Retail, leisure and dining businesses are taking a hit as more people in Japan avoid crowded areas and opt to stay home due to the spread of COVID-19, with economists predicting a fall of over ¥2 trillion ($18 billion) in household consumption.
Japanese-style izakaya pubs reported group cancellations after Prime Minister Shinzo Abe asked organizers of big sport and cultural events on Wednesday to consider canceling or postponing them over the next two weeks in the wake of the pneumonia-causing virus.
Noting spring is a season for send-off and welcome parties in Japan, with the fiscal year starting for businesses in April, the head of one izakaya in Tokyo said, “If this (self-imposed restraint) continues through March and April, there will be damage to our business.”
Matsuya Co.’s department store in Tokyo’s upscale Ginza shopping district said sales between Feb. 1 and Feb. 26 fell some 30 percent from a year earlier, as the number of shoppers declined day by day from the middle of the month.
Department stores are also suffering from a sharp fall in the number of Chinese tourists to Japan due to a travel ban imposed by Beijing to contain the virus, which is believed to have originated in the central China city of Wuhan.
Among major leisure companies, Sanrio Co. has decided to close its indoor Hello Kitty theme park, Sanrio Puroland, in Tokyo from Feb. 22 through March 12.
Tokyo Disneyland and Tokyo DisneySea will be closed from Saturday to March 15, operator Oriental Land Co. said Friday.
Central Nippon Expressway Co., which manages major highways, has also seen less traffic. Preliminary data for toll revenues from Feb. 1 to 23 showed a fall of some 4 percent on the year, while sales at rest stops along highways, including of goods and food, decreased around 7 percent.
One senior official at a firm that supplies staffing for events said, “Our sales will be affected if this mood of restraint continues. We have decided to consider reducing the number of new recruits from April.”
Some companies sense a new opportunity in the widespread desire to avoid crowds, although they remain in the minority.
BellFace Inc. reported growing interest in its online conference services from companies looking to introduce teleworking. “There are more inquiries, as face-to-face business is becoming difficult,” a company official said.
Leisure-related stocks have faced selling on the Tokyo Stock Exchange. Shares of Oriental Land and Sanrio ended Thursday down nearly 20 percent from the end of last December.
Shares of Tokyo Dome Corp., which operates an amusement park and baseball venue, have fallen 22 percent, while movie and theater production companies Toei Co., Toho Co. and Shochiku Co. saw declines of 21 to 24 percent.
Toshihiro Nagahama, chief economist at Dai-ichi Life Research Institute, said household spending in Japan could fall more than ¥2.3 trillion in the first half of this year if people adopt the same level of self-restraint seen after the earthquake and tsunami disaster in March 2011.
“If the decrease in inbound travelers is also considered, the country’s nominal gross domestic product could shrink by some ¥2.9 trillion,” Nagahama said.
“The new coronavirus comes as a further blow to the economy in addition to the consumption tax rise (from 8 percent to 10 percent last October). It’s like salt rubbed into a wound. Economic recovery is likely to be delayed significantly.”
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