Japan’s retail sector remained stable despite continued dollar strength against the yen, with sales totaling $286 billion in 2025 and rising demand across supermarkets, convenience stores, and drug stores. Retailers have targeted younger consumers seeking easy-to-prepare, frozen, and ready-to-eat foods to drive growth. Starting with the 2026 report, FAS Tokyo updated its retail sector data source, revealing a larger market and greater opportunities than previously estimated. In August 2026, Japan’s Cabinet approved a plan to cut the grocery consumption tax from 8 to 1 percent for two years, beginning April 2027, while keeping the dining-out tax at 10 percent. If enacted, this is expected to modestly boost domestic food demand and shift consumption from dining out toward eating at home. Building and maintaining relationships with Japanese manufacturers and importers remains critical to successful market entry.