Japan’s department stores are feeling the pinch as tourist spending drops sharply. In May, tax-free sales to international visitors plunged by 41% compared to last year, signaling a slowdown in the post-pandemic shopping boom that had been propping up retail revenues.

Editor’s Note: Remember when tourists were flocking back to Japan and splurging on luxury goods? That trend’s cooling off—hard. For stores that had been banking on big-spending visitors, this slump could mean tighter margins or even layoffs if it continues. It’s also a red flag for Japan’s broader economic recovery, which has leaned heavily on tourism. If wallets stay closed, the ripple effects could hit everything from local jobs to luxury brands.