JAPAN REPORT: INTRODUCTION
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Renovation work intensifies ahead of Tokyo Olympic Games
In the first quarter of this year Japanese travel retail operators reported a slowdown in airport departure store sales, as Chinese customs enforce stricter inspection procedures on travellers re-entering China. However, sales in arrivals and downtown shops continue to rise, according to David Hayes.
either foreign or Japanese cigarettes, or one carton of each. This replaced prior rules that limited the duty free import of tobacco products to one carton of Japanese cigarettes and one carton of foreign cigarettes only. The change in regulations has
Above: Lotte Duty Free is reporting strong revenue growth from its downtown store in Ginza.
F
ollowing a particularly buoyant FY2018, many operators speaking to David Hayes for this
year’s comprehensive Japan Report professed to a marked slowdown in their airport departure shop sales. They argue that customs checks,
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which have tightened recent months in China, are partly to blame. This has had the biggest knock-on affect to tobacco sales, particularly Iqos e-cigarettes, along with some popular beauty products. Renovations taking place in a
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large number of stores at both Narita and Haneda airports in Tokyo are also partly responsible for a deceleration overall. Thankfully, some of those same
operators have still experienced growth overall from their operations due to the steady rise in arrivals and
Japan overall is making the most of a tourist boom in the country, which registered a total of 31.2 million inbound foreign visitors in 2018, according to the Japan National Tourist Organisation (JNTO), an 8.7% increase compared with the previous year.
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and Haneda are hoping for at least single-digit growth this year in order to match the revenue figures they reported in 2018. As the number of foreign visitors
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continues to grow, operators are hoping to offset the reduced spend by Chinese passengers. On the other hand, duty free arrival shops across Japan in Narita, Haneda and Kansai airports continue to report rising sales. A shift is occurring in the share of
spend in these stores, in favour of more Japanese men, while tobacco now accounts for more than 80% of purchases. To provide some context, Japan’s
duty free import regulations were changed last year to allow inbound passengers to bring in two cartons of
free operators are refurbishing their Narita and Haneda airport departure shops and boutiques, while introducing new brands. This is in preparation for the expected surge in foreign visitors next July, when the world’s attention will turn to Japan as it hosts the Tokyo 2020 Olympic Games. Duty free operators at Narita
downtown duty free store sales. As mentioned, many duty
benefitted duty free arrival shop operators, who are currently restricted to selling only imported liquor, tobacco, confectionery and perfumes in their arrival shops. Most arriving passengers who purchase cigarettes buy two cartons, often of the same imported brand. Downtown in Tokyo, however,
it is Japanese cosmetics that are responsible for driving strong revenue growth, as more Chinese FITs and group tours visit their shops. In response, these stores are rethinking their assortments by replacing imported brands with premium Japanese cosmetic brands, as well as those in a lower price bracket. These are sold in tax free drug store chain outlets that have recently opened in downtown stores’ tax free zones.
Pax boom continues Japan overall is making the most of a tourist boom in the country, which registered a total of 31.2 million inbound foreign visitors in 2018, according to the Japan National Tourist Organisation (JNTO), a 8.7% increase compared with the previous year. Foreign visitors continue to grow
this year, with 16.6 million arriving in Japan during the first half (January to June) of 2019, representing a 4.4% increase compared to the same period last year. Asian travellers accounted for about 85% of all foreign visitors during 2018. According to JNTO figures, these
OCTOBER 2019
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