Japan’s airports consider 'downtown stores' to compete on tax free shopping

By Michelle Yeomans

- Last updated on GMT

Japan’s airports consider 'downtown stores' to compete on tax free shopping

Related tags Retailing Japan

Japan’s airport corporations are considering opening downtown duty free stores after facing some serious competition from retailers offering tourists tax free shopping around the country.

In actual fact, Japan's government target of 10,000 tax-free shops by 2020 has been reached five years early, as the number of retailers offering the service shot up by 60% in the last six months. 

As of October 1st, duty-free products in Japan, previously limited to electronics and clothing, included items like food and cosmetics and large cities which has seen more department stores, electronics retailers and convenience stores start to exempt foreigners from the levy.

This in turn, has affected the airport's profits which has prompted its management to look at alternative strategies to compete with licensed tax free shops.

Take for example, Haneda Airport Tokyo International Airport which has nineteen registered stores operating as 'tax free' in the terminal’s land side shopping area.

Tourists are favoring Japan's cosmetics

As retailers scramble to offer consumption tax free shopping to a record number of 13.41 million tourists in Japan in the last six months, cosmetics sales have seen a significant rise. 

Japanese cosmetics are already a popular tourist purchase with, say over 90% of Chinese tourists buying them.

The government hopes that by 2020 the year of the Tokyo Olympics, 20 million visitors will have come to the country.

This updated duty-free list and the abolished 8 per cent consumption tax will ultimately see demand for cosmetics continue to increase among foreign tourists, which has seen retail chains expand their services and workforce.

However, retailers will have to place stickers on products warning customers not to open products before leaving Japan, or use adhesive on the packaging that will show if the item has been opened.

Cosmetics buyers among the highest spenders..

A recent survey by the Japan Tourism Agency revealed that 38.5% of tourists who visited Japan bought cosmetics and pharmaceuticals, making them the third most commonly bought item after food and confectionery.

The average amount spent on cosmetics and pharmaceutical products was ¥20,270 (USD $205.52). Visitors from China were the highest spenders, with 68.4% purchasing and an average spend of ¥34,521 (USD $350.01).

Taiwan and Thailand tourists also featured prominently in purchasers of cosmetics, with 62.8% and 42.3% purchasing and average spending being ¥16,406 and ¥15,921 respectively.

The same study revealed that 3% of the ¥1.09 trillion spent by tourists each year was allocated to shopping.  Foreign visitor numbers in Japan were 8.37m in 2012, an increase of 34.6% the previous year, with the Japanese National Tourist Organization setting a target number of 10m tourists for 2013.

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