What: Japanese department stores have benefitted from the touristic boon to thrive when others are currently struggling.

Why it is important: Is this more a trend or a stable situation?

Japanese department stores are experiencing a boost in sales due to an influx of overseas tourists, particularly with the weak yen encouraging high spending on luxury goods. However, executives remain cautious as this growth, largely driven by tourism, is not seen as sustainable in the long term. The focus is on maintaining relevance in the fashion segment for domestic middle-class customers and diversifying into complementary businesses.

While overall sales increased in October, there was a slowdown compared to the third quarter. Growth is primarily concentrated in major urban areas like Tokyo, Osaka, and Kyoto, with regional stores lagging behind. High-value customers and 'gaisho' sales (where sales representatives visit customers) are significant growth drivers, with a notable increase in younger, affluent shoppers.

Diversification efforts include developing mixed-use spaces and commercial activities, as well as positioning department stores as cultural hubs. Despite the positive trend, there's an industry-wide concern about sustaining this growth, particularly as other retail sectors like supermarkets and convenience stores are showing signs of a slowdown. November sales figures are being watched closely for indications of either a continued upswing or a further decline in retail performance.

Japan’s department stores: what’s left when the tourism tide goes out?