A prized Japanese watermelon fetched nearly $4,000 on Monday at an auction in Sapporo. Yes, $4,000.

But before you choke on your own slice of citrullus, that four-figure price tag is actually a steep fall from the fruit's peak season several years ago, in what may be a sign that the country's highly regarded luxury fruit market is the latest victim of tightening consumer purse strings.

The...