Department stores harness return of foreign visitors to boost sluggish sales

The Yomiuri Shimbun

21:00 JST, November 15, 2022

Major department stores are stepping up their efforts to accommodate foreign visitors as they anticipate the return of strong sales.

Following the slump caused by the spread of the novel coronavirus, the department stores expect a growth in consumption, driven by the drastic easing of border control measures and the record depreciation of the yen.

They are rushing to respond in order to use the opportunity as a trigger for recovery in their business performance, which has been sluggish for some time.

17 times higher

There has been a noticeable increase in the number of visitors to Japan carrying shopping bags in both hands at the duty-free counter on the third floor of Matsuya Ginza in Ginza, Tokyo, since mid-October.

“Thanks in part to the weak yen, we have had more visitors to our stores than we expected,” a Matsuya official said.

Since the ban on the entry of individual travelers from abroad was lifted on Oct. 11, the store’s duty-free sales have increased about 17-fold compared to the same period last year.

In order to cope with the increasing number of foreign visitors, 10 Pocketalk automatic translators are now installed at the duty-free counters and sales floors. Matsuya also reopened a prayer room for Muslims.

In September, the Takashimaya Shinjuku store in Shibuya Ward, Tokyo, installed two dedicated terminals that read passports and receipts, and process part of the duty-free procedures.

The department store plans to reduce congestion by installing the terminals, which are available in 10 languages including English and Chinese.

Since July, Daimaru Shinsaibashi department store in Osaka has conducted a refresher on duty-free procedures and guidance for employees and tenant employees, as part of its efforts to improve its services.

Balancing customer needs

According to the Japan Department Stores Association, duty-free sales at department stores were expanding up until the pandemic, reaching a record high of ¥346.1 billion in 2019.

However, the sales volume decreased by nearly 90% to ¥45.9 billion in 2021 due to restrictions on travel to and from foreign countries.

Department stores lost about ¥300 billion in consumption by visitors to Japan alone.

“We have waited a long time for this revival. We would like to strengthen our efforts to attract more customers for a further increase,” said a person concerned with the industry.

However, the current influx of visitors to Japan is mainly from South Korea, Taiwan and Southeast Asia, and a recovery of Chinese visitors – who were prominent before the pandemic – is not expected for some time.

Some department stores in the center of Tokyo used to turn an entire floor into a duty-free shop to cope with buying sprees by foreign shoppers.

Now, the focus is mainly on trying to avoid losing individual customers by providing them with more detailed services.

“We need to consider the layout of the sales floor in a way that does not encroach on how Japanese customers use the space,” Takashimaya Co. President Yoshio Murata said.

Dai-ichi Life Research Institute Inc. Senior Executive Economist Yoshiki Shinke said: “The weak yen has increased the purchasing power of foreign customers in Japan. High-value items becoming easier to sell is a tailwind for department stores.”

“It will become important for them to have an attractive product lineup for visitors to Japan, in addition to customer service,” he said.