Supermarkets suffer in more frugal Japan

26 January 2010

TOKYO: Supermarket sales declined by more than 4% in Japan last year, as consumers in the country reined in their expenditure levels in the downturn.

Figures from the Japan Chain Stores Association, based on information from 68 retailers active in the sector, revealed that same-store totals fell by 5% in December 2009 on an annual basis, to ¥1.25 trillion ($13.4bn; €9.8bn; £8.6bn).

This followed on from a drop of 8% in November, and marked the thirteenth successive monthly contraction recorded across the 8,216 stores owned by its panel overall.

During 2009 as a whole, revenues were off by 4.3%, to ¥12.8 billion, the lowest returns recorded since 1988, according to the industry body.

"Consumers tightened their purse strings in 2009 because their disposable incomes shrank, deepening their anxieties over the outlook of the economy," it said in a statement.

Seven & I Holdings, the convenience store giant which boasts assets including 7-Eleven, saw profits from its supermarket division drop by 83% over the nine months to November last year.

Mitsuo Shimizu, an analyst at Cosmo Securities, said "there's nothing they can do to spur sales in this environment. Their private brands are doing much better now and should help improve profit margins."

More positively, Noritoshi Murata, president of Seven & I, said the company expects "to see a recovery in profits from 7-Eleven in Japan and the United States. We are aiming for profit growth for next year."

Aeon, which operates Jusco, posted an operating profit of ¥20.5bn in the last quarter, but this was mainly achieved by streamlining its operations.

"We cut costs more than our plan by thoroughly reviewing our cost structure," said Masaaki Toyoshima, Aeon's chief financial officer.

Its other major initiatives have included expanding the Topvalu own-label range, as it seeks to broaden its appeal among price-conscious shoppers.

"The point is the US economy, and it is not so bad. We are seeing a glimmer of sunlight," Toyoshima added.

"Personally, I think we are beginning to see a different view from around the fourth quarter of 2010."

Data sourced from MNI/Bloomberg; additional content by Warc staff