COVID-19 Impacts on Retail

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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.

Departmental Stores

  • 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.

Drug Stores

  • 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%.

Research Strategy:

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.
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COVID-19 Impacts on Retail - China

Six stages, or thresholds, have been identified regarding consumer behavior during a pandemic, particularly related to COVID-19. These stages are proactive health-minded buying, reactive health management, pantry preparation, quarantined living preparation, restricted living, and living a new normal. China is considered to have recently entered the sixth threshold — living a new normal. The retail industry has been impacted at every stage of the pandemic reactions in China.

Tourism Effects

  • Travel and tourism are significant sources of income for Chinese retailers, especially around the Lunar New Year in late January.
  • In 2018, tourism in China accounted for $1.5 trillion of the GDP and 79.9 million jobs.
  • Chinese travel saw a 50% decrease around the time of the Lunar New Year, which was attributed to COVID-19.
  • Hubei was one of the hardest hit areas of China due to the pandemic. Hubei reopened approximately 130 tourist attractions as of March 24, 2020, offering tickets at half-price and checking temperatures of visitors before allowing entry, after being closed approximately 2 months, devastating retail revenue. Many travel restrictions for the area were lifted March 25, 2020, allowing more citizens to visit the areas with the hopes of creating revenue again.
  • Travel bans and decreased tourism have significantly impacted retail sales in a negative manner.

Supply Chains and Factories

  • Moving goods between factories and ports in China is at 60-80% of normal production as of March 25, 2020.
  • The outlook for the retail market, particularly for suppliers, in China has been classified into three possible outcomes: "quick recovery, global slowdown, or pandemic-driven recession".
  • In a quick-recovery scenario, young adults return to work with better habits promoting health, and less than a 1% drop is seen in the GDP growth rate.
  • In a global slowdown scenario, the GDP growth rate is cut in half, as a significant demand drop is experienced with a delayed recovery. This causes retailers to operate with narrow working-capital margins until demand returns.
  • The pandemic-recession, a worst-case scenario, involves the virus continuing to grow and spread, devastating the workforce and businesses, with the GDP growth rate going as low as 0.5%.
  • Supply chains and factories have significant uncertainty, as it is unknown how consumer demand will change post-COVID-19.

Brick-and-Mortar Stores

  • Citizens began with increased demand for essential goods, then were reluctant to shop in traditional stores during the early stages of the pandemic, and eventually shopping in these was not allowed during the restricted living stage.
  • Retail sales decreased by 20% in China from January-February, as many traditional stores were forced to close due to COVID-19.
  • These establishments have needed to institute additional measures and expenses for cleaning and sanitation as they reopened in mid-March.
  • Many recently reopened brick-and-mortar facilities still remain empty or with very low consumer numbers, as significant fears of infection and job insecurity still remain.
  • Many businesses are accruing additional expenses to attract consumers again, such as giveaways and discounts.
  • Several retailers used B2C and B2B partnerships and digital technology to keep revenue. One company, Lin Qingxuan had to close 40% of the brick-and-mortar stores and switched to digital tools and training as online influencers, and the company actually achieved 200% growth in sales in Wuhan.

Technology and Delivery Options

  • The concept of contactless delivery was developed due to concerns of contamination.
  • Multiple food chains implemented contactless delivery options to retain business, such as McDonalds and Starbucks, allowing online ordering methods as well.
  • More businesses began using artificial intelligence (AI) technology to monitor physical inventory and arrange order delivery in less than an hour from local stores, which has provided some stability for retailers.
  • Prior to COVID-19, 71% of Chinese persons were using technology and the internet for retail transactions. This contributed to the country's ability to show retail resilience by relying on digital options.
  • Social media channels, such as WeChat, to overcome challenges associated with remote work and coordination with partners and employees and motivate online sales initiatives.

Online Shopping and Services Increase

  • The restrictions necessary during the COVID-19 pandemic have led many to use online shopping. This includes consumers who had not used this method regularly in the past.
  • As more consumers have experimented with online shopping and found success, it is likely the online shopping retailers will continue to see increased business.
  • Use of online grocery orders increased during earlier stages of the pandemic response. For example, vegetable delivery orders saw a 600% increase during China's Lunar New Year time frame., an online retailer, reported a 215% increase in sales over 10 days in February 2020.
  • Some experts are predicting online shopping and delivery services will continue to increase long after the country has recovered from COVID-19.

Luxury Retail

  • Many Chinese fashion designers did not attend the traditional "Paris Fashion Week," meaning brands such as Calvin Luo, Uma Wang, and Masha Ma missed significant advertisement opportunities.
  • Multiple luxury retailers, such as Burberry and LVMH, closed their stores. As Chinese participation in luxury shopping makes up 33% of the global market, these closures had a significant impact on retailers.
  • China supplies 40% of clothes purchased by Americans, in addition to supplying desired fabrics used in making clothes to multiple countries. Primary concerns regarding effect on the luxury clothing industry lie in the future rather than the present, with one retailer noting 2020 fall fashion will be very similar to 2019, which is likely to hurt sales.
  • It has been predicted $43 billion will be lost for luxury sales due to COVID-19 impacts. Chinese are key buyers of luxury items, and closing malls, stores, and decreasing travel have hurt luxury sales.

Additional Information

  • Overall, China is beginning to see some rebound in retail.
  • As the first graph in the image below demonstrates, 2020 overall movement of people and goods is significantly lower than that of 2019, but the movement in major cities is increasing. Other indicators, such as coal use and property transactions, show signs of recovery as well.

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COVID-19 Impacts on Retail - Singapore

Travel bans and decreased tourism have significantly impacted retail sales. There has been a 40% increase in online grocery orders due to the panic buying of essential commodities in bulk.

Tourism Effects

  • According to the Singapore Tourism Board (STB), there is a loss of an average of 18,000 to 20,000 international tourists every day due to the COVID-19 virus. This leads to a negative impact on retail sales because shopping malls and other retailers in Singapore are highly dependent on tourism.
  • There is a 19% decline in the number of visitors as compared to 2003 when Singapore endured the same severe acute outbreak, which is SARS (Severe Acute Respiratory Syndrome).
  • According to the Singapore Tourism Board (STB), in 2020, tourist arrivals are expected to drop by 25 to 30% due to the COVID-19 virus.
  • Travel bans and decreased tourism have negatively impacted retail sales.
  • Physical Stores

Increase in Online Sales

  • Traditional retail faces a depressing situation, whereas e-commerce retail is benefited from the episode of the virus outbreak because people are turning to online grocery platforms to purchase their daily necessities.
  • According to The New Paper, the outbreak of the coronavirus has led to a surge in online demand for grocery and food deliveries in Singapore as people prefer to avoid crowded areas.
  • As per RedMart, an online supermarket site, there has been a 40% increase in online grocery orders in the last week of January, after the confirmation of the first COVID-19 case in Singapore. Due to extreme pressure, the consumers are buying about 30% to 40% more dry and fresh groceries.
  • As per food products supplier Sasha's Fine Foods, there has been a 20% rise in the online sale of staple foods, including eggs, fruit, milk, poultry, and seafood in March 2020.
  • The local supermarket chain, NTUC FairPrice, stated demand for online orders has surged amid coronavirus outbreak.

From Part 01
  • " According to a survey conducted in March 2020, approximately 61 percent of business enterprises in the Japanese retail industry stated that they already experienced an impact of the coronavirus (COVID-19) outbreak on their corporate activities. Adding the share of companies which foresaw a possible impact on their business in the near future, more than 95 percent of the companies considered that they were somewhat affected by the outbreak of coronavirus. "
  • "Department store sales in Japan are likely to drop 40 percent in March from a year earlier, by far the largest margin on record, partly due to a plunge in the number of foreign visitors due to the outbreak of a new coronavirus, according to industry body data released Tuesday. Duty-free purchases are also expected to plunge 80 percent in the reporting month, the Japan Department Stores Association said."
  • "Coronavirus fears have dealt a particularly heavy blow to the tourism sector since China banned all group travel to other nations in late January."
  • "Meanwhile, four major department store operators saw sales decrease in February, hit by a drop in tax-free sales due to a sharp fall in foreign tourists visiting their stores. Sales at J. Front Retailing Co., operator of the Daimaru and Matsuzakaya department stores, dropped 21.4 percent from a year earlier, while Isetan Mitsukoshi Holdings Ltd. saw a fall of 13.6 percent."
  • "The Japanese government, through its Ministries, has announced measures to contain the spread and reduce the impact of the epidemic, such as closing schools and restricting inbound travel from coronavirus-affected countries. "