Tourist boom fades for Japan's department storesーNHK WORLD-JAPAN NEWS

Summary

Japan's department stores are struggling with declining sales, largely due to fewer high-spending foreign tourists. Despite record tourist arrivals, a shift towards middle-class visitors and a stabilization of the yen have led to reduced sales, especially in luxury goods. Experts suggest that stores should focus on unique Japanese products and services, like cosmetics and beauty treatments, to attract foreign shoppers. Strengthening customer loyalty through multilingual staff and social media engagement is also key to revitalizing sales and encouraging repeat visits from tourists, particularly from neighboring countries like South Korea and Taiwan.

Takeaways

• 😀 Japan's department stores have seen a decline in sales, mainly due to a drop in spending by inbound tourists.
• 😀 Sales at department stores dropped by 7.8% in June compared to the same month last year.
• 😀 The decline in sales marks the fifth consecutive month of falling revenue for Japan's department stores.
• 😀 The number of foreign shoppers has decreased by almost 14%, significantly impacting tax-free sales.
• 😀 Tax-free items, which make up around 10% of department store sales, saw a 40% drop in sales.
• 😀 Despite a record number of tourists visiting Japan, the type of tourists has changed, with more middle-class consumers now visiting.
• 😀 High-end luxury goods, once a major driver of foreign tourist spending, are experiencing declining sales.
• 😀 The weakened yen and low inflation in Japan previously made it an attractive destination for foreign shoppers, but these advantages are now fading.
• 😀 To revive sales, experts suggest focusing on services unique to Japan, such as cosmetics, snacks, and beauty treatments.
• 😀 Encouraging repeat business from tourists, especially from South Korea and Taiwan, is critical for Japan's department stores moving forward.
• 😀 Department stores could benefit from hiring multilingual staff and utilizing social media to connect with customers, especially those returning to their home countries.

Q & A

Why have sales at Japan's department stores been declining?

Sales have been declining primarily due to a drop in the number of inbound tourists, who are traditionally big spenders, particularly on high-end goods and tax-free items. The number of shoppers from abroad has decreased by almost 14%, and sales of tax-free items have fallen by more than 40% from last year.

What is the trend in inbound tourist spending in Japan's department stores?

Although Japan is still experiencing record-high tourist arrivals, there has been a shift in the type of visitors, with more middle-class tourists now coming in. These tourists tend to spend less compared to the previous high-spending visitors, resulting in a decline in the sale of high-end goods.

How has the weakening of the Japanese yen impacted sales in department stores?

The weaker yen made products in Japan more attractive to foreign tourists, as their purchasing power increased. This led to an increase in the sales of luxury goods, which were priced competitively due to the exchange rate. However, as the yen has stabilized, this advantage is fading, impacting department store sales.

What role do tax-free items play in Japan's department store sales?

Tax-free items account for about 10% of department store sales. A significant drop in sales of these items has contributed to the overall decline in department store revenues. In June, sales of these items dropped by more than 40% compared to last year.

What other factors have influenced inbound tourist spending in Japan?

Apart from the weak yen, Japan's relatively lower inflation compared to other developed economies has made it an attractive destination for bargain hunters. However, as Japan's currency stabilizes and prices for luxury goods rise, the spending surge from tourists is expected to decline.

What does economist Kugano suggest for reversing the sales decline?

Kugano suggests that department stores focus more on services unique to Japan, such as quality cosmetics, snacks, and beauty treatments. These items are attractive to foreign tourists, and their appeal won't necessarily be diminished by fluctuations in the yen.

How can department stores attract more repeat visitors from abroad?

To attract repeat visitors, department stores should improve their connection with tourists, particularly those from South Korea and Taiwan, who are frequent visitors. This can be achieved by hiring more multilingual staff, offering services tailored to these customers, and engaging with them through social media, like Instagram live sessions.

What are some of the unique experiences that tourists seek in Japanese department stores?

Tourists are particularly attracted to Japanese cosmetics, snacks, and the takeout delis in department store basements. Additionally, beauty salons and other treatments, which can only be experienced in Japan, are also popular among foreign visitors.

What is the outlook for department store sales if the yen weakens further?

If the yen were to weaken again, department store sales could see a temporary boost. However, given the current stability of the yen and rising prices for brands, it is unlikely that there will be a strong surge in sales in the near future.

What changes do Japanese department stores need to make to remain competitive?

Department stores need to be more creative and develop strategies that cater to inbound tourists. This includes focusing on high-quality, unique services, enhancing customer engagement through digital platforms, and tailoring their offerings to attract repeat business from tourists.