Japanese operators scale back Olympic retail plans

By David Hayes and Andrew Pentol |

The number of foreign nationals visiting Japan in 2020 fell by 87.1%.

The Japanese duty free industry is preparing for a low-key Tokyo Olympics and summer vacation period after it was revealed a state of emergency would run throughout the event (24 July – 8 August) ending two days before the start of the Paralympic Games (24 August -5 September).

Prime Minister Yoshihide Suga put Tokyo under its fourth Covid-19 state of emergency, beginning today (12 July).

The restrictions announced include an alcohol ban in bars and restaurants, which also will have to close by 20:00.

On announcing the state of emergency Suga made it clear to journalists the need for Japan to strengthen its countermeasures, with the restrictions designed to prevent infections taking into account the threat of Covid-19 variants.

The state of emergency was announced after a meeting between the Olympics Organising Committee, the government and the International Olympic Committee president, Thomas Bach.

TOKYO OLYMPICS BEHIND CLOSED DOORS

On 8 July it was revealed the Tokyo Olympics would take place behind closed doors due to a surge in Covid-19 cases. The decision was taken following talks between the government, Tokyo organisers and Olympic and Paralympic representatives. Pre-purchased event tickets will be refunded.

Perfumes & cosmetics took a 19% share of Centrair’s duty free sales in 2020.

The number of foreign nationals visiting Japan in 2020 fell by 87.1% year-on-year to 4.12 million, according to the Japan Tourism Agency. This is the largest drop since records began in 1964 and the lowest number in 22 years.

Duty free operators in Tokyo’s Narita and downtown Haneda Airport gateways and at other Japanese airports have scaled back plans to provide shopping attractions originally intended to serve the forecasted 40 million foreign visitors. This was the number of visitors the government expected to receive in Japan in 2020 before the Olympics and Paralympics were postponed.

Narita International Airport will be the main arrival and departure gateway for foreign athletes, coaches and officials attending the games.

Narita Airport owner NAA International Airport Corporation has decorated the airport terminals in an Olympics theme and has opened several shops selling souvenir items and exclusive themed products.

The state of emergency will end two days before the start of the Paralympic Games (24 August to 5 September).

“Preparations have been in place for the opening of new stores this spring and summer in conjunction with the Tokyo 2020 Olympic and Paralympic Games,” commented Hiroomi Eguchi, Deputy Vice President in the Retail Operations Department of NAA’s Marketing Division.

“As an official Olympic partner we plan to continue with our preparations so we are completely ready to welcome athletes, officials and others.

“The terminals are decorated in a Games look to provide an uplifting experience in our airport. We have official Tokyo 2020 Olympic and Paralympic Games shops in T1 and T2.”

LARGE DROP IN DF&TR SALES

Narita and other Japanese airports have seen a large drop in duty free and tax free sales over the past year while Japan has remained closed to foreign tourists and all but essential travel to prevent the spread of the virus.

NAA recently reported a 93.8% drop to JPY 7.4 billion/US$67.1 million in duty free and tax free sales for financial year ending 31 March 2021 (FY2020).

Other airports have also reported a sharp fall in travel retail sales, though not all operators have revealed exact details of their FY2020 results.

At the time of writing, some duty free shops, luxury boutiques and tax free stores were temporarily closed at Narita Airport following the government’s announcement of a third state of emergency in April.

“Shop re-openings will depend on customer traffic and the extent to which the Covid-19 pandemic has declined. At this stage it is difficult to give an answer,” said Eguchi.

“Our arrival duty free shops were also closed temporarily last fiscal year.”

A new double-fronted Prada boutique opened on 23 April 2021 in Narita International Airport Terminal 1 (North Wing).

Among recent additions to Narita Airport’s FaSoLa shopping facilities, NAA Group member, NAA Retailing Corporations’s duty free and tax free retailing division opened a double-fronted Prada boutique on 23 April in Narita International Airport Terminal 1 (North Wing). This replaced the former Chloe and Gucci jewellery and timepieces boutiques that previously occupied the two adjoining outlets.

OLYMPIC-THEMED PRODUCTS

FaSoLa, NAA Retailing’s duty free and tax free retailing arm, recently introduced a number of special Olympic-themed products in its stores.

“We will ensure we offer a good line up of major products from Japanese brands during the Olympic and Paralympic games,” said Chihiro Oshima, Director, International Product Division I, Merchandising and Logistics Department, FaSoLa Shops, NAA Retailing Corporation.

“SKII is offering some cosmetics products with special packaging for the Tokyo Olympic Games.

“We also offer a limited-edition Tokyo Olympics model from Swatch in our Akihabara Tax Free stores.”

Some FaSoLa shops and boutiques have been closed temporarily since the government announced the third state of emergency in April. Correct at the time of writing, full re-opening has yet to be decided.

Several new shops have been opened at Central Japan International Airport, with Japanese products attracting consumer interest.

“Regardless of the state of emergency, we have been operating only some flagship stores in each terminal with shortened hours since last April (2020),” said Oshima. “Our FaSoLa duty free arrival shops have been closed for over a year.

“Luxury boutiques re-opened two days per week with some shortened hours last November. On other days most of the boutiques are available to open by appointment.”

Duty free sales are unlikely to recover until the Covid-19 pandemic begins to be brought under control, allowing normal travel in and out of Japan to resume.

“Currently the number of international flights and destinations are very limited,” continued Oshima.

“We see Japanese and non-Japanese business travellers in our shops, some Japanese returning to their country of residence, and some foreign residents returning to their home country. There are very few FITs [free independent travellers].”

See the Top 10 Airports Annual Report for an extensive report on the Japanese duty free market.

Middle East

MEADFA Conference 2024 ‘heading to Abu Dhabi on 17-19 November’

This year’s Middle East & Africa Duty Free Association (MEADFA) Conference will take...

International

DFWC Q1 2024 KPI Monitor indicates rise in duty free impulse purchases

Impulse purchasing within global duty free is on the rise, according to the latest Duty Free...

Asia & Pacific

Avolta details “bold and ambitious” goals to grow its APAC business

With a number of key developments coming to fruition, including its operations at Wuhan Tianhe...

image description

In the Magazine

TRBusiness Magazine is free to access. Read the latest issue now.

E-mail this link to a friend