In July 2023, Japan witnessed a notable rise in retail sales, marking a 2.6% increase compared to the previous year, alongside a seasonal adjustment that recorded a modest 0.2% growth from June. This information, released by the Ministry of Economy, Trade & Industry (METI) on Friday, highlights the ongoing recovery of Japan's retail sector in the post-pandemic landscape. The growth is significantly attributed to the country's department stores, which have seen a revitalization thanks to a resurgence in inbound tourism.
These stores reported a remarkable 5.1% increase in sales year-over-year for July. On the other hand, supermarket sales experienced a slight decline, decreasing by 0.1% year-over-year. Furthermore, convenience store sales also exhibited positive trends, rising by 0.7% year-over-year during the same month.
Sales at major specialty retailers focused on home electric appliances showed an increase of 1.6% year-over-year. Meanwhile, drugstore sales experienced a notable uplift, climbing 4.5% year-over-year. In contrast, sales at home-improvement stores saw a downturn, falling by 1.5% over the same period. Despite this overall trend of growth, the retail sales volume in Japan for July fell short of expectations.
According to ING Think, a division of the Dutch investment firm, "Retail sales rose a less-than-expected seasonally adjusted 0.2% month-over-month in July. However, it is noteworthy that sales have now risen for four consecutive months. Motor vehicle sales, for instance, rose by 5.6% month-over-month and have also increased for three months, along with a solid 5.5% rebound in household machines sales." Additionally, METI reported that commercial sales saw a significant 7.5% increase year-over-year in July, with a monthly gain of 2.5%.
Wholesale sales were even stronger, expanding by 9.9% year-over-year and experiencing a 3.1% month-over-month rise. The continuing upward trend in retail sales reflects a broader positive sentiment in Japan's economy, supported by increasing consumer confidence and the influx of international tourists looking to experience the unique shopping culture and offerings the country has to offer.
As Japan moves forward in its recovery journey, the retail landscape remains a key area to watch in the coming months..