What: Japanese department stores report 5.2% year-on-year sales growth in January 2025, driven by strong duty-free sales and seasonal promotions, despite reduced operating days.

Why it is important: This growth demonstrates the evolving role of department stores in Japan's retail landscape, where tourism spending and seasonal promotions become increasingly crucial for maintaining market relevance.

Japanese department stores achieved total sales of 480.5 billion yen in January, marking a 5.2% increase year-on-year despite operational adjustments at 46 stores nationwide. The performance was particularly notable in duty-free sales, which surged 54.9% to reach 61.9 billion yen, setting a new January record. This growth was driven by a combination of factors, including strong demand for traditional lucky bags and increased spending from foreign tourists, especially during the Chinese New Year period. The success of these sales, achieved despite delayed first sales days and increased holiday closures, demonstrates the sector's ability to adapt its operations while maintaining strong performance. The robust demand for specific categories, including food-packed lucky bags, artworks, and jewelry, indicates effective merchandise strategy alignment with both domestic and international consumer preferences.

IADS Notes: Japanese department stores' strong January performance reflects broader trends in the sector's post-pandemic evolution. The 5.2% year-on-year sales increase aligns with the record-breaking performance seen throughout 2024, where total sales reached 5.75 trillion yen . The surge in duty-free sales, up 54.9% year-on-year, continues the momentum from 2024's remarkable 85.9% growth , demonstrating the sector's successful leverage of tourism and currency advantages. This growth is particularly concentrated in specific categories, with cosmetics and luxury goods leading performance . However, the success remains geographically uneven, as evidenced by the stark contrast between urban and regional store performance . The strong demand for lucky bags and seasonal items, combined with strategic timing of sales events, shows how traditional retail practices continue to resonate when aligned with modern consumer behaviors. This performance comes amid broader market challenges , suggesting that Japanese department stores have found an effective balance between catering to domestic traditions and capturing international tourism spending.

Japan's department store sales rise 5.2 pct in January