One of the notable developments of Japan's retailing is the persistent sales decline of the large-scale retail stores. Indeed, shoppers' buying habit has changed substantially over the past decade under the lingering impact of asset depreciation following the bubble burst, high unemployment due to corporate restructuring, and worries about heavy tax and contribution to pension funds to support the ageing population. The emerging specialty stores selling cheaper merchandise, such as Uniqlo, become the favourites of consumers. Exacerbated by falling exports, Japan s industrial output plunged in the first five months of 2001. The latest Tankan survey conducted by the Bank of Japan also showed that large manufacturers have projected declines in profits and capital spending for fiscal year 2001.
Deflation remains a problem amid flat economic growth.
Prices may continue to nudge downward as a wholesome recovery in consumer demand is not evident amid faltering household incomes. Unemployment remains severe as corporate restructuring continues. In the past year, the Japanese banking industry has gone through a major realignment with 11 big banks coalescing into four megabanks. Japan's import growth outpaced that of exports, leading to the shrinkage in trade surplus in the first five months of 2001. For the rest of 2001, Japan's exports will continue to be undermined by the slowdown in overseas markets.