Retailers wage duty-free war for tourist cash

JIJI

Retailers are fighting tooth and nail to lure foreign visitors, mainly from China, as Japan set third consecutive record high for tourism in 2015.

In Tokyo’s posh Ginza district, two giant, separately owned duty-free shops are slated to open by the end of March inside the Mitsukoshi department store run by Isetan Mitsukoshi Holdings Ltd., and in Tokyu Plaza Ginza, a new shopping center run by Tokyu Land Corp.

Unlike standard duty-free shops, both will operate just like the ones in airports, exempting shoppers from the consumption tax as well as the liquor tax and customs duties.

“We’re worried that the new shops will steal our customers,” one department store official admitted.

The surge in visitors to Japan, which stood at 19.73 million in 2015, was buoyed partly by an increase in cruise ships, many from China, calling in Kyushu.

The rise in cruise ship travelers has triggered fierce competition outside metropolitan areas. In autumn last year, major duty-free shop operator Laox Co. opened outlets in four Daimaru department stores, including the Fukuoka store.

But these days foreign customers seem to be less enthusiastic about shopping for luxury items and more disposed toward purchasing supplies for daily life, reflecting an increase in repeat visitors from China, a Laox official said.

In contrast with the popularity of everyday goods, such as cosmetics and medicines, demand for durable household goods, including rice cookers, a hot item recently sought by Chinese visitors with “explosive buying” habits, has dropped off.

Electronics retailers also see changes underway, with beauty treatment appliances and vacuum cleaners now in demand, an official at Bic Camera Inc. said.

According to the Japan Department Stores Association, sales of duty-free goods per head have been below year-before levels since November.

Although sales do not seem to have been too badly affected by China’s stock market plunge and the depreciation of the yuan, “there are concerns that could happen” if the trends are not reversed, an association official said.

By contrast, Koya Miyamae, senior economist at SMBC Nikko Securities Inc., said the weaker yuan and other China-related worries will “only have a limited effect” on Chinese tourists’ shopping in Japan, as they tend to have plenty of money to spend. Foreign visitors will again rise toward this summer, Miyamae predicted.