Tax free sales at department stores drop in Japan as foreign tourists curb spending

TOKYO – Visitors to Japan have been key customers for department stores, but now they are tightening the purse strings.

Foreign visitors spent about 42.5 billion yen (S$374.4 million) at department stores nationwide in May, down by a massive 40.8 per cent from the same month in 2024, the Japan Department Stores Association announced on June 24.

Department stores will try to adapt, such as by offering an app exclusively for overseas customers, but it remains uncertain whether sales will rebound.

May was the third straight month for tax-free sales to fall from the same period in 2024.

The number of foreign shoppers fell 5.4 per cent year-on-year to about 536,000, dropping below the previous year’s level for the first time in three years and two months.

With sales for luxury brands and other high-priced items sluggish, average purchases per individual dropped by 37.4 per cent, to about 79,000 yen.

Foreign visitors are believed to have found shopping in Japan less of a bargain after the recent rise in yen and price hikes by high-end brands, which were prompted by a surge in raw material costs.

Some also argue that Chinese tourists went on fewer shopping sprees due to the slowdown in the Chinese economy.

From January to March, visitors to Japan spent about 222,000 yen on average, up 5.2 per cent from the same period in 2024, according to a survey by the Japan Tourism Agency. This suggests that overall consumption by foreign tourists has not declined.

However, during that quarter, Chinese visitors spent significantly less on total purchases, with the average dropping by 13.7 per cent to 256,000 yen.

“The decline in the average spending per Chinese customer is particularly noticeable. Inbound tourists are diversifying their spending, and they are changing the types of shopping that they value,”