A Department Store on the Brink of Collapse... Even a 320-Year-Old Japanese Store Closed Its Doors

Online Boom Hits Hard

1,218 Store Closures Scheduled in the U.S. This Year

▲The front view of the Yamagata City main store of Onuma Department Store, founded 320 years ago, which filed for bankruptcy at the local district court on the 27th.
[Image source=Yonhap News]

[Asia Economy Reporter Kwon Jaehee] "We sincerely apologize to the customers, business partners, and local residents who have cherished and loved Onuma all this time. I am sorry to the employees for being a powerless manager." Onuma, a Japanese department store founded 320 years ago, has closed its doors. Mitsuhiro Nagasawa, CEO of Onuma Department Store, bowed deeply as he announced the closure at a press conference held at a hotel in Yamagata city on the 27th.

According to Asahi Shimbun, Onuma Department Store, located in Yamagata Prefecture in northwestern Japan, filed for bankruptcy with the local district court on the same day. With the closure of Onuma Department Store, Yamagata Prefecture has become the only prefecture in Japan without a department store. Onuma Department Store ceased operations on the 26th and will close a total of three stores, including its main branch in Yamagata city. In Japan, nine department stores closed last year alone. NHK reported that six more department stores are scheduled to close this year and next. The Japan Department Stores Association stated, "Local department stores continue to face difficulties due to competition from online shopping malls and large shopping centers."

Since the 2000s, the rapid growth of online retailers based on the internet has led to a wave of offline retail store closures. This is not only a phenomenon in Japan but a global trend, reflecting the current state of the retail industry. The Financial Times (FT) reported that while overall retail sales have been booming, this is limited to online sales. Especially during this holiday season (typically from Thanksgiving to the end of the year and New Year), Amazon's sales increased by 19% compared to the same period last year. According to a report by Swiss financial group UBS, by 2026, online sales are expected to account for one-quarter of total retail sales.

The boom in online shopping malls has dealt a direct blow to offline retail store closures. The New York Times (NYT) reported that in the U.S., a total of 1,218 stores, including major department store chain Macy's and retailers like Papyrus, are planning to close this year. Home decor retailer Pier 1 Imports plans to close 450 stores, half of its total locations, this year. The number of retail store closures in the U.S. increased from 6,897 in 2018 to 9,275 in 2019. Since 2008, more than 57,000 offline stores have disappeared in the U.S. The wave of offline retail closures is also reducing related jobs. FT reported that as shoppers move online, 500,000 retail jobs are expected to be lost by 2025.

Due to the wave of retail closures, a new profession called "store closure specialist" has emerged in the U.S. This role involves traveling across the country to offer deep discounts to customers looking for bargains and comforting store employees who work until the last day of business. They receive commissions based on sales during the inventory clearance period.