How corporates can learn from the messiness of Don Don Donki

If you are from Japan or Southeast Asia, hearing the word “Don Don Donki”, will immediately bring you to this song:

Don Don Donki (Don Quojite), is a Japanese discount retail chain – commonly associated with its penguin mascot – which sells a wide assortment of products arranged in messy displays in stores. 

How did they start? 

Don Don Donki was founded by Takao Yasuda, and in September 1980, it opened its first retail store in Suginami, Tokyo. Over the years, the store decided to change its primary business from wholesale to retail. 

The sudden economic uncertainty caused the Japanese public to become more thrifty and therefore helped to boost sales at its stores during the early 1990s.

Their venture overseas began in 2017, and now have stores in Singapore, Hong Kong,Thailand, Malaysia, Taiwan, and Macau. 

How big are they? 

Don Don Donki goods are no longer considered discounted goods, but rather, mass premium Japanese goods. E.g. a Japan watermelon in Don Don Donki cost S$25 – S$90! (Definitely not something my mum would buy weekly)

In 2021, Don DOn Donki hit record high net sales of US$13.1B, revenue of US$5.3B, and gross profit of US$3.8B. 

Interesting facts about Don Don Donki

1. It uses a “small profits, quick turnover” model: 

This model allows Don Don Donki to provide convenience, amazing discounts on promotional items and amusement (through the variety of products it has).It all makes perfect sense, but how does Don Don Donki do it? Friends in the industry tell us that they think it’s related to their superior sourcing and merchandising capabilities. This is something that all shops want to do, but can’t do well. The only other company we know that has achieved this feat is SHEIN. <<Check out our report here>> 

2. Cool quirky and innovative brand image

Before 24/7 stores existed, Takao Yasuda (the founder) noticed that Don Don Donki stores were visited by customers even in the wee hours and realised “There’s something about overnight marketing.”

As at today, it has retained some of its’ unique brand features such as late night shopping. It is open until after midnight and offers late-night deals – 60% off ready-to-eat food items – to tap on customers’ growing demands for late-night shopping.

3. Treasure hunt effect 

Whenever I go to Don Don Donki, I’m always amazed at how messy the store layout is.

Grocery shopping at Don Don Donki sometimes feels like a treasure hunt with its messy maze-like layout coupled with its addictive jingle, suggestive bright (and informative) posters and also their ceiling height shelves. You never know what you will get but in the end you manage to get their discounted items – i.e. their ready-to-eat food that sometimes can go up to 60% off.

The “enjoyable mess” is something that people are attracted to, and in a way, it is a bit of gamification : being welcomed by a big-eyed penguin, trying to find the grocery on your list, discovering new items (and their uses that you didn’t know existed), finding bargains that makes your heart beat a bit faster, and throughout it all – bright lights and the addictive jingle to edge you on! 

What Don Don Donki has done is that they use a strategy called the Gruen effect – a confusing store layout makes shoppers lose track of their original intentions and more susceptible to impulse purchases.

What can corporates learn from Don Don Donki?

1. Pivoted the business to keep up with the changing customers’ demand.
2.  Similar to tech/ gaming companies, it understands the importance of the user interface (i.e. its store) and has gamified the user experience within its sphere of influence.
3.  Finally, it leverages on its moat , in this case, the supplier and merchandise network, to provide the right products to its users at the right cost. 

Previously, we shared about the value propositions that ecommerce or retail companies look at to succeed – selection, speed, quality and savings. No one company can capture all four value propositions, and companies need to select which areas they want to go deep into. 

In Don Don Donki’s case, it is clearly focusing on providing selection and quality.

And they do it by making its users happy, and coming back for more. 

Momentum Academy explores these businesses and makes these insights relatable to corporates through our talks, case studies and business analysis workshops. Watch out for more of our case studies at Momentum Academy and give us a shout out if you want to find out more.