In 2022, the overall scale of Japan’s retail apparel market reached approximately ¥8 trillion, 105.9% year-on-year, exceeding the previous year results for two consecutive years. Although the market size shrank from about ¥9 trillion before the COVID-19 pandemic to about ¥7.5 trillion during the pandemic, it has been on a recovery trend after bottoming out in 2020. The Group also increased both revenue and profits in the fiscal year ended March 2023, mainly due to a recovery in the flow of people following the normalization of socioeconomic activities.

By sales channel, department stores and specialty stores, which struggled during the COVID-19 pandemic in 2020, have been recovering. Physical stores showed remarkable recovery due to increased outing opportunities and a recovery in the flow of people in urban areas. On the other hand, e-commerce that had thrived significantly during the COVID-19 pandemic, slowed down the growth as the demand calmed down.

Against this backdrop, the entire apparel industry is increasingly accelerating OMO* strategies. The aim is to enhance customer convenience by strengthening the link between physical stores and online store sites, and to improve sales for both of them.

The overall scale of Japan’s retail apparel market is expected to recover to the pre-COVID-19 level in the coming years. This tendency is projected to continue for a short term as demand for occasional items and outing demand are rising, which currently drives the recovery. In addition, although the market size is likely to expand since unit sales prices have been rising in line with inflation, the market size is expected to gradually shrink in the medium to long term due to the effects of an aging population with a declining birthrate and a declining population.

According to a survey by the Ministry of Economy, Trade and Industry (METI), the e-commerce market represents an expanding proportion of total merchandise sales in Japan, growing to ¥13.9 trillion in 2022, an increase of 5.4% on the previous year. Of this total, e-commerce sales of clothing and miscellaneous items amounted to ¥2.5 trillion, up 5.0% year on year, and comprised 18% of the e-commerce market. Clothing and miscellaneous items are next to “Food and beverages” and “Home appliances and AV equipment” in market scale and have become one of the main categories in the e-commerce market. E-commerce sales accounted for 9.1% of total domestic sales and 21.6% of sales of clothing and miscellaneous items, both of which were higher than the previous year.

In 2020 and 2021, the e-commerce market for clothing and miscellaneous items expanded greatly in response to the COVID-19 pandemic. However, in 2022, this trend subsided and the market experienced moderate growth. In this market, apparel companies are promoting OMO initiatives that integrate physical stores and e-commerce sites, and the changes in their roles are drawing attention.