Retail Sales Endure Negative Growth in Wake of Last Year’s Demand Surges
Overall retail sales (preliminary figures included) for the June - August period fell 0.24% y-o-y to JPY37.45 trillion. August was the first month of decline in six months. Home viewing of the Olympic Games, beginning July 23, prompted greater demand for eating-in and grocery shopping, lifting supermarket and convenience store sales. However, against a backdrop of rising global food commodity prices, food-related product sales are weakening in response to widespread price rises. Consumer electronics retailers and home centers have also seen sales tumble following last year’s spike in demand for furniture and home appliances, experiencing negative growth for three and four consecutive months, respectively.
Retail Stores Shifting from Goods to Experiences
Mall operators and department stores are increasingly introducing experience-based offerings, including Showrooming and Online Merge Offline (OMO) concepts, predominantly with Direct to Consumer (D2C) brands. Marui Co. is growing its Showrooming presence and is currently developing Mercari Station, Concept Shoppes, and Shibuya Base. Among major department stores, Seibu Shibuya opened Choose Base Shibuya in the period, with around 700 sq m across four areas including an exhibition room and a café, on the first floor of the carpark tower. Daimaru Tokyo opened a D2C brand showroom in a corner of the women's wear section. With b8ta, a pioneer in this category, planning a new store in Shibuya, and Showfields, in which Sojitz has invested, planning to expand into Japan, physical stores are set to be redefined.
Luxury Watch Market Strengthens
Demand for high-end watches retailing for more than JPY1 million has been rising, as the wealthy continue to drive luxury spending. The prolonged state of emergency has channeled more disposable income into luxury goods, while stable prices of parallel imported watches has also prompted investment purchases. In particular, demand for Rolex timepieces is at a high level due to their brand reputation, functionality, and retained value. Parallel import prices have increased during the year in response to limited supply. Overall, the luxury watch sector continues to strengthen, in response to the change in money flow and its high attractiveness as an investment area. Responding to this trend, more luxury watch retailers are now considering new high-street store openings.