Duty-free sales among foreign visitors, which had led to soaring profits for Japanese department stores, have continued to decline as the strengthening yen makes luxury products less of a deal for tourists.
In response, now-struggling department stores are trying to attract customers through new promotions, including sales floors that are not affected by currency fluctuations.
Nationwide, duty-free sales in July totaled 40.3 billion yen ($274 million), a 36.3-percent decrease from the same month last year, according to data released by the Japan Department Stores Association on Aug. 25.
It was the fifth consecutive month of year-on-year declines, and the drop has now exceeded 30 percent for three straight months.
In addition, the average spending amount per customer was about 84,000 yen in July, a 23-percent drop from the same month in 2024.
“The rising yen has made customers more cautious about spending compared to a year ago,” said Yoshiharu Nishisaka, executive director of the association. “The increasing number of middle-class tourists visiting Japan is also playing a role.”
Although the yen weakened to the 161-yen range per U.S. dollar in July 2024, it strengthened to the 140-yen range in April this year.
According to Isetan Mitsukoshi Holdings Ltd., travelers from Europe, the United States and around Asia could buy goods in Japan last summer at prices around 15 percent lower than in their home countries.
Now, for European and American tourists, the prices in Japan are roughly the same as those at home, while the price gap has narrowed to just about 5 percent for Asian tourists.
Price increases for luxury brand products have also hurt sales of high-end items.
At Matsuya Ginza, duty-free sales from April to July plummeted by 34 percent to 50 percent year-on-year.
For the April–June quarter, Isetan Mitsukoshi Holdings saw duty-free sales slide by 31 percent from the same period last year. The number of customers also decreased by 11 percent, while average spending per customer fell by 23 percent.
This trend continued into July.
Takashimaya and Daimaru Matsuzakaya Department Stores also experienced year-on-year declines in duty-free sales of about 20 percent to 40 percent from April to July.
However, foreign tourists’ enthusiasm for visiting Japan remains strong.
According to the Japan National Tourism Organization and the Japan Tourism Agency, the number of overseas tourists to Japan from January through June increased by 21.0 percent year-on-year to 21,518,390.
And their spending in Japan rose by 22.9 percent to 4.8053 trillion yen.
Both figures were record highs for the first half of a year.
The number of foreign visitors in July also hit a record high for that month.
DEPARTMENT STORES MAKING CHANGES
Department stores are working on new strategies to attract tourists.
Daimaru’s Umeda store in Osaka is holding a special event called “Gundam Base Pop-Up World Tour in Osaka” from April to October to coincide with the Osaka Kansai Expo.
The event features Gundam, a robot franchise that is highly popular overseas. An area of about 900 square meters in the store sells plastic Gundam models, also known as Gunpla, clothing and stationery.
Visitors can also view nostalgic video content.
Seibu department store’s Ikebukuro store, which is currently undergoing renovations, is enhancing its cosmetics floor.
By December, it will expand the section to about 1,700 square meters, one of the largest cosmetics floors in Japan, and bring together 57 popular domestic and international brands.
“Department stores are often associated with high value-added products. However, it will be essential to offer content beyond traditional boundaries, such as pop culture,” Nishisaka said.
AloJapan.com