Gaia Series 24 : Monopoly! Donki's New Strategy
Famous discount store Donki is featured this week, with a focus on its new speciality store Domise, which sells own-brand items and has a unique "slip-up corner" for discounted “failed” products.
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Don Quijote or Donki is a discount store everyone is familiar with. It has nearly 600 stores in Japan and abroad. It stocks a wide range of goods and the items are cheap. For example, in its huge store in Ota Ward, Tokyo - called Tokyo Mega Don Quijote Omori Sanno Store - 4,000 different items are sold such as food, clothes and household electronics. Some of the products have a "Doh" mark, which refers to its own-brand range of competitively priced products.
Donki’s Own-Brand Planning and Development Head is Tomonari Watanabe. He has created about 200 products in the past two years. So far, his biggest hit is a bag of mixed nuts. For example, there are a lot of different varieties of almonds and the taste changes depending on the variety. Mr Watanabe spent more than half a year comparing nuts from different regions and in different proportions. The final product has boasted annual sales of more than a billion yen. A new product Mr Watanabe has created this year is red ginger rice crackers.
Donki does not have its own factory so it outsources the production of its own-brand products. One such company it works with is a food producer in Yaizu City, Shizuoka. Its factory produces products like salad dressing and it manufactures own-brand products for various companies such as Donki. Mr Watanabe worked with this factory to create a new product - finely chopped red ginger flavoured with vinegar and sugar. He got the idea for this from the red ginger rice crackers.
In May this year, Mr Watanabe visited the Donki store in Tachikawa, Tokyo. He holds a meeting with the company’s heads of design to discuss the packaging for the red ginger product and come up with a product name too. The term “pourable red ginger” was created after 2.5 hours of discussions.
On Donki’s homepage, there is a section on "Hall of Failure", where customers can post their opinions on its products. The company uses the information to develop products, improve them or create entirely new products. They get as many as 2,000 such posts every month. The comments have helped Donki improve things such as packaging and taste. Examples of products which have been improved are bath towels whose width was extended by 20cm after incorporating feedback that the initial ones were too small; and toilet paper, as customers had complained that the paper quality was too rough or “rugged”. Donki worked with the manufacturers to make the necessary improvements to the products.
The founder of Don Quijote is Mr Takao Yasuda. In 1978, at the age of 29, he opened a small discount store with the name "The Thieves' Market". The displays were packed full of products with handwritten signs; this format has continued till today at Donki stores. Subsequently, Mr Yasuda built a huge group of distributors at which sales approached two trillion yen. Mr Yasuda is currently the founding chairman and the chief adviser of Don Quijote.
In August this year, a new type of Donki store was launched. Called Domise, its new business model has attracted a lot of attention. The store’s emblem is the "Doh" symbol, which can be seen on all its products. The store sells only original Donki’s own brand of competitively priced products. It is located in a recently completed skyscraper in Shibuya, Tokyo, called Dogenzaka-dori. It is Donki's first large-scale complex and rises to 28 floors above ground. It has a luxury hotel, shops and offices. Building a large-scale complex in Shibuya has in fact been founding chairman Mr Yasuda's dream for 20 years.
Mr Takeshi Moritani is the general manager of Donki’s own-brand range of products. Founder Mr Yasuda’s aim is to open stores selling Donki’s own-brand products throughout the world. So this was the impetus to open the first Domise store in Shibuya.
The Dogenzaka-dori complex and Donki’s new store Domise officially opened their doors on Aug 24. Domise has hand-drawn display cards using Don Quijote characters, specially designed by Donki’s specialist display card writers. There are also display cards made of cardboard. One of the highlights of the store is the "Doh slip-up corner” for “failed products”, displaying products which did not sell well in the past and which are now available at reduced prices. Mr Watanabe also launched his newly created “pourable red ginger” product at this new store. Mr Yasuda wants to open a second Domise store in Yao City in Osaka, in line with his plans to spread this new concept worldwide.
Tips:
1) Donki’s Domise store in Shibuya sells mainly Donki’s own brand of products
2) Mixed nuts are among Donki’s most popular products
