Total retail sales in Japan are on the rise, and is expected to remain so until the 2020 Tokyo Olympics.

Photography by Jan Yong


According to JETRO (Japan’s governmental external trade agency), Japan boasts the world’s second largest retail market, with a sales value exceeding US $1.3 billion (150 trillion yen).

Being a mature, quality and luxury-oriented consumer market, the country has been a natural destination for any and all global brands seeking to establish their presence in Asia for many years, with spectacular results. Thirty-five per cent of Asian tourists from countries such as China, Taiwan, Hong Kong and South Korea, who are travelling to Japan, cite their main reason for visiting as “shopping” – and local Japanese shoppers are also a force to be reckoned with – often labelled as “obsessed with consumerism culture”, for better or worse.

Key sectors in the country’s retail market are high-end speciality stores, apparel specialty stores, and lifestyle/ environmental products – all of which are readily available not only in shopping hot spots such as Tokyo’s Ginza, Omotesando, Shibuya and Shinjuku, but all over the country – for example, in other large metropolitan centres such as Osaka, Nagoya, Fukuoka and Sapporo, to mention only a few.

Shopping malls, supermarkets and street shops are bustling with activity during all hours; fashion is a major driving force for men and women alike, and even the two “lost decades” of deflation, which the country has only recently broken out of, did not seem to diminish the Japanese passion for shopping – as a walk down the street of any of these major shopping districts would have demonstrated at any point in time during those years.

As the graph here, taken from Mitsui Fudosan’s 2016 statistics publication shows, total retail in Japan – while suffering from a small slump due mainly to a sharp drop in Chinese tourist numbers as a result of increased import duties in the Mainland – is generally on the rise, and is expected to remain so until the 2020 Tokyo Olympics at the very least.

Two interesting main trends evident from that same graph, are the following:

  1. Supermarket shopping has long surpassed department stores as far as total retail sales numbers are concerned, and is likely to remain so.
  2. By far, a large majority of retail sales in the country, perhaps surprisingly, isn’t in either department stores (or “Depaato” as they’re known here), nor in Supermarkets – but in “other retail” – namely, street shops, train and subway station shops, outlet malls, and small businesses– as well as, in recent years, internet shopping.


As explained in depth in our annual summary and confirmed by Savill’s annual retail property report, rents and prices for retail commercial properties have increased only slightly in 2016, in line with general Japanese property market trends – mainly as a result of almost stagnant salaries and spending power.

General tourist numbers are increasing but, as mentioned above, the sharp drop in Chinese tourist numbers has put a damper on this trend in the short term. The exception to this rule are non-1F rents (shops in second floors of buildings and higher), which are still seeing a steady and gradual increase.

Furthermore, multiple new shopping mall projects announced in Tokyo and beyond have created an expectation for more stock to soon hit the markets, which will naturally further taper the potential for price hikes in rents and purchase prices.

The same report, however, also points to two main macro-economic indicators which are expected to continue and buoy investment in the coming year:

a) An increase in Japanese consumer confidence – now at its highest since the 2014 consumer tax hike (further boosted by the postponement of the next scheduled tax hike to late 2019); and

b) An increase in retail sales since July 2016 – signalling that the Chinese tourism slump has now been overcome by increasing tourist numbers from other countries. This trend is expected to continue, as mentioned, until the 2020 Olympics at the least.


  1. While ownership of a shopping centre or mall can be an attractive investment, buying and managing such a property is an expensive exercise, and requires a Japanese presence for the purpose of running such a business, with all related aspects. It may be far more feasible for foreign, remote investors to put their funds into smaller, “street level” commercial retail properties, which can be easily managed remotely (straight-out rental yield investment, as opposed to business management) – and is far more affordable, which also allows for more diversity and hedging, as opposed to a single location, large property.
  2. Japanese consumers are ageing, fast (in fact, Japan is the world’s fastest ageing population). What this means is that, barring some serious overhauls of immigration and child birth trends, both of which are one of the current government’s main challenges and the subject of much public debate – Japan’s retail sales environment may undergo some drastic changes in coming years. In fact, many of Japan’s native retailers have branched out, for this reason exactly, and are now concentrating a large share of their efforts on other Asian and Western markets, where younger shoppers can be found in larger numbers.
  3. The huge boom in Internet shopping, and its expansion to the inclusion of same or next day service, has led to huge growth in the logistics real estate market (factories, packing houses and warehouses) in the suburbs of most of the country’s large metropolitan centres – another sector well worth looking into.

    Your Cart
    Your cart is emptyReturn to Shop