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Economy

Department stores, eateries savor spending growth in Japan

Luxury lovers and cheapskates both doing their part

TOKYO -- Business sentiment is on the rise at consumer-facing enterprises in Japan, especially department stores and restaurants.

The Nikkei's quarterly diffusion index for consumption-related businesses rose 8 points to zero for July. Covering 14 sectors, it is calculated by subtracting the percentage of negative responses from the percentage of positive ones.

That's my department

The department store subindex shot up 23 points to zero. Existing-store sales notched year-on-year growth in April and June. And sales of summer clothing have increased in July as hot weather scorches the nation.

Growth in visitors to Japan is buoying sales at department stores. In 2016, new Chinese duties on items brought home by individuals put the brakes on visitor spending. But this year, demand for cosmetics and apparel has rebounded. Tax-free sales climbed to a record in the March-May period.

Affluent consumers here are also spending more at department stores, helped by the wealth effect of high stock prices. "High-value items like watches and jewelry have gained traction," an Isetan Mitsukoshi Holdings official said.

Cheap eats

But low prices are popular in food service, whose subindex rose to 3. Italian-food discount chain Saizeriya enjoyed a 13-month streak of year-on-year existing-store sales growth through June. "Nighttime customers increased, and per-customer sales also rose slightly," President Issei Horino said.

Japanese-pub operator Torikizoku, which offers every item on the menu for 280 yen (about $2.50), is drawing many families with children.

Supermarkets and convenience stores, too, are having to adapt to consumers' hunger for low prices. Aeon cut prices on about 250 food and household products in April. "Demand is strong for items touting low prices and those that are expensive but delicious, but things that fall into neither category aren't selling," Mitsubishi Shokuhin President Toru Moriyama pointed out. This demonstrates a growing pickiness about what goods and services to buy.

For three months down the road, the diffusion index of business sentiment also came to zero. The consumption appetite index rose 5 points to minus 12. The new survey was taken from early June to early July, drawing responses from 225 companies.

(Nikkei)

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