Narita International Airport Corporation (NAA) has targeted duty free, general merchandise and F&B sales of more than JPY130bn ($1.19bn) for full-year 2018.

Total airside, landside and F&B sales reached JPY124.6bn/$1.14bn (+15%) in fiscal year 2017 (ending 31 March 2018), confirmed Chihiro Oshima, Retail Operations Department Marketing Division, NAA during a recent interview with TRBusiness. At present, duty free accounts for 51% of the total share of sales.

The result is in line with NAA’s earlier estimates shared with this publication in October.

NAA has set a target of JPY1.5bn ($13.8m) in arrivals duty free sales this year.

ARRIVALS ‘ROOM FOR IMPROVEMENT’

In 2017, retailer Fa-So-La Duty Free opened arrivals duty free shops at Narita Terminals 1,2 and 3, permitting Japanese and foreign visitors to enjoy the convenience of duty free shopping.

This followed a long-mooted proposal that had up until that point been rejected by the government.

The units, which range in size from around 50sq m to 100sq m, stock tobacco and wines & spirits. Currently, imported alcohol and tobacco only is permitted for sale in store.

However, broadening the present category assortment to include perfumes & cosmetics is under consideration within the current space limitations and TRBusiness understands that talks with relevant parties are in discussion.

“The results ending fiscal March were a bit lower than what was expected as arrivals in Japan is really new to us, our passengers and customers,” admitted Oshima. “We need more time to achieve our objectives, but this is natural.”

[It is important to note that arrivals duty free has yet to complete a full financial year of trading – Ed].

Oshima says NAA is optimistic of growth in the arrivals business by the end of the year and is complementing its exposure by providing additional signage, which is helping the business.

Left to right: NAA’s Akihiro Watabe, Manager, Retail Operations Department Marketing Division; and Chihiro Oshima, Retail Operations Department Marketing Division during this month’s TFWA Asia Pacific Exhibition & Conference.

TOBACCO PERFORMING

Currently, almost 80% of sales are generated from Japanese passengers, with tobacco a major category.

Within this, nearly 50% of total sales are accounted for by heated tobacco products, which includes Philip Morris’ IQOS device.

The addition of Japan Tobacco imported products to the portfolio is also contributing to sales.

“This year we see growth in the arrivals shops and we are targeting JPY1.5bn ($13.8m),” revealed Oshima.

Kansai Airports followed Narita’s lead earlier this year, appointing ANA Trading Duty Free Co LTF (ADF) to operate three arrivals shops.

Similar in size and assortment to Narita’s stores, Kansai Airports announced it would open two units in the north and South Wing baggage collection areas in Terminal 1, with one shop located in the International Terminal 2 extension.

“We need to get higher recognition from passengers – it is essential,” commented Oshima.  “This type of shopping is very new. To boost our sales in arrivals we need more attention for both Japanese and non-Japanese passengers.

“In departures duty free for example, we have more non-Japanese passengers but in arrivals it is 80% Japanese passengers so there is more potential for them to make purchases here.”

As anticipated, the airport is constructing and extending facilities to accommodate for an increase in international travellers in the build up to the 2020 Tokyo Olympic Games (24 July – 9 August).

The capacity-constrained Terminal 3 is one focus, with plans to lift this ceiling to accommodate more passengers.

“For Terminal 3, we had over 7.6m passengers last year,” said Oshima. “It was opened in 2015 and already has exceeded its capacity (7m) so we’ve decided to expand the floor space and building itself.”

LUXURY ATTENTION

In July, NAA will open a 30sq m official Olympic shop situated landside, which will house official souvenirs and merchandise.

In addition, NAA is eyeing growth in its luxury and general merchandise assortment.

Thirty-two boutiques feature across Narita’s terminals, with NAA opening a 100sq m Gucci boutique in Terminal 1 South Wing in front of passport control earlier this year that has helped to deliver ‘unexpected sales’, according to Oshima.

ANA Duty & Tax Free Shop at Narita International Airport.

NAA subsidiary Fa-So-La is the incumbent duty free retailer alongside ANA Duty Free, Jatco and Japan Airlines (JAL).

Work to improve the central area of Terminal 1 will extend availability for retail units, which are expected to come online this summer.

The airside refurbishments expect to result in the opening of 17 stores, seven of which have already opened in the last year including Chanel, Bottega Veneta and the aforementioned Gucci. Another 10 units are planned to open in phases by the end of July.

Once complete, the re-worked commercial space (including passenger lobby areas) will total 2,400sq m including duty free, general merchandise and F&B outlets.

“We are happy to have more passengers in the terminals, but at the same time we are suffering from long queues in the shops,” added Oshima. “To avoid this, we are adding two new confectionery shops in T1.”