Tax-exempt spending falls for fifth consecutive month compared to previous year.

Some of the biggest beneficiaries of Japan’s inbound tourism boom have been department stores. Stop by branches of any of the major chains in Tokyo, Osaka, or other popular destinations for foreign tourists, and you’re sure to see a line of people waiting to go through the procedure at the tax exemption service counter, which saves non-residents 10 percent on most purchases of non-consumable items that they’ll be taking back to their home countries.

However, those lines aren’t quite as long these days, according to data from the Japan Department Stores Association. The organization releases monthly figures for foreign tourist spending and visitor numbers at 87 department stores that make up its Inbound Tourism Promotion Committee, and the numbers for July, the most recently calculated period, are down considerably compared to a year ago.

In July, total tax-exempt purchases by foreign tourists at the department stores came to 40.34 billion yen (about US$272.5 million). While that’s still a whole lot of money, it’s down 36.3 percent compared to July of 2024.

This wasn’t a midsummer fluke, either. While tax-exempt sales this past January and February were up compared to 2024, they’ve been down every month since.

Tax-exempt sales to foreign tourists in 2025, compared to same period for previous year
● January: Up 54.9 percent
● February: Up 14.5 percent
● March: Down 10.7 percent
● April: Down 26.7 percent
● May: Down 40.8 percent
● June: Down 40.6 percent
● July: Down 36.3 percent

The dip in tax-exempt shopping isn’t being offset by greater spending on non-exempt items by foreign tourists either, as the association says that was down even more, 40.6 percent, in July. It’s not just spending that’s down, either, as the number of foreign tourist shoppers for the department stores dropped 16.7 percent in July compared to 2024, the third consecutive month to do so.

Number of foreign tourists making purchases in 2025, compared to same period for previous year
● January: Up 48.4 percent
● February: Up 29 percent
● March: Up 13.4 percent
● April: Up 3.1 percent
● May: Down 5.4 percent
● June: Down 13.8 percent
● July: Down 16.7 percent

And if department store operators are looking for a possible silver lining in the form of a shift to a smaller number of foreign tourist customers opening their wallets wider on an individual basis, that doesn’t appear to be happening either. The data for July says that the average per-person spending by foreign tourist customers was 84,000 yen, which, once again, is a decrease compared to the previous year, this time by 23.6 percent.

The Japan Department Stores Association’s press release doesn’t offer any theories as to why foreign tourist spending has been cooling off, and there hasn’t been any significant decrease in the total number of inbound international travelers to Japan. With approximately 476,000 foreign tourists visiting the report’s stores this past July, it’s not like they’ve completely lost intertest, but the figures suggest that leaning heavily into courting luxury travelers might no longer be as lucrative a strategy for Japanese department stores as it has been for the past few years.

Source: Japan Department Stores Association via Ryutsu News via Jin
Top image: Pakutaso
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