In 2017, Japan’s duty free industry is enjoying a rebound in sales, following a tough trading year in 2016, according to a number of senior executives talking to TRBusiness for this year’s annual Japan Market Report.

 

The comprehensive Japan Market Report appears in the October issue of TRBusiness magazine which can be picked up at the TFWA World Exhibition in Cannes this week, or can be obtained through subscription here.

 

China’s introduction of higher customs tariffs on luxury goods imports in April 2016 coupled with stricter inspections for travellers returning to China caused sales of luxury duty free goods to fall sharply last year at Japanese airport stores where operators also felt the impact of the yen’s rise against the US dollar.

 

Luxury boutiques were hardest hit, especially top line brands.

 

The good news for Japan’s duty free retailers is that sales have begun to recover, even in the luxury boutiques. All major airports and duty free operators contacted for this year’s exclusive Japan Market Report are reporting double-digit revenue growth in Q1 FY2017 (year ending 31 March, 2018).

 

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For example, Narita International Airport Corporation (NAA) has set a 15% growth target for travel retail sales this year in order to regain revenue lost in 2016 – attributed to the fall in Chinese visitor spending.

 

 

NAA is aiming for total airside and landside retail and restaurant sales to reach JPY 125bn (US$1.16bn) in FY2017 after registering JPY 108.6bn ($1bn) last year.

 

Elsewhere, Tokyo’s Haneda Airport registered a double-digit rise in travel retail sales during the first quarter of the current financial year ending 31 March, 2018 (FY2017), outpacing passenger traffic growth.

 

Although Haneda Airport’s Tokyo International Air Terminal (TIAT) has been affected by recent changes in Chinese traveller shopping trends – including lower per capita spending – the number of international passengers are helping to lift total travel retail revenue in the terminals’ outlets.

“In Q1 FY2017 we had a 17% increase in duty free and tax free sales,” said Hideki Hayashi, Vice President for Sales and Marketing at Tokyo International Air Terminal Corporation, in an exclusive interview with TRBusiness.

 

“The travel retail increase is more than for passenger numbers; we are not surprised, but we are lucky.

 

“Duty free sales increased 10% and tax free sales, including Japanese cosmetics, confectionery, electronics and other products, are up 14%, but fashion boutique sales only grew 8%.”