Silver Egg Releases Report on the Japanese Department Store and General Retail Market Entering a Period of AI-Driven Transformation

Silver Egg Technology Co., Ltd. (Headquarters: Suita City, Osaka Prefecture, President and CEO: Susumu Iwata, hereinafter referred to as Silver Egg), which provides personalization services utilizing AI technology, announces the publication of the "Japanese Department Store and General Retail Market Related Report: Transformation and Future Prospects in the Department Store Market".

Approximately 5% of companies adopting Silver Egg's AI solutions are department stores and general retailers. This survey investigates and analyzes the current state of the general retail market, focusing on department stores whose national sales exceeded 5.6 trillion yen in total in 2025, and explains issues such as changes in inbound demand and delays in transitioning to e-commerce (EC).

Furthermore, it mentions the promotion of OMO as the key to sustainable growth in such an environment, and the potential of "digital concierges" that replicate online the traditional "Omotenashi" (hospitality) cultivated over many years through the use of AI.

■ Background and Purpose of the Survey

The department store market in 2025 has seen a pause in the recovery trend from the COVID-19 pandemic that lasted for the past few years, and is approaching a major turning point. While the number of foreign visitors to Japan has reached a record high, the core of demand has shifted from luxury goods to consumables, and tax-free sales have decreased by 12.7% compared to the previous year, showing that the market is facing fluctuations in the external environment.

On the other hand, domestic demand for high-value-added products, mainly from the wealthy class, continues to be solid.

Under these circumstances, in order for companies to sustain growth, it is essential to break away from conventional business that waits for an unspecified majority, and shift to an identified customer strategy that deeply understands each individual customer, as well as an OMO strategy where stores and digital seamlessly connect. This report summarizes the structural changes in the market and the role of technology in maximizing the experiential value that is the unique strength of department stores.

■ Main Topics of this Survey

1. Shift from Inbound Demand to Domestic Identified Customers

   Although overall market sales decreased slightly, domestic demand remains robust. As the spending per customer in inbound consumption stagnates, major department stores are strengthening their identified customer strategies through their own cards and apps. By utilizing customer attributes and purchase history data to deepen connections with domestic customers, some companies are updating their record high profits.

2. Fusion of Stores and Digital (OMO) and Investment in Experiential Value

   The EC ratio of the five major department stores remains at 1.1% to 4.2%, which is still developing. However, this is also due to the historical background of emphasizing customer service and experiential value in physical stores. Currently, OMO initiatives using electronic shelf labels and apps are accelerating, and there is a movement to transform from places that simply sell goods to "digital native stores" that provide experiences, increasing the ratio of non-merchandising tenants to 65%.

3. Evolution into Digital Concierges via AI and Creation of Serendipity

   As the boundary between stores and EC becomes blurred, initiatives to fuse department stores' greatest weapon, "the ability to deeply know customers," with AI technology are highly anticipated. The spread of digital concierges, where AI learns the "close accompaniment of each individual" performed by skilled staff and makes proactive proposals taking into account even the season and weather, will digitally realize the personal value provision unique to department stores. Furthermore, the gift market expanding to approximately 11.3 trillion yen scale...