Japanese shops eager to transform
▶ Cross-border e-commerce a new ‘battlefield’ to attract customers
At the central avenue of Ginza district, Tokyo, foreign tourists with hands full of shopping bags can be seen everywhere, forming a unique landscape in the area packed up with trendy malls. Among these malls, the main store of Laox, the largest duty-free store in Japan, was once the most eye-catching. During peak times, the popular Japanese rice cookers stacked in the store could be snatched up by Chinese tourists in just a few minutes.
Laox transformed to a general duty-free store from a home electronic merchandiser in 2009, and the shop specifically targeted tourists visiting Japan.
In the following several years, thanks to the surge in the number of tourists in Japan, the company has finally got rid of a 13-year deficit situation in 2014, and achieved a sales record of 92.6 billion yen ($826.9 million) in 2015.
Eyeing on the huge profit, others soon followed suit and accelerated to open new duty-free shops around the country.
A business model for duty-free shops has also formed. These shops would pay fees to travel agencies, which would be entrusted to lead group visitors into these stores, so that they could ensure customer sources.
Among all the tourists who visited Japan, Chinese tourists are undoubtedly ones who had devoted the most to the outstanding sales performance of Japanese duty-free stores.
Based on media reports and data from official websites, the Global Times found out that the “shopping spree” phenomenon of Chinese tourists has gradually emerged in Japan since 2008. In 2009, the word Bakugai, the Japanese word for “explosive buying by Chinese tourists” was first used in a Japanese TV program to describe the strong buying ability of Chinese tourists.
The word was even declared Japan’s word of the year in 2015, indicating a buying peak of Chinese tourists in Japan.
End of an era
During a trip to Japan in 2015, the Global Times reporter saw Chinese tourists had already “occupied” these duty-free shops. People could not even find a space to stand.
However, after just one year, the unprecedented scene could not be seen anymore with the end of the shopping spree era.
According to media reports, starting from 2016, the travel model of Chinese tourists has gradually shifted from “explosive buying” to “experience-based consumption.” Instead of rice cookers and toilet lids, they are more interested in typical Japanese experiences such as bubble hot springs and other Japanese-style services.
“Chinese tourists are increasingly searching for unique experiences that represent a culture or lifestyle they cannot find back in China. Shopping is now becoming a less important item on their itinerary when traveling abroad,” Li Yilan, an independent Beijing-based tourism analyst, told the Global Times on Monday.
“Another important reason behind the shift of travel preferences is that with the booming of cross-border ecommerce, it’s quite convenient to buy products from countries like Japan and the US from home,” Li said.
Li noted that more young Chinese prefer to plan their own travel routes, instead of traveling with travel agency groups. This has also cut the number of group tourists, who were major customers for the duty-free stores in Japan.
The change has brought heavy losses to those once thriving Japanese duty-free stores. For example, Laox, after achieving good sales performance in 2015, suffered a loss of 1.5 billion yen in 2016. Laox finally closed its Ginza store on August 31 this year.
While Laox is apparently not the only one which suffered. With declining Chinese tourists, many once crowded duty-free stores in Japan have been closed, or turned to other businesses instead.
Eager to change
Some shops are looking for a way out.
Prompted by the withering sales, owners of these duty-free shops are upgrading their service to cater to Chinese tourists’ new demands. For example, closing down counters for household electrical appliances, and setting up more cosmetics counters and expanding types of salon products which are popular among Chinese customers, according to Japanese media reports.
Moreover, some duty-free shops also opened kimono rental services for tourists to take photos, and some even transformed into barbecue restaurants to avoid relying on a single business model.
Amid the transform, Chinese tourists are still the main target for Japanese duty-free stores.
In a recent interview with the Global Times, Yamamoto, a duty-free shop manager in Shinjuku, Japan, said that although Chinese tourists lost interest in certain Japanese products such as household electrical appliances, demand for daily necessities still remain strong.
“Cosmetics such as sunscreens, eye masks, and skincare products are especially popular, so we have expanded the display space for these products, and also strengthened the promotion to attract more Chinese customers,” Yamamoto said.
In addition, shop managers like Yamamoto are also actively expanding new sales channels.
Not only limited in physical stores in Japan, they have also joined forces with Chinese e-commerce companies such as Aliababa Group Holdings and JD.com Inc to sell their products to China through online channels.
Yamamoto said that although his duty-free shops have already caught up with the cross-border e-commerce trend, they also have other strong competitors such as those from the US. Thus, they are strengthening promotion on social networks popular among Chinese people such as WeChat and Weibo.
“With the growing number of middle class in China, Chinese consumers are now willing to spend more in highquality products. In a bid to retain Chinese tourists and customers, owners of these Japanese duty-free stores should also focus more on improving service and product quality, instead of just changing business models and advertising,” Li said.