What: Japanese retail sales show mixed performance in March with 3.1% annual growth falling short of expectations, while monthly figures reveal broader market challenges.

Why it is important: The mixed results demonstrate the ongoing evolution of Japan's retail sector, where different segments show varying resilience to changing market conditions. Japan's retail sales demonstrated mixed performance in March, with year-on-year growth of 3.1% reaching 14.063 trillion yen but falling short of the expected 3.6% increase.

While this represents improvement from February's 1.3% growth, the seasonally adjusted monthly figures showed a 1.2% decline. Commercial sales achieved a 3.5% annual increase to 57.064 trillion yen, with wholesale sales growing 3.6% to 43.00 trillion yen, though both sectors experienced monthly declines of 1.6%. Large retailers showed contrasting results with a 0.2% monthly decrease but 3.0% annual growth. The broader first-quarter performance for 2025 remained positive, with retail sales growing 2.9% year-on-year and 1.5% quarter-on-quarter to reach 38.970 trillion yen, indicating sustained but moderating growth in the Japanese retail sector.

IADS Notes: Japan's March retail performance reflects broader market transformation and challenges. According to Japan Today's January 2025 coverage , while department stores achieved record sales of 5.75 trillion yen in 2024, performance showed significant regional variation with major city stores growing 9.1% while regional locations declined 0.5%. Inside Retail's February 2025 analysis revealed how consumer confidence has hit concerning lows at 35.2, with department stores seeing growth decline from 10.8% to 2.3% in the second half of 2024, though value-oriented specialty retailers like Uniqlo demonstrated resilience. Inside Retail's April 2025 report highlighted how major department stores posted March sales declines ranging from 0.8% to 1.6%, driven by reduced tourist spending and weather-impacted seasonal merchandise. Inside Retail's January 2025 coverage showed how J Front Retailing achieved 6.2% growth through focus on luxury categories and high-value customers, though success remained concentrated in flagship locations. The March retail sales growth of 3.1%, while below expectations, demonstrates how Japanese retail continues to navigate between tourism dependency, regional disparities, and changing consumer behavior.

Japan retail sales climb 3.1% on year in march