Although Japan Airport Terminal Co Ltd (Jatco) recently lost seven boutiques at Kansai International Airport in an open tender – leaving the company with just four boutiques at West Japan’s leading airport – the company insists its duty free shop sales are rebounding in 2017.

 

After losing the boutiques at Kansai International Airport – located on an artificial island in the middle of Osaka Bay – Jatco’s duty free focus is switching to Tokyo (at Haneda and Narita airports) where the company is looking to prepare its airport and downtown shops for the tourism boom expected in the run up to the 2020 Tokyo Olympic Games.

 

Jatco is happy to report that revenue at its directly managed Haneda TIAT shops rose by JPY 700m (US$6.2m) last year, however the company did concede that the increase in China’s luxury goods import duties in April 2016 affected boutique sales which otherwise were expected to be higher.

 

But prospects are brighter this year, with TIAT’s shops posting a 17% increase in revenue in Q1 FY2017, ahead of passenger growth for the quarter, raising hopes that duty free sales in Haneda will show a double digit improvement at the year end.

 

DFS OKINAWA MOVES IN

As previously reported by TRBusiness earlier this year, Jatco lost out to DFS Okinawa, a subsidiary of DFS Hong Kong (at Kansai Airport) who submitted the winning bid for the concession which expired on 31 March 2017. Jatco and Lotte Duty Free were the two other bidders.

 

 

The luxury brand boutiques which Jatco previously operated at Kansai Airport comprised the following: Bottega Veneta, Bulgari, Cartier, Coach, Omega, Rolex and Tiffany & Co.

 

This leaves Jatco with four boutiques in T1 under a separate concession, consisting of Chloé, Salvatore Ferragamo, Samantha Thavasa and Victoria’s Secret.

 

For the moment, however, Jatco continues to operate its former boutiques while DFS sorts out operational issues.

 

MAXIMISING SALES AT HANEDA

“We have an agreement with DFS for the store operation,” Hideki Sugimoto, Deputy Executive Officer and Vice President in Jatco’s Travel Retail Operations Division, told TRBusiness.

 

“We operate the DFS boutiques as DFS could not suddenly find staff. We operate their boutiques with our Jatco staff and DFS supplies the merchandise. So now it’s time to maximise our Haneda Airport sales.”

 

Jatco reported total international terminal store sales worth JPY 33bn (US$292m) for the financial year ending 31 March, 2017 (FY2016), registering a 6.1% decrease compared with revenue the previous year.

 

“In 2016 business was very tough in Narita, Haneda and Kansai airports, but from April this year foreign visitor numbers have been growing a lot,” explained Sugimoto.

 

“Chinese passengers are spending less than before but our sales are growing compared to 2016.”

 

In addition to Tokyo’s downtown Haneda Airport Tokyo International Air Terminal (TIAT) where Jatco recorded about half of its duty free sales last year, the company also operates duty free outlets in Narita International Airport which accounted for about 25% of duty free revenue.

 

Kansai International Airport in Osaka represented about 10% of its sales last year and the balance of sales was recorded at its joint venture Japan Duty Free Ginza downtown store in Tokyo.