Takashimaya introduces direct to airport delivery for duty-free

Tourist shopping is now an increasingly important market for many retailers from high end to low end. Last month Takashimaya added a delivery-to-airport service to encourage tourists to get more shopping done throughout their trip rather than just near the end of their visit. The chain is even offering the service in more remote stores.

Takashimaya launched its latest duty-free service last month, offering to deliver purchases direct to the airport ready for tourists to pick up on their way home. The service began at the Shinjuku store, not the chain’s best performing, but the most popular with tourists because of its location and easy accessibility compared to the Nihonbashi store. In FY2013, 4% of Shinjuku sales came from tourists, but hit 10% in October when the chain introduced new duty-free counters. Takashimaya says it is attracting growing numbers of repeat shoppers too. Takashimaya has the highest profile in Asia of any Japanese department store thanks to successful stores in Singapore, Taiwan and Shanghai.

The Shinjuku store offers delivery to Narita and Haneda Airports, but will expand to Kansai early this year. The service isn’t free, with the department store looking to cover costs, and it’s unlikely to stay unique to Takashimaya for very long. The chain plans to offer the delivery service from all 19 of its largest stores, with even regional stores now receiving increasing numbers of visitors as Japan’s more provincial delights become more accessible and more accepting of foreign guests.

The rollout of services to foreign visitors is growing rapidly throughout the retail industry. Isetan Mitsukoshi and J Front Retailing have already introduced a range of services to help with duty-free purchases at most of their major department store branches, and interpreters, who are today easy to employ for languages such as English and Chinese at least, are available in most locations – and software solutions help out when interpreters aren’t available. According to the Japan Department Store Association (JDSA) sales to tourists were up 2.2 times in October on 2013 to ¥8.67 billion – only 1.6% of total sector sales, but still unprecedented.

For Takashimaya at least, the shift to better accommodate tourists has contributed to profit growth. Net profit for 1H2014  was up 23% to ¥13 billion, a figure that was also partly boosted by the sale of two DCs for ¥2.9 billion. Sales rose 1% to ¥655.4 billion, and strong sales of luxury items meant that domestic same store sales also improved 0.6%. Within this, sales to tourists rose 1.5 times compared to 2013. Further efforts at reducing store costs, notably rents and staff, helped grow operating profit 8% to ¥17.8 billion. The company is now forecasting FY2014 total net profit 15% above last year at ¥21.5 billion, operating profit up 10%, with sales expected to stay on pace, up 1% to ¥916 billion.

Today not only department stores and higher end boutiques and consumer electronics chains, but even drugstores and convenience stores are introducing duty-free shopping options and accepting Chinese credit cards, such is the importance of the tourist Yen. The pace of change has been rapid and tourism continues to expand, with a forecast 20 million tourists a year by 2020.