Luxury goods sales concerns at Tokyo Narita
By David Hayes, 29 September 2008

Many duty free shops and almost all brand name boutiques in Tokyo Narita International Airport are reporting a worrying fall in sales since early 2008, due partly to less passengers using the airport, as well as a new trend also noted in Japanese department stores, with fewer people buying luxury goods.

The unexpected drop in passenger numbers and the fall in brand name boutique sales' revenue are among various issues that Narita International Airport Corporation (NAA), which owns and operates Narita International Airport, is considering while waiting for fuller details about the important proposed development of international flight services from Tokyo's Haneda Airport.

For the past four years the number of international passengers using Narita Airport has averaged about 34m per year. NAA's Retail Management Department Retail Strategy Team Member, Shun Homma said: "Passenger figures for the past few years have remained much the same. Sales, on the other hand, have increased significantly since fiscal year 2006 when the Narita T1 South Wing shops were opened."

He added that sales grew further last year following the opening of the Narita 5th Avenue shopping area in T2: "Food and beverage sales, meanwhile, have stayed flat at Y10bn ($94.9m) annually for the past four years, while shop sales have grown dramatically. In particular, there has been noticeable growth in duty free and tax free general merchandise shop sales."

According to NAA figures, total duty free shop sales rose 11.6% to Y48bn ($455.m) in the financial year ending March 31, 2008 (FY 2007) after rising 7.5% in FY 2006. Revenue growth in Narita Airport's tax free FaSoLa Akihabara shops (which sell electronics products, souvenirs and Japanese snacks) has been even higher, rising 17.4% to reach Yen 27bn ($256.2m) in FY 2007, after posting 15% growth the previous year.

"Duty free store sales have been aided greatly by exclusive fashion boutique sales, while general merchandise sales have been given a boost by the new style of shop," Homma commented. "Fashion brand boutiques and FaSoLa Akihabara stores have given customers a wider choice and this has helped boost sales beyond all recognition."

Total shop sales at Narita grew 10% to Y66bn ($626.4m) in FY 2006 with duty free shop and fashion boutique sales accounting for two thirds of total revenue. By comparison, total shop sales growth in FY 2007 was 13.6% reaching Y75bn ($711.8m) for the year, with duty free shop and fashion boutique sales maintaining a two thirds total shop revenue share.

NAA-controlled FaSoLa Shops is the largest duty free retailer at Narita Airport with the company's Y26bn ($246.7m) sales contribution in FY 2007 accounting for one third of total retail shop sales at the airport last year. FaSoLa Shops is also the largest duty free retailer at Narita in terms of outlets with 41 shops at present, including duty free outlets, brand name boutiques and various souvenir and general merchandise shops.

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