Department stores' tax-free sales drop as tourists' shopping patterns change
Tax-free sales at department stores nationwide are plunging due in part to a change in the shopping patterns of foreign tourists, prompting retailers to rethink their business strategies.
According to the Japan Department Stores Association, sales of tax-free products at department stores in May fell 40% year-on-year, with the decline being for the third month in a row.
Broken down by category, general products sales, which includes luxury brands, decreased 45.6% from the same month last year, showing a slowdown in high-end items. The average amount each shopper spent was about ¥79,000 ($546), down by about ¥47,000 from May 2024.
The number of shoppers decreased 5.4% in the same period, shifting to negative growth for the first time in 38 months.
'There is a greater diversity of foreign tourists, and their shopping priorities have changed,' said Yoshiharu Nishisaka, the association's executive.
A senior official at a major department store pointed out that the stronger yen and price hikes of foreign luxury brands make buying tax-free items less attractive for many tourists, while a separate department store source said consumer sentiment is weaker due to uncertainty in the economy over U.S. President Donald Trump's tariffs, as well as China's economic slowdown.
Travelers from Hong Kong have declined due to rumors on social media that there will be a major earthquake in Japan soon.
Major department stores are doing their best to cater to foreign customers, but it's unclear if it will lead to more sales.
Isetan Mitsukoshi Holdings introduced an app for foreign clients in March, for example, to send information about sales campaigns and coupons. Matsuya's Ginza outlet opened a guest lounge for wealthy foreign customers, while Takashimaya is issuing VIP cards at its Singapore outlet so customers can enjoy priority treatment when going through tax-free procedures at its department stores in Japan.
Translated by The Japan Times
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