* Inbound travellers topped 10 mln in 2013 for first time
* Duty-free sales surge as local tax hike crimps spending
* Government targets 30 mln visitors by 2030
By Chang-Ran Kim and Ritsuko Shimizu
TOKYO, May 21 In ageing Japan, retailers are
waking up to a hot new demographic: foreign visitors.
Driven by government tourism promotions and lately a weaker
yen, the number of inbound travellers has quietly doubled in the
past decade to top 10 million for the first time last year. In
2013, they spent $14 billion on everything from powdered green
tea to Prada handbags, to rare, red-coral rings.
With a doubling to 20 million visitors targeted by 2020, the
year of the Tokyo Olympics, the growing flow of cash is welcome
for Prime Minister Shinzo Abe as he seeks to nurse a recovery in
consumer spending through a national sales tax hike. It's also
sending retailers scrambling to tap into the so-called
"inbounds" windfall through marketing channels from social media
to street signage.
"Until now, we've been rather passive with 'inbounds'," said
Hideyuki Murakami, executive officer of department store
operator Isetan Mitsukoshi Ltd. "But as their numbers
surge, we'll need to really step things up - whether it's with
language, facilities or product selection."
Japan's department stores association on Tuesday said
duty-free spending at 46 stores across the country spiked 54
percent in April to 6.09 billion yen ($60 million) compared with
the same month a year ago, while overall sales at 241 department
stores nationwide slipped 12 percent to 417.2 billion yen.
Visitors have surged particularly from Thailand, which along
with Malaysia received visa exemptions for short-term stays last
Many spend freely on their trips. Yijia, a 16-year-old from
Shanghai who asked to be identified only by her first name,
showed off a 90,000 yen ($890) haul from Mitsukoshi's swank
Ginza store that included a pair of Kenzo designer shoes.
"I love coming to Japan to eat and shop," said the high
school student, on her third visit to Japan with her mother.
"Everyone loves the food in Tokyo, including French cuisine."
The 1.42 trillion yen ($14 billion) spent by "in-bounds" was
up more than a third from 2012, according to the Japan Tourism
Agency. That's less than half a percent of Japan's total private
consumption, yet it still offers retailers welcome relief from
the hangover of the April sales tax increase to 8 percent from 5
percent, now discouraging local shoppers.
Japan's visitor numbers are dwarfed by the 83 million
travellers that made France the world's most popular tourist
destination in 2012, the last year for which the United Nations
World Tourism Organisation has published estimates. Ranked 33rd
by visitor numbers, Japan trailed Asia tourism destinations like
Hong Kong, Macau and South Korea.
Yet their contribution to the economy will take on
increasing importance as Japan's population dwindles - estimates
suggest as Japan gets older its population will decrease by 10
million people by 2030. By then, the government hopes that
further visa liberalisation and a possible legalisation of
casino gambling will bring in 30 million visitors.
STEP RIGHT UP
Competition to reel in tourists and business travellers is
set to heat up as retailers beef up marketing efforts through
social networking sites, magazine ads and plain, old-fashioned
Back-lit adverts in English leading to the swish Matsuya Co
department store in Tokyo's storied Ginza shopping
district tout its full 8 percent refund policy on duty-free
purchases - against 6.9 percent for cross-street rival
Mitsukoshi, as well as Takashimaya Co and many others.
Scores of Thai tourists line up on the first of every month
before doors open at Matsuya's Ginza store, making a beeline for
Bao Bao bags by designer Issey Miyake that retail for hundreds
of dollars and are a hit back home, said general manager,
Takehiko Furuya. "Somehow they've figured out that that's when
the shipments come in," he said.
Isetan Mitsukoshi, formed from the merger of the Isetan and
Mitsukoshi store chains, last month set up a division
specifically charged with capturing in-bound customers.
President Hiroshi Onishi said he eventually envisaged an entire
floor at the historic Mitsukoshi Ginza store dedicated to
foreigners, who he said could account for a tenth of overall
sales this year - double the ratio last year.
The expansion of duty-free status to consumer products like
cosmetics and food on Oct. 1 may be a boon for lower-end
retailers like discount megastore operator Don Quijote.
Known to millions in Japan as 'Donki', the company's 255 crowded
outlets are packed with everything from green tea-flavoured
chocolates and cosmetics to Rolex watches. Its flagship store in
the Dotonbori strip of Osaka gets close to half of its sales
from duty-free shoppers.
Cut-price electronics store operator Bic Camera Inc
is also looking to get a leg-up on rivals by tying up with Tokyo
Metro to offer an extra 8 percent discount on most items at five
stores in the capital for visitors who purchase the subway
operator's all-day pass. That translates to a $400 saving, for
instance, on a $5,000 singe-lens reflex camera - popular among
Chinese and Vietnamese tourists, who along with Russians spend
the most per person on shopping in Japan, according to the
national tourism agency.
POLITICS OF SHOPPING
Though the weaker yen and its attractions appear set to
drive Japan's popularity as a destination, its ambition of
moving up in the world rankings for inbound visitors has not
been without hiccups beyond local retailers' control.
Visitors from mainland China, by far the top spenders per
head, fell 7.8 percent last year after Japan's dispute with
China over islands they both claim ignited anti-Japanese
South Koreans were scared away towards the year-end by media
reports highlighting radiation fears left over from the March
2011 nuclear disaster, which in turn caused a big drop in
overall visitors that year.
"If you look at what's happening now with Vietnam and China,
things can take a turn overnight," said Mitsukoshi Ginza's
Murakami, referring to the anti-Chinese riots in Vietnam this
month, also over territorial issues.
"But if you take a really long view, 'inbounds' offer the
biggest hope to fill the hole of Japan's shrinking population."
($1 = 101.1700 Japanese Yen)
(Reporting by Chang-Ran Kim and Ritsuko Shimuzu; Editing by