Tokyo, March 27 (Bloomberg) -- Japanese department store andsupermarket sales were unchanged in February from January, asrecord unemployment and slowing wages growth keeps people fromspending more. Sales at large retail stores held steady last month after rising 5.6percent in January, the Ministry of Economy, Trade and Industrysaid. At stores open at least a year, sales fell 5 percent from a yearearlier -- the 34th straight decline. Economists had expected salesto fall 2.5 percent from a year earlier. Today's numbers suggest underpinnings for spending ``haven'timproved,'' said Yukari Sato, a senior economist at Nikko SalomonSmith Barney Ltd. ``Spending fundamentals in terms of employmentand income will probably become more bearish.'' Record high unemployment -- the rate held at 4.9 percent in January-- and smaller wage rises, combined with falling prices, is keeping alid on spending. That's acting as a brake on economic growth --consumer spending, which accounts for 60 percent of economicactivity, hasn't contributed to growth for the past two quarters. The Topix index of retailers fell 1.1 percent today, led by Ito-YokadoCo., the largest supermarket operator, and Seven-Eleven Japan Co.,the nation's biggest convenience store operator. The broader Topixindex also fell 0.7 percent while the benchmark Nikkei 225 fell 1.2percent.
Discounters
Changes in the retailing industry are also eating into profits oftraditional retailers, as discount and specialty shops lure more price-conscious customers. ``More and more people are shifting to specialty and certain discountoperators,'' said Koichi Iwamoto, head of research and statistics atMETI. ``This is a structural change in consumer spending.'' Retailers such as Takashimaya Co., Japan's biggest departmentstore, and Mycal Corp. the fourth-biggest retailer, are hurting asnewcomers such as Fast Retailing Co. and Costco Wholesale Corp.win customers by cutting prices. Takashimaya last month said it will probably miss its operating profitforecast in the fiscal year ended February. Mycal is cutting 2,700jobs and closing 50 stores in a bid to reduce its debt. Yokohama Matsuzakaya Co., which runs department stores in thecity of Yokohama, last week widened its forecast net loss for theyear ended Feb. 28 to 251 million yen from 145 million yen. In comparison, sales at Fast Retailing's Uniqlo stores rose 35percent last month from a year ago on a same-store basis. These new shops aren't included in the ministry's survey of retailers,economists say. The ministry has said new retailers are added tothe survey, though it hasn't clarified how often the sample ischanged. Today's report showed total retail sales, including sales of householdelectrical products and autos, increased 0.5 percent from January,seasonally adjusted, while it fell 0.6 percent from a year ago.