thank you so much for the recommendation. We will definitely check out a department store.

Following your advice, this is our revised itinerary:

Day 1: arrive KIX, KIX-Kyoto
Day 2: Kyoto
Day 3: Kyoto-Nara-Osaka-Kyoto
Day 4: Kyoto
Day 5: morning train to Hakone
Hakone free-pass, will do the Hakone full course as described in japan-guide.com
Day 6: morning train Hakone-Tokyo
afternoon in Tokyo
Day 7: Tokyo
Day 8: Tokyo
Day 9: morning in Tokyo, then afternoon to Narita to catch a 4pm flight.

Really appreciate all input.

Michelle.