Japan Retail Sector "Department stores: Isetan Mitsukoshi HD's FY3/26 re..."

Research evidence excerpt

Japan Retail Sector "Department stores: Isetan Mitsukoshi HD's FY3/26 re..."

Trends among Japan's wealthy individuals; these consumers represent a

growth market

UBS recently issued its Global Wealth Report 2025. This estimates that in 2024, the

number of individuals in Japan with assets worth US$1mn or more reached 2.732mn,

ranking the country fourth globally after the US, mainland China and France. Tapping

into this growing affluent demographic is therefore likely to remain an important

business challenge for Japan's department store sector. Mitsukoshi Isetan HD is

promoting initiatives to attract affluent customers as part of its differentiation strategy.

In FY3/26, while domestic customer sales increased by 2.7% yoy, sales to customers

identified as affluent rose 3% and sales to those making purchases of at least ¥3mn

within this group climbed 6% yoy.

UBS view: business opportunities for retail sector

The UBS luxury brand price index indicates that, partly due to forex rate fluctuations,

Japan's relative affordability compared to France (set at 100) has steadily increased since

the end of January 2025, reaching 99 by the end of March 2026. If China was set at 100,

Japan’s figure would be 82 as of the same point. On the other hand, in addition to the

possibility that luxury brand companies may implement price increases to correct for

Japan's relative affordability, external factors include demand fluctuations for luxury

brands as a result of forex rate fluctuations, making sales fluctuations across the

department store industry to some extent all but unavoidable.

However, considering changes in Japan's social and industry structures, we believe that,

in addition to the rise in the number of affluent individuals, the overall reduction in store