The vaccination drive of Japan is picking up steam. That's good news for the retail sector, says EY

July 6, 2021: -Japan’s vaccination efforts will gain some momentum after a slow start, and that’s good news for retailers, said EY’s Nobuko Kobayashi.

“The vaccination is picking up steam in Japan. The government says that all who want to be vaccinated can be by October, November,” Kobayashi, Asia-Pacific strategy execution leader at EY, told CNBC on Friday.

In the future, the short-term milestone will be if the vaccination rollout reaches a level whereby “everyone feels comfortable to go out again,” she said. Kobayashi said the consumption outlook on balance is positive, even considering Covid variants like a delta.

Following a sluggish rollout this year, vaccination rates in Japan have risen substantially in recent weeks. According to Our World in Data, daily Covid-19 vaccine doses administered even went over the one million marks in June.

According to Our World in Data, The doses of Japan per 100 people reached an average of 0.77 for the seven days ending on July 1. That’s higher than the 0.48 and 0.32 doses per 100 in the United Kingdom and the U.S., respectively, in the same period.

Still, only 12.65% of Japan’s population has been fully vaccinated against Covid, compared with the U.K. and U.S., which have inoculated above 40% of their population. In 2020, Japan had a population of more than 125.83 million, according to World Bank data.

Japan is just weeks away from hosting the Summer Olympics, but Tokyo prefecture remains under priority measures intended to limit the spread of the virus. Some aspects of the games remain undecided. According to local news agency Kyodo News, Japanese Prime Minister Yoshihide Suga said Thursday that they could be held without spectators.

Still, EY’s Kobayashi said the Olympics are likely to have a “positive impact” on Japan’s retail landscape even if spectators are barred from the games.

In the short term, she said products such as high-definition TVs could see a spike in demand. Meanwhile, a successfully executed Olympics will “increase the attractiveness of Japan” as an international travel destination, in the long run, she said.

“It’s great news for inbound tourism and consumption,” said Kobayashi.