Chi­nese buy­ers boost Ja­pan’s lux­ury mall sales

The Pak Banker - - BUSINESS -

Chi­nese tourists buy­ing mil­lionyen watches and lux­ury brands helped boost sales at Ja­panese pre­mium out­let malls owned by Mit­subishi Es­tate Co. to a record last year, as a weaker cur­rency led to a surge in bar­gain­hunt­ing vis­i­tors.

Pre­mium out­let sales jumped by more than 10 per­cent to be­tween 300 bil­lion ($2.6 bil­lion) and 350 bil­lion in 2015, Yu­taka Ta­jima, a se­nior ex­ec­u­tive of­fi­cer at Mit­subishi Es­tate, said in an in­ter­view in Tokyo Mon­day. He is tar­get­ing higher sales this year, he said.

The tourism boom is help­ing Ja­pan's largest de­vel­oper by mar­ket value nav­i­gate slow­ing con­sump­tion as the na­tion's pop­u­la­tion drops. Over­seas tourists vis­it­ing the com­pany's nine high-end out­lets rose more than 80 per­cent to 1.17 mil­lion in the first nine months of 2015, Ta­jima said. For the first time in 45 years the num­ber of vis­i­tors to Ja­pan over­took peo­ple trav­el­ing abroad last year.

"We ben­e­fited from a big in­crease in in­bound tourists from China last year," Ta­jima said. "More peo­ple are look­ing for high-qual­ity goods, rather than just cheap prod­ucts. Ja­pan's pop­u­la­tion is shrink­ing and con­sump­tion is flatlin­ing, so tourists are very im­por­tant for us."

Ja­pan's pop­u­la­tion shrank in the past seven years to 126.9 mil­lion in 2015, the small­est since 2000, ac­cord­ing to es­ti­mates by the U.S. Census Bureau. It is set to de­cline by more than 700,000 a year on av­er­age be­tween 2020 and 2030, ac­cord­ing to the Na­tional In­sti­tute of Pop­u­la­tion and So­cial Se­cu­rity Re­search.

Mit­subishi Es­tate is set­ting up cur­rency ex­changes in its fa­cil­i­ties, help­ing ten­ants train staff in dif­fer­ent lan­guages, adding prayer rooms and mak­ing maps of tax-free shops to help over­seas vis­i­tors nav­i­gate shop­ping cen­ters, Ta­jima said.

Gotenba mall, near the foot of Mount Fuji 90 min­utes by bus from Tokyo, is the largest and most pop­u­lar with for­eign­ers, whose pur­chases topped 20 per­cent of over­all sales there last year, he said. The out­let has 210 stores and in­cludes brands from Gucci to Ralph Lau­ren.

"It's be­come part of a sight­see­ing course for over­seas vis­i­tors," he said. Seiko Hold­ings Corp. is one of the com­pa­nies ben­e­fit­ing from the in­flux of shop­pers, Ta­jima said.

The Tokyo- based man­u­fac­turer of the lux­ury Grand Seiko brand pre­dicts sales of time­pieces will help boost over­all sales 3.9 per­cent to 305 bil­lion yen in the fis­cal year end­ing March 31.

"We have a lot of reg­u­lar Seiko mod­els in out­lets, but high-end watches from a few hun­dred thou­sand yen to one mil­lion yen are pop­u­lar in out­lets

around as well as Ginza, shops and depart­ment stores," said Ta­jima.

Spend­ing by the av­er­age Chi­nese tourist was 283,842 yen last year, the most of vis­i­tors from any coun­try, and 23 per­cent more than Aus­tralians, the se­cond-big­gest spenders, ac­cord­ing to the Ja­pan Tourism Agency. The yuan gained 33 per­cent to 18.5 against the yen in the three years to the end of 2015, ac­cord­ing to data com­piled by Bloomberg.

Mit­subishi Es­tate will open a 10th pre­mium out­let mall in Hana­zono, Saitama pre­fec­ture, to the northwest of Tokyo, in 2018, Ta­jima said.

Mit­subishi Es­tate shares fell 5.2 per­cent to 2,135 yen at the close of Tokyo trad­ing Tues­day. They have dropped 15 per­cent this year, a sim­i­lar de­cline to the Nikkei 225 Stock Av­er­age. Mit­subishi Es­tate owns the pre­mium malls through a joint ven­ture with Si­mon Prop­erty Group Inc., the largest U.S. mall owner.

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