What you need to know about high-end retail in Japan’s tourist hotspots

Niseko has been proactively going for a high-end branding.

The stellar performance of high-end retail establishments in Japan’s prime central locations over the past few years appears to have had a knock-on effect on popular tourist destinations according to a Savills report, as several of them appear to be interested in establishing themselves as destinations for luxury experiences. 

This trend appears particularly prevalent in places that have been exceptionally successful in attracting inbound tourists. 

Here’s more from Savills:

Niseko has been at the forefront of proactive high-end branding. For instance, Louis Vuitton tested the waters by opening a pop-up store in December 2023, during the area’s peak ski season, which appears to have been well received. In addition, there is also a plethora of luxury hotel developments in the area, meaning that more high-end shops could be expected to enter the market, although seasonality poses challenges. 

Elsewhere, Seibu’s Prince Shopping Plaza in Karuizawa has broken sales records for two consecutive years, with FY2023 hitting JPY56.5 billion. This success appears to have attracted the attention of other players, and Mitsubishi Estate announced the development of a new retail facility in the area in 2026, which should be expected to feature some high-end establishments. 

The impacts of such strategies revolving around high-end retail on respective regions could be observed in the annual Standard Land Price Survey published in September 2024 by the Ministry of Land, Industry, Transport and Tourism. Niseko, and its neighbouring Kutchan, have seen commercial land prices rise by 8.2% and 8.6% yearly, respectively - both significantly above the national average of 2.4%, and even comparable to that of Tokyo prefecture’s 8.4%. 

Commercial land prices in Karuizawa have risen by 6.0% and could be expected to rise even further with the announcement of Mitsubishi Estate’s new retail facility. There should be greater potential in these areas and further new developments and projects will be able to attract even more desired visitors. 

Overall, high-end retail is a sector with vast potential in tourist hotspots, particularly those that have successfully attracted elevated levels of inbound footfall. In addition to the areas mentioned, there are likely many more potential candidates for future high-end retail destinations. Inbound tourists are expected to continue playing a significant role in this, and developments such as the Integrated Resort (IR) in Osaka should help attract a larger number of wealthy clientele. 

At the same time, establishing a high-end retail hub should be preceded by the development of accommodation to match, as many of these areas have done. It will take time for developers and investors to accurately gauge the appetite for such experiences, meaning that the transformation of any region will be a gradual process. Therefore, opportunistic players looking to secure first mover advantages should closely monitor ongoing developments and trends.