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Coronavirus

Virus fright slashes visitors to Japan’s shopping hubs

Weekend pedestrian traffic down 15% in central Osaka

Tokyo's Asakusa district, home to the Sensoji temple, suffered a 15% decline in traffic this month.   © Reuters

TOKYO -- As the number of confirmed cases of coronavirus grows, people in Japan have stopped leaving their houses.

When Japanese carrier KDDI used location data on mobile phones to measure how many people were in a 1 km radius from major stations and tourist hot spots, the drop off from the previous year was clear.

In Asakusa, the center of retro Tokyo and home to the city's oldest temple, Sensoji, there was a 15.5% plunge in pedestrian traffic on weekends and holidays this month. Osaka's Umeda district, a popular shopping and dining area for Chinese tourists, dropped 15.2%. Kyoto and Yokohama saw declines of 14.1% and 9.7% respectively, according to a joint analysis with Nomura Securities.

Empty shopping centers, amusement parks and travel destinations are expected to be a drag on the economy, which already saw a shocking 6.3% decline on an annual basis in the October-December period before the coronavirus outbreak, largely owing to the consumption tax hike to 10% from 8% in October.

With consumption accounting for 60% of Japan's GDP, there are growing concerns that the slowdown in personal spending would lead to another quarter of dismal economic performance.

Toshihiro Nagahama, senior economist at Dai-ichi Life Research Institute, warns that Japan's GDP could be squeezed by 2.9 trillion yen ($25.9 billion) even if the stay-at-home attitude subsides within the first half of the year. That would amount to a larger economic repercussion than the 2011 earthquake and tsunami.

As of Friday, 105 people in Japan have been diagnosed with the coronavirus, according to Japan's health ministry. The figure excludes the 600-plus passengers on the Diamond Princess cruise vessel who have tested positive for the disease.

Sales at department stores and drug stores have started their decline, while travel cancellations have hit theme parks, hotels and transportation services.

The diminished foot traffic has dealt a major blow to department stores. Mitsukoshi Ginza, located in Tokyo's upscale shopping district, has seen customer arrivals sink by roughly 10% this month compared with a year earlier. Revenue for foods -- once strong sellers -- retreated by 10%.

Reduced foot traffic at urban centers has led to lower sales at department stores.

Department store operator Sogo & Seibu saw sales between Feb. 1 and Tuesday decline about 5% from a year earlier. Tax-free items make up a small proportion of revenue, meaning the change can be attributed mainly to Japanese consumers and less to foreign tourists.

"It will probably worsen to a 10% decrease," said a Sogo & Seibu representative.

Drugstores and supermarkets are also suffering from the fallout. Major outlets in Tokyo endured 40% slumps this month in sales of daily goods, cosmetics and pharmaceutical products.

As for individual tourist attractions, traffic at Osaka Castle reportedly crashed roughly 40% compared with other Februaries, while the number of people arriving at Tokyo Tower is said to have diminished by about 30%.

Sanrio Puroland, the indoor theme park in Tokyo, usually sees hundreds of Chinese visitors in February, but not one group of Chinese tourists has come so far this month. Its operator said Friday it is shutting down the park until March 12 to prevent the spread of the coronavirus.

A growing number of people are giving up on traveling altogether, both for business and leisure. East Japan Railway saw ridership for the shinkansen bullet train drop 10% from a year earlier for the first 17 days of this month.

At Tokyo Station, fare receipts dipped 7% from a year earlier for the month through Monday. Fare receipts at Maihama Station, which serves Tokyo Disneyland, slipped 9%.

Sanrio Puroland will be closed until March 12.

The spillover effect will likely overwhelm the hospitality business. Japan Hotel REIT Investment, which operates several hotels, reports the potential of per-room revenue contracting by over 20% in February.

"Cancellations could occur from travelers besides those from China," said Hisashi Furukawa, president of the affiliated asset-manager Japan Hotel REIT Advisors.

Meanwhile, there has been a steady uptick in online orders, takeout orders and other spending associated with reclusive lifestyles.

One okonomiyaki (Japanese pancake) restaurant, Chibo Dotonbori, in Osaka's bustling Namba district says customer traffic this month fell 40% from a year earlier, but takeout orders are growing.

Meanwhile, Consumer electronics chain Yodobashi Camera is seeing sales of air purifiers jump 70% from the previous February. Sales of tissue paper and other daily necessities have tripled thanks to online deliveries, as the growth of digital sales has outstripped purchases at physical stores.

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