Japan banks on duty free growth as travel rebounds

By Luke Barras-hill and David Hayes |

tax free shopping Japan Duty free retailers, like those in Haneda, are likely to be affected by the moveJapan’s airport and downtown duty free and travel retail operators are eyeing a strong improvement in sales this year, as foreign visitors and outbound traveller numbers continue to rise.

The government suspended Covid entry restrictions for most foreign nationals in October, spurring arrivals to the country as fully vaccinated FIT (free independent traveller) foreign passport holders were given the green light to enter Japan without facing the prospect of quarantining.

Overseas tourist numbers were limited initially after Japan reopened but are now tipped to grow quickly from January, spurred by the yen’s exchange rate weakness.

The forthcoming Chinese New Year holiday beginning 22 January shows promise, though the number of Chinese tourists expected to visit Japan remains to be seen given Japan is among a number of countries to require negative Covid tests for Chinese passport holders after China reopened its borders at the weekend.

Foreign travellers using Tokyo’s Narita International Airport, including transit passengers, have risen steadily over the past year as international travel has resumed, boosting Narita’s duty free and tax free shopping sales across all product categories.

Shops trading, but limits in place

FaSoLa Shops and some other operators are still to fully re-open all their duty free airside and landside tax free stores at Narita Airport, where the T1 North and T1 South duty free arrival shops are among the latest to re-commence business.

“Currently sales in all our duty free and tax free shops are running at about 50% of pre-Covid levels,” commented Chihiro Oshima, Director in the Merchandising and Logistics Department of FaSoLa Shops, operated by NAA Retailing Corporation. “The trend started from Spring 2022, before that there were not many passengers using Narita Airport.

“Since July and August last summer we saw our sales grow quicker because of transit passenger growth. Transit passengers buy everything, and they purchase a lot of luxury goods.”

Lotte Duty Free’s Tokyo Ginza downtown store, which reopened in July 2022.

Further revenue growth is expected in 2023 as international passenger traffic increases.

At Tokyo’s Haneda International Airport International Terminal 3, all Tokyo International Air Terminal (TIAT) duty free shops and those managed by ANA Duty Free, JAL Duty Free and FaSoLa Tax Free Akihabara are fully reopened, though some are still operating on shortened hours.

Approximately 12 luxury boutiques in Terminal 3 have reopened (again, on reduced hours), while seven are still closed. Terminal 3’s duty free arrival shop also remains closed at present.

Meanwhile, Japan’s downtown duty free shops are confident in sales growth in line with the anticipated uptick in foreign tourist arrivals this year, though most shops at the moment offer a reduced range of merchandise.

In Tokyo, Japan Duty Free Fa-So-La Isetan Mitsukoshi and Lotte Duty Free Japan downtown stores closed all their luxury boutiques during the pandemic and currently offer customers a selection of mostly cosmetics, along with some fashion accessories and tax free goods.

Lotte Duty Free is trading on reduced hours at its Ginza Tokyo Plaza shop’s ninth floor cosmetics and tax free zones, while its luxury boutique 8th floor remains closed for the moment. As reported, the travel retailer reopened its Ginza downtown shop in July.

TIAT Duty Free store at Tokyo Haneda International Airport Terminal 3.

Lotte recently announced plans to encourage South Korean travellers to visit its Ginza store on shopping trips to Tokyo and hopes to attract returning Chinese travellers and new Japanese customers in the future.

China halts issuing visas, reports claim

According to the latest available data from the Japan National Tourism Organization (JNTO), Japan welcomed a total of 2,461,900 visitors to the country in the 11 months through November 2022 – down 91.6% against 2019 when numbers surpassed 29.3 million.

However, 934,500 visitors were recorded alone in November 2022, following the lifting of restrictions.

That number was 61.7% down compared with November 2021, when 2,441,274 visitors were logged, and a marked improvement of the in excess of 80% decline year-on-year witnessed in the previous 10 months.

Japanese overseas travellers in the 11 months through November totalled 2,339,600 – a decline of 87.3% year-on-year.

As this report went to press, multiple international media outlets are reporting that Beijing has purportedly suspended issuing certain visas to travellers from Japan in an apparent counter gesture to its Covid entry restrictions as mentioned above.

Citing several well-placed sources, the authoritative Japan Times says travel agencies in Japan have been notified of the visa suspension in a move that could hit Japanese workers travelling to China.

Watch out for a more detailed report on Japan’s DF&TR market in the TRBusiness February e-zine.

Words: David Hayes and Luke Barras-Hill; editing: Luke Barras-Hill.

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