L to R: Daisuke Takayama, Manager for Retail Strategy; Hiroomi Eguchi, Deputy Vice President and Chihiro Oshima, Supervisor, Retail Operations.

Narita International Airport Corporation (NAA) has set a growth target of +15% in sales for FY2017, according to Hiroomi Eguchi, Deputy Vice President in the Retail Operations Department of NAA’s Marketing Division, talking exclusively to TRBusiness.

“For the financial year ending 31 March, 2018 (FY2017) we have a target of JPY 125bn for total airside and landside retail and restaurant sales; it’s a 15% increase,” said Eguchi.

NAA has set itself this ambitious sales target in the same year that it is opening Japan’s first airport duty free arrival shops.

In addition to this it is building new travel retail facilities in other areas to cater to the expected increase in foreign passengers, in the run up to the 2020 Tokyo Olympic Games.

DUTY FREE SALES ‘HALF OF ALL RETAIL AND F&B REVENUE’

NAA recorded total retail and restaurant revenue of JPY 108.6bn in FY2016, down 7% from record sales of JPY 116.9bn the previous year.

Japan Air Terminal Corporation (Jatco) runs the Japan Duty Free shops at Narita Airport.

Duty free sales, including those generated by luxury boutiques accounted for about half of total retail and restaurant revenue last year while airside and landside tax free shops [along with book shops and drug stores] represented 40% of revenue, and restaurants 10%.

“Last year duty free sales were down 14% while tax free shops airside and landside were down 2%,” Eguchi added.

“In FY2016 we saw different trends from the first half to the second half of the year. In H1 FY2016 we were affected by the yen appreciation against the dollar [up 25%], but also by the new higher Chinese import duties on luxury goods that changed last April.”

Luxury boutiques at Narita Airport were worst affected by the fall in Chinese passenger spending last year with sales of high priced watches, jewellery and fashion accessories dropping sharply.

Hermès boutique in the airport’s Fifth Avenue shopping area.

“Chinese passengers were buying less,” confirmed Eguchi.

“The passenger spending slowed and decreased. In the brand boutiques Chinese customers stopped buying expensive watches and jewellery; that’s why luxury boutiques were affected heavily.”

To read the full-length feature on NAA, pick up a free copy of the October issue and the Top 10 Report at the TFWA World Exhibition in Cannes this week or subscribe to the magazine here.