Shoppers stroll in Nagoya's central area on a weekend in March following the Great East Japan Earthquake. (Asahi Shimbun file photo).The March 11 disaster drove down sales at department stores at a record pace during a time when the retailers were finally convinced they were on a firm road to recovery.
The store operators now only see months of sluggish sales and declining revenue.
Consumers have tightened their purse strings as they brace for an economic slowdown stemming from the Great East Japan Earthquake and the crisis at the crippled Fukushima No. 1 nuclear power plant.
Foreign tourists are staying away from Japan because of fears of radiation contamination.
And rolling blackouts could lead to shorter operating hours and sweltering conditions inside the department stores in the summer.
Breweries also expect losses from the disaster.
Sales in the Tokyo metropolitan area of Daimaru Matsuzakaya Department Stores Co., Takashimaya Co. and Sogo & Seibu Co. in March plunged a record 20 percent to 30 percent year on year.
The decline was particularly sharp for clothing and jewelry.
Since last fall, the department store operators had reported strong sales, leading to predictions of rising sales and profits for the current fiscal year.
After a prolonged period of stagnation, the three companies all posted operating profits for fiscal 2010 ended February.
Now, they are all forecasting declines in revenue for fiscal 2011, which ends in February 2012.
"We need to endure (lackluster sales) for about a year," said Tsutomu Okuda, chairman of J. Front Retailing Co., a holding company of Daimaru Matsuzakaya Department Stores. "Hopefully, we will see sales rebound in about six months."
Stores have already been forced to curtail shopping hours since rolling blackouts were introduced last month by Tokyo Electric Power Co., which operates the Fukushima plant and services the Kanto region, including Tokyo.
Department store operators may have to shorten store hours further in the summer, when demand for electricity peaks.
TEPCO's capacity is expected to fall short of projected demand due to the damage to its power plants in the March 11 quake and tsunami.
Although shop hours and sales have expanded in April, the department store operators are worried about sales prospects in the coming months.
The government is working on a decree to ask large power users to cut electricity by 25 percent in the summer.
Department stores have been trying to save power by turning off lights at their outlets since the rolling blackouts were introduced. But the 25-percent cut would be impossible to achieve if they continue to use air conditioning.
One proposal that emerged is for all department stores to set up a holiday, industry sources said.
Another problem for the department stores is that foreign tourists, seen as a key to their sales strategies, have disappeared.
Between March 11 and March 31, sales involving foreign shoppers at J. Front Retailing, which has an outlet in Tokyo's upscale Ginza district, plummeted 61.5 percent from the same period in 2010.
Matsuya Co., which operates department stores in Ginza and elsewhere, reported a year-on-year decline of 88.3 percent over the same period.
"We cannot expect large sales," said Masaki Akita, president of Matsuya, referring to the prolonged period needed to resolve the nuclear crisis.
The crisis in northeastern Japan is also expected to reduce shipments of beer and other alcoholic drinks.
Five breweries said Tuesday their shipments last month fell to 33.349 million cases, down 10.9 percent from the same month in 2010. It was the second-lowest level for March since 1992, when the industry began compiling data under the current method. One case contains 20 633-milliliter bottles.
The lowest shipment volume for March was in 2008, when a price hike resulting from soaring costs of ingredients reduced sales.
Beer shipments for March dropped 5.3 percent year on year, while shipments of so-called "third-category" beer, which imitates beer but contains little or no malt, declined 13.8 percent, the first year-on-year decrease in 37 months.
The decreases were attributed to the suspension of production at factories damaged in the March 11 disaster.
Two factories each of industry leaders Asahi Breweries Ltd. and Kirin Brewery Co. were seriously damaged. Other brewers also lost production sites.
Although many beverage companies have resumed production, Kirin's beer factory in Sendai, a major city in northeastern Japan devastated by the quake and tsunami, is expected to reopen in autumn or later.
Another factor in the decline in March shipments was that many consumers refrained from buying alcoholic beverages after the disaster, while farewell parties in March, the last month of fiscal 2010, were canceled.
An official at a large brewer expressed concerns that consumption could continue to dwindle in the coming months.
"We still have many drinks on store shelves," the official said. "We could have fewer orders."
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