Japan's retail sales fall for fifth year


Sales fell 2.2% in Japan in 2001, for a fifth straight annual decline, spelling tough times for retailers like Daiei Inc.

By Alex Frew McMillan
CNN Hong Kong

TOKYO, Japan -- Retail sales fell 5.7 percent in Japan in December, compared with a year ago, the government reports.

December's decline was the biggest drop of the year and marked the ninth straight monthly decline in a row.

Total sales stood at 13.25 trillion yen ($98.3 billion) for the month, the Ministry of Economy Trade and Industry said on Monday.

For the full year, that meant that retail sales fell 2.2 percent, to 136.1 trillion yen ($1.0 trillion), with a particularly sharp 4.5 percent drop in the fourth quarter.

That was the fifth year in a row that overall sales have fallen in Japan.

The boost from holiday buying was not enough to offset the effects of a rising rate of joblessness and bankruptcies, and declining incomes.

Not likely to improve soon

Japan watchers say the slump in sales is likely to continue for the foreseeable future.

"With the economy in a slump and corporate earnings continuing to deteriorate, this pressure is unlikely to subside anytime soon," Mamoru Yamazaki, Barclays Capital's chief Japan economist, said in a report.

In fact, the sales slump is gradually accelerating. After rising 0.8 percent in the first three months of the year, retail sales fell the next three quarters -- down 1.7 percent for the second quarter, 3.0 percent for the third and now 4.5 percent.

Large-store sales also fell, down 2.5 percent for December, over the same time in 2000, but down a massive 7.4 percent over the previous month.

That means they are still very weak, J.P. Morgan economist Ryo Hino noted.

"The drop was largely due to technicals, though it does draw more attention to the plight of the retail sector, which is being plagued by falling consumer demand and prices, and increased competition," Hino stated.

December's numbers looked particularly poor because November sales were fairly firm. But consumer demand is undoubtedly down and deflation has set in.

Both department stores and grocery stores showed sharp slides from November's sales, and all main types of goods were down, led by food and clothing.

New figures last week showed that consumer prices fell 0.7 percent in Japan, for a third year of overall decline.

Retailers such as Daiei Inc. face a tough time locking in profits in that environment. Daiei, Japan's largest supermarket chain, landed a $3.2 billion bailout from its banks earlier this month.