Don Quijote – Breaking Rules and Building Profits

Japanese retail company, Don Quijote’s, rule-breaking approach continues to grow the company’s profit margin

Mega Don Quijote in a busy shopping area
Mega Don Quijote in a busy shopping area
5/51 rating

Japanese retail giant, Don Quijote – known locally as Donki – has had a reputation as a rule breaker from its inception. With its franchise of chaotic, cluttered stores that sell everything from electric toothbrushes to clothing items, the company offers a different customer experience.

Last week, the company reported its 29th year of unbroken sales and profit growth with sales this year projected to reach 1 trillion yen ($9 billion). Don Quijote representatives believe its success lies primarily in its ability to amuse its customers.

What makes Don Quijote different?

While most stores pride themselves on having a neat and efficient layout, Don Quijote stores embrace disorder and a random selection of products. Shoppers to Donki stores are welcomed by tanks of exotic fish before they enter the maze-like shop floor where they can find pretty much anything they can imagine.

Once inside customers are serenaded with the Donki theme song, an earworm tune that is difficult to forget once it gets into your head. And the ever-changing stock draws customers back to the stores again and again.

The products sold in the stores are cast offs from other retailers. Japan has a weakness for seasonal and experimental products so there is never a shortage of new stock to display on the shelves. Customers can find items like beer cans with cherry blossom print or yogurt-flavored water.

It may seem like no organization went into the layout, product sourcing and display but it’s all based on a carefully-honed strategy that is the result of years of experimentation in each store.

Store staff choose what to stock in each outlet with financial incentives in place to help motivate them to source and display the products effectively. As a result, each Don Quijote store caters to local tastes and needs.

While most stores pride themselves on having a neat and efficient layout, Don Quijote stores embrace disorder and a random selection of products

Geared up for further expansion

The retail company has a growing range of stores, from its smaller Picasso stores to giant Mega Don Quijote or Platinum Don Quijote selling high-end products.

The retailers want to expand further but with a shortage of suitable locations in which to open new stores they have struggled to find sites for expansion into. So, to combat their predicament, last year, Donki took a 40 per cent stake in FamilyMart Uny Holdings Co.

In the 6 months since this business alliance, Donki-like stores have almost doubled sales, with 20 more stores to open by 2019.

The company has set a target to have 500 stores by 2020. It currently has 420 and FamilyMart has stores in almost 200 locations, so it’s a very achievable goal.

It was reported recently that Walmart’s Seiyu supermarket unit has struggled to replicate its low-priced model in Japan. With over 300 stores nationwide, Donki said it would be interested in buying Seiyu from the US retail group if they decided to sell.

Don Quijote branches out to overseas markets

Two Don Quijote stores, Don Don Donki, opened up last year in Singapore and another one is due to open in Bangkok.

Founder Takao Yasuda drove the expansion after moving to Singapore following his retirement. He found that Japanese products in Singapore were too expensive. Prices in Don Don Donki stores there are as much as 50 per cent lower that rival stores selling Japanese products. The most popular products abroad are food and drink products.

The Don Quijote franchise is continuously proving that being open-minded and daring in business can yield great results. If it can keep going with its expansion plans, the company will certainly be celebrating 30 years of sales and profit growth next year.

Today’s “otsumami” – a bite size snack:

Thinking outside the box and breaking established rules can set your business apart from the rest and see your reputation and profits soar.

What do you think?

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Written by Catherine McGuinness

Writer and Journalist with a love for all things Japan.

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