Kansai retail expansion proceeds despite downturn

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The project to create new retail space at Japan's second biggest airport Osaka Kansai is to go ahead despite a severe drop in traffic

The war in Iraq and the SARS outbreak have caused a year-on-year fall in retail sales of up to 40%, but airport authority Kansai International Airport Co (KIAC) has confirmed its plan to build new brand boutiques at the location, first revealed in DFNI July 1 2002.

KIAC director duty-free Takao Matsunami told TRW the expansion plan was now one of the company's key objectives. "The Japanese government recommended that our company seek all possible ways to improve revenue, and our retail division has been asked to expand. It is now our firm policy to do so and although the details of the expansion are not yet decided, we are in the final negotiating phase." Matsunami confirmed that new retail space would be created to house more brand boutiques, of which there are currently eight at Kansai.

Meanwhile, Japanese operators are fighting to improve sales as the SARS virus and conflict in Iraq spread travel jitters throughout the country. Retailers at Kansai said duty-free had been hit hard by flight cancellations by leading carrier Japan Airlines, especially on routes to Hong Kong and the US. "Business is terrible and no-one has any idea how long this will go on," one operator told TRW. In Tokyo the situation is following a similar pattern, with drastic reductions in scheduled flights causing a drop in duty-free sales of 30% year-on-year.