Unprecedented Profits for Japan's Department Stores

Apr 23, 2024 | News On Japan

TOKYO - Amid a nationwide trend of retail closures, Japan's department store sector has achieved record profits, particularly bolstered by the influx of foreign tourists, fueled by a favorable exchange rate.

The Takashimaya Group, for example, has reported its highest profits in 33 years, a success largely attributed to a surge in visitors capitalizing on the weaker yen. The group has been proactive on international social media platforms and has employed numerous bilingual staff to cater to this growing demographic. Starting in June, Matsuya Ginza will launch a reservation service via an app specifically designed for foreign visitors.

However, the retail landscape exhibits stark contrasts. While some thrive, others falter, leading to an extreme polarization in the sector. This has been highlighted by the closures of significant outlets such as the Ichibata Department Store in Shimane in January, the Shin-Tokorozawa Parco in Saitama in February, and the upcoming closure of Gifu Takashimaya in July. In regions like Gifu and Shimane, the number of department stores has dwindled to zero, with a nationwide reduction of 40% compared to 1999.

The surge in online shopping and the comparative affordability of supermarkets are contributing to the struggles of physical stores. Chiaki Horan, a broadcaster, reflected on the changing perceptions of department stores, noting that while they were once seen as special destinations where one would dress up and visit, the current economic reality leans towards more affordable and accessible options like supermarkets and online shopping.

In response to these challenges, some department stores are rebranding and refocusing their business models. For example, Tachikawa Takashimaya S.C. transitioned into a specialty store in November 2023, introducing major supermarkets and drugstores into its premises.

Kintetsu Department Store has announced plans to remove the term 'department store' from all its outlets except the main store, signaling a significant shift in how these establishments define themselves in a rapidly evolving market landscape.

Source: TBS

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