Market Overview

The domestic retailing market size in 2021 slightly increased from the previous year. A state of emergency was declared in April 2020 against the new coronavirus pandemic, which led the market to suddenly stagnate, as people were restricted to go outside or travel and retail stores had to close or shortene the business hours.

Although a state of emergency declaration as well as semi-state of emergency measures were issued also in 2021, the relaxed behavior restrictions have caused eageness to consume, reflected by the popularity of phrases such as “tired of self restraint" and “revenge spending”. By industry, while there were some that continued their strong online and catalog sales, peole showed reluctancy in buying expensive products such as houses and home appliances.

Noteworthy Topics

Influences of Inflationary Prices and Price Rise

The prices of many food items have soared in 2022, and are expected furthermore in 2023.

Despite the price rise by food manufacturers, no shrinkage occurred in the separated growth rates between domestic corporate goods price index and consumer price index. The reasons were because consumers selected relatively lower-price products, in addition to companies not having passed on to product prices. Many of items that raised prices were new or replacement products, and many of existing products retained the prices, which seemed to have slowed down the rising speed of consumer price index as of 2022. In fact, some major GMS (general merchandise stores) took the strategy of getting the upperhand in the sales competition by retaining prices of private brand products.

Still, if the raw material costs continue rising, such costs are propelled to pass on to retail prices hereafter, which is likely to reduce the number of items at existing prices. Later, this should be reflected in consumer price index. Price rise against the backdrop of cost increase may reduce the purchase power of consumers. Furthermore, if Japan stays being the only country in the deflated economy, the concerns of Japanese buyers losing out to overseas markets are likely to be more significant.

Future Outlook

By the summer of 2022, the infection cases expanded once again, but no behavior restrictions were strengthened which led to stable consumption. On the other hand, lifestyle changes caused some industries to suffer from unrecovered demand. The stronger tendency of price rise, the shift to weakened yen, and relaxed border control measures were about to regain inbound tourism demand, expected to expand the domestic retailing market for 2022.

Research Outline