Japanese retailers face declining sales as population shrinks

Declines in e-commerce activity and the nation’s population have seen Japanese retailers and restaurant owners downscaling their operations and abandoning former growth-reliant business strategies.

The total number of retail and restaurant venues in the market has decreased 1 per cent to less than 118,000, since the end of last year. Projections suggest that as online shopping continues to build market share, formerly bustling chain stores may start dropping off the map.

“The retail industry as a whole is suffering from a glut of stores,” said FamilyMart convenience store chain president Takashi Sawada. FamilyMart has been withdrawing from trading locations for the past two years.

An analysis by Nikkei showed a 2.4 per cent drop in restaurants, the first decline in three years. The number of department stores and supermarkets in Japan are also falling. The data also showed “previously unthinkable strategic shifts” from players such as 7-Eleven Japan, which is reconsidering its 24-hour trading in some areas as a response to demographic changes.

Another study by the Ministry of Economy, Trade and Industry revealed that retail stores have shrunk almost 4 per cent between 2014 and 2016.

Retailers have been posting larger write-downs – impairment losses at companies with February book-closings amounted to around ¥260 billion yen (US$2.4 billion) in the last financial year.

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