Luxury hit by Japan’s sales tax increase
The rise in Japan’s sales tax to 8 percent that took effect last week has driven a boom-and-bust in sales of high-priced items like jewellery but passed with little impact on sales of daily necessities. The last rise in the sales tax in 1997 dragged Japan into a recession and depressed private demand for years.
Takashimaya Co Japan’s third-biggest department store operator, said the last-minute rush of demand in March had been stronger than the company anticipated, especially for items like watches, jewellery and luxury brands. As a result, Takashima sees a pullback in sales starting this month that will continue through summer, the company’s president said.
Department stores like Takashimaya saw a spike in demand before the sales tax hike with consumers snapping up watches, jewellery and other big-ticket items.
Takashimaya’s domestic department store sales in March jumped 33 percent from the year before. Isetan Mitsukoshi Holdings Ltd and J.Front Retailing Co Ltd’s Daimaru Matsuzakaya saw spikes of 24 percent and 35 percent respectively.
Takashimaya is seeking to cushion the impact of the expected snapback in sales with a promotion offering 1,000 yen coupons on items priced 10,000 yen or more. It said it would look to offset the reduced sales with lower costs, including reduced spending on rent after buying a bigger stake in the building that houses its store in the Tokyo hub of Shinjuku.