store sales for its members up 11.4%, one of the highest single month growth figures on record. Sales were strong across the country, but SCs in Shikoku (18%) and Hokkaido (15%) were up the most. Sapporo, Tokyo, Nagoya and Hiroshima SCs also saw sales up in double figures.

Similarly for supermarkets, the Japan Chain Store Association (JCSA) reported that same store sales for the 9,000 stores run by its 59 members were up 9.4%, the highest single month growth since the tax was first introduced in 1989. They were also helped by good weather and plenty of shopping days. The JSCA noted that the last time the tax was increased in April 1997, sales slumped 4.6% in the first month, but recovered in May. It expects an even lower decline for supermarket chains this time around and a similar rapid recovery. As in other sectors, bulk buying was prominent, with household goods such as furniture and cosmetics up 20-30% on last year, and dried and packaged foods also selling strongly. Member companies said footfall was up 1.4% and average purchases per customer up 7.5%.

For convenience stores, the Japan Franchise Chain Association reported that same store sales were up for the second month in a row in March, by 2.9%, with sales per customer up 3.9%. The 39 member companies of the DIY Association also saw sales up by 30.7% to ¥209.6 billion for the month, a significant jump from the 3.8% growth in February. Footfall was up 8.1%, with orders for home reform up 57.2%, along with basic household necessities such as toilet paper, up 52%.

Not surprisingly, department stores did best of all, surging 25.4% overall, more than in 1997 when sales jumped 23%. All major cities saw sales up in double-digits, with stores in Nagoya alone up 37.3%, Osaka up 32.1% and Kobe up 30%. As with SCs, Shikoku had the strongest sales among the regions, up 30.6%. Tokyo department stores, which account for a quarter of the entire market, were up 25.3%, lower than the 35.3% jump in the same month in 1989.

By category, accessories grew most, up 38.6% compared to last year, but the sub-category of art, jewellery and high end watches was up 67.2%, the highest growth rate since 1967. Apparel, which makes up a third of total sales, was up 18.5%, while food was up 5%, both lower than in 1997.