Isetan Mitsukoshi may close more local outlets with poor sales

January 4, 2018

Tokyo- Isetan Mitsukoshi Holdings Ltd. President Toshihiko Sugie has indicated the major Japanese department store operator's intention to close more local outlets struggling with poor sales.

In a recent interview, Sugie also said that the company will cancel its plan to open a so-called airport-style duty-free shop targeting visitors from abroad in Tokyo's bustling Shinjuku district. Such an outlet exempts shoppers from customs duties, consumption tax, and tobacco and liquor taxes.

Sugie said "it's very possible" that local Isetan Mitsukoshi stores that continue to suffer sluggish sales due to falling populations or other reasons will be shut.

Some regional stores of Isetan Mitsukoshi are running losses. The company is set to shut its Isetan store in the city of Matsudo, Chiba Prefecture, east of Tokyo, in March.

As to criteria for making decisions on store closings, Sugie said, "Whether we can recover the costs spent to open outlets is important," adding, "We'll make decisions while looking at 10 years down the road, rather than whether the store is in the black or in the red now."

On the timing of taking possible store closing decisions, Sugie said, "We plan to decide a direction within the current fiscal year, based on reconstruction plans submitted by each of our stores." The company will then pick stores that would be shut, after seeing how they will perform under the revival plans in the following year, he suggested.

Still, Sugie noted that a careful decision is required. "We can't easily close stores in light of relations with relevant local governments and jobs of our employees."

The cancellation of the launch of the airport-style duty-free shop in Shinjuku comes as the "bakugai" explosive shopping boom mainly among Chinese tourists to Japan is subsiding, according to Sugie.

"A store that only sells goods isn't supported by consumers at a time when their interests are shifting to experience-oriented services," Sugie said.

Meanwhile, he said that a similar duty-free shop launched in Tokyo's posh Ginza district in 2016 will be kept intact at least until 2020. strong>Jiji Press