Boosted by an increase in inbound tourism from neighboring countries, beauty players in Japan are optimistic about renewed growth in what has otherwise been a difficult market in recent years. However, even last year in spite of the flow of tourists, retail beauty and personal-care sales fell by 0.4 percent to $32.15 billion, according to figures from Euromonitor International.

Economic measures such as the removal of taxes for foreigners on consumer products like cosmetics, the devaluation of the yen and a relaxation of visa requirements have contributed to pushing monthly visitor numbers to Japan to record highs over the past 12 months. February 2016 saw a 36.4 percent year-on-year increase in visitor numbers to 1.89 million, led by the Chinese (498,900), South Koreans (490,800) and Taiwanese (349,00), according to data from Japan Macro Advisors. It is estimated that around half of all visitors purchase cosmetics during their stay.

Mintel beauty analyst, Hinako Sugioka, said Chinese visitors tend to engage in ‘bakugai’, or shopping sprees, purchasing cosmetics in bulk during their stay. She says both department stores and drugstores have benefited from the influx of overseas consumers.

For prestige beauty brands, the influx of cashed-up inbound tourists has driven renewed growth in key department store doors, and offset domestic consumption patterns that have been weakened by hikes in consumption taxes and an aging population.

“Beauty is growing extremely fast again in Japan and this has been the case for a good two years now. Department stores specifically are growing very fast. The Chinese impact has been tremendous,” commented Justin Boxford, Estée Lauder’s Senior Vice President and General Manager of International. Most of the major Japanese companies’ domestic sales over the past year or more have been buoyed by the tourist impact.

To read BW Confidential’s full report on the beauty market in Japan, click here.