COVID-19 Impacts on Retail - Japan
One of the most impacted industries in Japan is the retail industry. Some of the key impacts in Japan as a result of COVID-19 have been seen in supermarkets, departmental stores, and employment.
- A survey conducted by Statista and released in March 2020 indicated that around 61% of Japan's retail business enterprises reported that COVID-19 had an impact on their corporate activities.
- Many retailers foresee future impacts, leading to 95% of retail companies that anticipate an effect due to the outbreak.
- As of February 2020, retail companies in Japan have experienced considerable sales declines that are primarily attributed to COVID-19, which impacted foreign tourists and customer sentiment.
- Sales generated by departmental stores have fallen by about 40% in March 2020, which is the largest margin ever. This decline is higher than the 12.2% decline witnessed in February 2020.
- The sales decrease is primarily connected to China's decision to ban outbound group travel, making it challenging for Chinese travelers, who are valuable customers for departmental stores, to obtain products. Also, the Japanese government postponed popular events to limit the spread of COVID-19, which resulted in the closing of cultural venues, theme parks, and stadiums that attract large crowds.
- According to the Japan Tourism Association, close to 400,000 different visas have been canceled because of COVID-19.
- The Daimaru Matsuzakaya department chain's operator, J. Front Retailing Co., saw its sales fall by 21.4%, and Isetan Mitsukoshi Holdings Ltd. witnessed a 13.6% decline.
- In February 2020, the total sales for 206 department stores operated by about 75 different businesses reached $3.3 billion, which represented a decline from the prior year.
- Due to a high consumer demand for commodities and food residing at home, supermarket sales in February grew by about 4.1%.
- Out of the concern that the outbreak could expand, food sales rose by 5.8% over 2019, as preserved and frozen food products, as well as rice, attracted notable demand.
- Chain association sales for 10,548 various supermarkets operated by 55 businesses reached 937 billion yen in February 2020.
- Consumers emptied supermarket shelves as fears for the outbreak have led to food shortages, particularly in Yokohama.
- Meanwhile, sales for household goods have expanded by 1.6%, and clothing sales have declined by 3.9%.
- Due to coronavirus, retailers such as Laox, a duty-free business, are implementing procedures to evade its spread by asking employees that are 40 and up and have been employed by them for two years to go into early retirement.
- Retail companies have either diminished their business hours or temporarily closed down business to prevent the spread of the virus.
- This move is projected to harm Japanese families, as they will incapable of maintaining their needs.
- In Shinsaibashi, which welcomes a high volume of tourists that purchase beauty products, drugs, and cosmetics, the closing of China's borders (the area's primary customers) has had a remarkable impact.
- Although there have been high sales for specific medicines, disinfectants, and masks to combat COVID-19, drug stores have reported noticeable losses due to the lack of tourists.
- There has also been a reduction in working hours for drug stores due to COVID-19.
- As of February 2020, sales for specific drug store companies have risen greatly due to the high demand for toilet rolls, masks, tissue paper, sanitizers, and related items.
- Matsumoto Kiyoshi Holdings, which maintains extensive inbound sales, witnessed an 8.0% YoY rise in sales in February. Because of movement restrictions to halt the spread of COVID-19, the company's duty-free stores' sales have seen a negative impact of 50%.
To provide examples of impacts on the retail industry in Japan due to the COVID-19 pandemic, we made use of credible news articles discussing the outbreak. While we found limited information published on the retail industry specific to Japan, we came across a paywalled source that we believe can be helpful in offering more insights regarding the impact of the outbreak on the retail industry.