Japan Duty-Free Sales Up in March; 1st Rise in 5 Months

Duty-free sales at Japan’s department stores in March rose 5.2 percent from a year earlier to 46.51 billion yen, marking the first increase in five months, despite a roughly 20 percent drop in sales to Chinese customers amid diplomatic friction.

The overall figure rose as a weaker yen helped increase spending per customer while sales to visitors from Taiwan, South Korea, Southeast Asia and the United States increased, according to the Japan Department Stores Association.The number of duty-free shoppers, meanwhile, dropped 12.3 percent to 453,000, decreasing for the fifth straight month.The number of Chinese customers sank around 40 percent in March, hurt by persistent diplomatic frictions between Japan and China, the association said.

Duty-free sales to Chinese visitors have sunk in recent months but an association official said, “The pace of decline has been slowing compared with January and February.” The official also noted a change in spending patterns by Chinese shoppers. Before the COVID-19 pandemic, tour groups of Chinese customers would arrive at department stores in large numbers and splurge on Japanese goods, a phenomenon known as bakugai, or bulk buying.

Nowadays, however, “there has been an increase in repeat customers and more visitors familiar with Japan, and such individual shoppers appear to be spending heavily” despite the overall drop in Chinese customers, the official added.

Japan-China relations have been strained since Japanese Prime Minister Sanae Takaichi said in parliament last November that a Chinese attack on Taiwan could constitute a “survival-threatening situation” that could prompt a response by the Self-Defense Forces in support of the United States.

Excluding duty-free sales, domestic department store sales increased 3.0 percent in March, boosted by robust sales of spring clothing and high-end items such as watches and jewelry.