board. The nation’s 56,000 convenience stores posted a sales increase of 5.4 per cent. Large specialty stores selling home appliances (2,667 of them) were down by 4.6 per cent and home improvement sales (4,440 stores) were down 0.4 per cent.  Supermarkets (5,921 stores) gained 1.8 per cent but the big winners were department stores (190 of them) performing well above the average, with a 13.5 per cent gain. On a store productivity basis, the numbers looked even better: sales per store in the first quarter were up more than 16 per cent over a year ago. Big department store chains’ momentum April sales reports by some of Japan’s most important department store chains suggest that the sales momentum of the first quarter is being maintained into the second. At Takashimaya, the company reported year-over-year sales growth of 10.3 per cent in April on top of strong performances in March (+9.0 per cent on 3.6 per cent increase in foot traffic), February (+17.8 per cent) and January (+16.3 per cent). One of the key drivers of the strong showing has been the revival in visitors from overseas. In April, the Shinjuku (+21.2 per cent) and Osaka (+16.0 per cent) stores were going gangbusters with duty free sales, which account for up to 20 per cent of their store sales. Meanwhile, Isetan Mitsukoshi’s five Tokyo-area stores had sales growth of 23.2 per cent in April, led by the Ginza (+41.4 per cent) and Shinjuku (+25.4 per cent) stores. Regional stores had more modest sales growth of 8.1 per cent but overall growth for the portfolio of 15 stores was still an upbeat 17.2 per cent. At J. Front Retailing, which consists of nine Daimaru and four Matsuzakaya department stores, year-on-year sales growth was 19.1 per cent in April. The Shinsaibashi store in Osaka and the Tokyo store both had sales growth close to 40 per cent. Does the US’ fate await Japan? METI counted 190 department stores for its first quarter survey. In 2019, it was 219, so the closing of doors continues at a steady rate. The reasons for the attrition have been well documented: the rise of global fast fashion retailers (exemplified by Japan’s own Fast Retailing), casualisation, greater budget-consciousness, the shift to e-commerce, the ageing of the traditional department store customer base, and the redevelopment of railway stations connected to department stores.  Could the Japan department store industry be in for the same kind of seismic decline as has happened in the US? There, a large slice of the department store segment has become uncompetitive – irrelevant is probably a better word – and store closings and bankruptcies have been rife in recent years. Just in the past few years, Lord & Taylor has closed all its stores, Sears has closed most of them, and J.C. Penney and Macy’s about one-third of theirs. No chain has been immune to the carnage and in the next few years it is highly probable that another one-third of the remaining stores will disappear. To be fair, US department store chains saw the writing on the wall years ago and did take steps to align themselves better with consumer trends. Perhaps the most important step was the introduction of smaller, off-price formats, which proliferated in open-air shopping centres and freestanding locations in CBDs and became extremely popular as entry-level brand access points for more budget-conscious consumers. But now, even the off-price format is taking a hit. In recent days, another shudder through the industry emanated from the US. Nordstrom, one of the country’s most iconic upscale department store chains, announced the closing of two units in downtown San Francisco: the mainstream mall anchor store at Westfield San Francisco and the freestanding off-price Nordstrom Rack on Market Street. To some extent, the closings reflect the same broad changes in consumer shopping behaviour that have plagued the department store industry in recent years. But the closures in San Francisco also reflect a rising crime problem that is causing safety fears – both real and imagined – among customers and retailers in downtown San Francisco. This is not particularly relevant to Japan, where the crime rate is still relatively low. How small will the industry become in Japan? Let’s take the three big aforementioned department store chains – Takashimaya, Isetan Mitsukoshi and J. Front Retailing – which collectively operate 44 stores. Of these, about 12, or a little more than a quarter, are on the margin of viability and don’t have a long-term future. Bear in mind that these stores belong to the strongest department store chains in Japan, so scaling that up to the industry as a whole, it is not unreasonable to expect about 60 more stores to disappear by the end of this decade. That would bring the number down from its current 190 to about 130. If department stores in Japan were to shutter on the same scale as those in the US, however, the number could drop to a hundred or so by the end of the decade, or about half the current number. Cataclysmic as that may seem, such closures could be interpreted as a healthy thing: by getting rid of marginally viable or outright unprofitable stores, the industry survivors would be stronger. This is a small part of the reason for the increase in store productivity between this year and last. There is no getting around the fact that the issues facing department stores – a retail format well over 100 years old – are not just the kind of transient ones that come and go with consumer spending cycles.  For now though, department stores in Japan, particularly the flagships in Tokyo and other big cities, are enjoying their mini-comeback from Covid. Let’s celebrate that while it lasts.