What: Japanese department stores achieve record tax-free sales of JPY 50.8 billion in October 2024, marking a 32.3% year-on-year increase, while domestic sales face weather-related challenges.

Why it is important: The contrasting performance metrics highlight the transformation of department store business models, where success increasingly depends on managing seasonal volatility while capitalizing on international shopping trends.

Japanese department stores demonstrated remarkable resilience in their tax-free sales performance during October 2024, achieving a significant 32.3% year-on-year increase to reach JPY 50.8 billion. This growth has contributed to an impressive year-to-date performance, with tax-free sales from January to October 2024 totaling JPY 534.7 billion, exceeding the previous year's record by more than 50%.

However, the sector faces contrasting domestic challenges, as evidenced by a 0.7% decline in nationwide sales to JPY 447.7 billion in October. This downturn, the first in over two years, was primarily attributed to unseasonably warm weather impacting autumn and winter clothing sales. Despite these challenges, the industry maintains optimism about the upcoming Christmas shopping season, anticipating a recovery in domestic sales as temperatures normalize and seasonal shopping patterns resume.

IADS Notes: The October 2024 surge in Japanese department store tax-free sales reflects broader trends in the sector's post-pandemic recovery. The 32.3% year-on-year increase aligns with the record profits reported by major chains earlier in the year , demonstrating the successful revival of tourist spending. However, the contrast between robust tax-free sales and the 0.7% decline in overall sales highlights the dual nature of the market: while international tourism drives luxury purchases, supported by the weak yen , domestic sales remain sensitive to factors like unseasonable weather.

This pattern follows the observed trend of concentrated growth in major urban centers, particularly in Tokyo, Osaka, and Kyoto , while regional stores face different challenges. The performance disparity between tourist-driven and domestic sales reflects the sector's ongoing transformation, with retailers increasingly focusing on flagship store experiences and adapting to changing consumer behaviors. Despite current seasonal challenges, department stores are maintaining strategic optimism, supported by data showing sustained recovery in both international and domestic luxury spending .

Tax-free sales at Japan's department stores surge in October