Japanese Drugstore Chain Boosts Duty-Free Counters on China Bets

2023-08-18 10:47

Welcia Holdings Co., Japan’s largest drugstore chain, is more than tripling the number of stores with duty-free counters

Welcia Holdings Co., Japan’s largest drugstore chain, is more than tripling the number of stores with duty-free counters as it anticipates the return of Chinese group tours for the first time in more than three years.

The company plans to offer duty-free services at 1,000 stores, up from about 260 currently, and it expects tourists to travel beyond Japan’s major cities, a spokesperson for the company said by phone.

Welcia is one of the first Japanese companies to respond to China easing its ban on group tours to a raft of countries last week. The return of tourists from the nation is expected to boost Japan’s economy by about ¥200 billion ($1.4 billion), with total spending by all inbound tourists set to reach ¥4.1 trillion this year, according an estimate by Kanako Nakamura, an economist at the Daiwa Institute of Research. In 2019, Japan welcomed almost 32 million visitors who spent about ¥4.8 trillion.

Read More: China Allows Group Tours to US, UK in Test for Travel Demand

But it’s unclear whether Chinese tourists will return en masse as concerns about an economic slowdown hurt consumer sentiment. Isetan Mitsukoshi Holdings Ltd., Japan’s largest department store, says it’ll closely watch the travel trend and decide whether to boost the capacity to deal with customers, according to a spokesperson.

A labor shortage is also affecting some firms’ plans.

“It’s the problem troubling me the most”, said Wenjing Zhang, the inbound business manager of Tsuruha Holdings Inc., Japan’s second-largest drug store chain by revenue. Since the easing of Japan’s border control measures last October, she has been increasing the number of staff who can speak Chinese or other foreign languages, but she doesn’t have a sufficient number. “If we can’t keep up with the large influx of customers, it could affect our overall business performance,” she said.

The total number of foreign visitors to Japan topped 2 million for the second consecutive month in July, recovering to about 78% of pre-Covid levels, according to Japan’s National Tourism Organization. While the number of arrivals from countries such as US and Australia are already surpassing 2019 figures, there were just 313,300 visitors from China last month — 30% of pre-pandemic levels.