A retail company that creates theme songs for crabs, sweet potatoes, and oden—have you ever seen that? Image source: Xiaohongshu DON DON DONKI Last month, the author visited Hong Kong and made a special trip to Don Quijote in Causeway Bay. After shopping, one feeling kept circling in my mind: the things domestic retail has spent so much effort on in recent years—lowering shelves, widening aisles, refining displays, and enhancing the shopping experience—are almost nowhere to be found in this store. Yet its business is incredibly good. This contrast is worth a serious discussion. Don Quijote's shelves are stacked to the ceiling, the layout is disorienting, and affordable snacks and luxury goods are squeezed onto the same shelf, earning it the nickname "the worst store." But it is the only retail company among Japan's 3,000 listed companies to achieve 35 consecutive years of double growth in both revenue and profit. Its annual revenue is approximately 1.44 trillion yen, equivalent to about 70 billion yuan, with an overall profit margin of 12%, far exceeding the industry average of less than 5%. How does it do it?

Don Quijote's "Mess"

Walking into the Causeway Bay store, the first perception is not visual but auditory—a fast-paced Japanese song is playing on a loop, simple in melody but extremely penetrating in the noisy commercial street. The author looked it up: the song is called "Miracle Shopping," Don Quijote's brand theme song, played on a loop in all stores worldwide for decades, never changed. You might think this is an insignificant detail. But think about it: fast-paced music effectively raises shoppers' excitement and compresses space for rational decision-making. Even the background music is making decisions for customers, making them more likely to pick up items and put them in the basket rather than repeatedly weighing whether to buy. Following the crowd up the escalator, the author noticed that the personal care section's display is completely different from domestic stores. The shelf density is extremely high, with Japanese skincare, beauty tools, and personal cleaning products ranging from affordable to mid-to-high-end. But it doesn't segment by brand or function; instead, it mixes different brands, specifications, and price points of similar products together. Standing in front of the shelf, you can't help but stop and compare: what's the difference between this bottle and that one? Which is more cost-effective? Just this action is enough to extend the time consumers stay. The most intuitive scene is the checkout area. At 6 p.m. on a weekday, the checkout line snakes along the shelves, with an estimated wait of over ten minutes. But almost no one in the line looks impatient; they're all looking down at their phones or examining items just picked up in their baskets. Most of those queuing are young people in their twenties and thirties, half locals and half tourists, with baskets generally quite full. A store that can make people willingly queue for ten minutes shows it has already accomplished one thing after you enter: making you feel that leaving would be a loss.

From a Discount Grocery Store

to Japan's Only Retail Myth

Don Quijote's starting point was actually very humble. In 1989, founder Takao Yasuda opened a 24-hour discount grocery store in a Tokyo suburb, small in size, with cluttered merchandise, focusing on clearance and bargain items. At that time, Japan's bubble economy hadn't burst yet, and the consumer market was still high, so this small store wasn't conspicuous. The real turning point was crisis. In the early 1990s, the bubble burst, and Japan entered the "Lost Three Decades." Per capita consumer spending fell by nearly 18% from 1990 to 2024, with consumer sentiment persistently low. The retail industry's instinctive reaction was to compete on tidiness, efficiency, and standardization. By 2024, the standardization level of Japanese retail displays had reached 90%, resulting in a thousand stores looking the same—60% of small and medium retailers were in the red, 23% faced closure, and the average profit margin of the three major convenience store chains was only 2.5%. The more refined, the more similar, the harder to survive. Don Quijote went against the grain at this point. The more consumers saved money, the more it pushed discounts to the extreme; the tidier competitors became, the more it turned "mess" into differentiation; while others cut categories for efficiency, it kept stacking SKUs to 100,000. It is the only company in Japan's most brutally competitive retail market to maintain double growth in revenue and profit for 35 consecutive years. Often, the best opportunities lie where everyone else is running in the same direction.

Behind the "Mess"

Is a Carefully Designed Profit Logic

Many people think Don Quijote simply wins on cheap prices and a wide product range. That judgment might be only half right—and not the important half. First, let's clarify a common misconception: Don Quijote is not dirty, nor is it poorly managed. The floors are spotless, products are intact, and every price tag is clearly marked. Its "mess" is deliberately designed, not the result of management failure. Layer 1: "Mess" extends dwell time, and dwell time is conversion opportunity. The underlying logic of retail has always been customer dwell time—the longer a consumer stays in a store, the higher the chance they buy something. Don Quijote uses cluttered displays and winding layouts to stretch the average customer stay to 70 minutes, nearly five times that of a typical supermarket. Data shows that for every additional 10 minutes spent, the average transaction value can increase by 15% to 20%. Although the aisles in the Causeway Bay store are narrow, the utilization of each shelf level is extremely high, with almost no gaps between products. Its spatial logic is not to make you shop comfortably but to give you no reason to stop. Layer 2: Mess creates a treasure-hunt feeling, turning emotional value directly into repeat purchase rate. In times of low consumption, people are more willing to pay for surprise and joy. When you dig out a low-priced gem from the cluttered shelves, that "I found it" satisfaction is something no precise algorithm recommendation can provide. This emotional value pushes Don Quijote's repeat purchase rate to 68%, far above the industry average of 42% in Japan. The young people queuing at checkout are largely hooked by this experience. Layer 3: Full-category coverage keeps different customer groups in one stop. Don Quijote's regular stores have about 40,000 to 60,000 SKUs, while large stores have up to 100,000 items, more than ten times that of Sam's Club. Tourist-area stores attract visitors with duty-free goods, community stores retain locals with daily necessities, and personal care categories drive high-frequency repurchase among younger customers. Low-margin daily necessities drive traffic, while high-margin clearance goods make money—two legs walking without interfering with each other. Layer 4: Extreme low prices make you feel you're losing out if you don't buy. The same products are 20% to 50% cheaper than mainstream supermarkets and over 40% cheaper than department stores. How is this price advantage achieved? First, by purchasing large volumes of clearance goods at 10% to 30% of the original price, with gross margins exceeding 50%, making them the core source of profit. Second, the rent expense ratio is only 4%, lower than the industry average of 6% to 8%—Don Quijote itself is traffic, so landlords have little bargaining power.

Why Can't Anyone Copy Don Quijote?

At this point, some might say: this logic doesn't sound complicated, why can't other retailers learn it? Because Don Quijote's real moat is not in the display method but in three hard-to-replicate aspects. First: Power is delegated to store managers. Don Quijote gives each store manager purchasing, pricing, and display authority, with compensation directly tied to store performance. About 40% of each store's products are independently procured by the store manager. The Shinjuku store is full of tourist souvenirs, the Akihabara store is piled with anime merchandise, community stores strengthen daily necessities, and the Causeway Bay store focuses on personal care and beauty—each store looks different because each store manager has a different judgment about the local customer base. This flexibility is something a highly standardized chain system simply cannot provide. Second: The ratio of clearance goods to bestsellers. 40% are clearance goods purchased at 10% to 30% of the original price, with gross margins exceeding 50%, serving as the profit engine; 60% are bestsellers or daily necessities, sold at thin margins or even at cost, responsible for pulling people in and driving sales of high-margin items. Additionally, private brands contribute about 16% of gross profit. This combination allows it to appear "very cheap" while actually achieving profit margins far above the industry average. Third: Monopolizing traffic others don't want. Open 24 hours, sales from midnight to 6 a.m. account for 12% of the day's total. Stores are concentrated in tourist areas and areas with dense nighttime foot traffic, with tourist spending accounting for 27% of total sales. These time slots and customer groups are actively abandoned by refined supermarkets and standardized chains—Don Quijote captures all of them. The evening crowd at this Hong Kong store confirms this: tourists and local young people stand in front of the same shelf, each taking what they need.

Final Thoughts

Coming out of Causeway Bay, one question kept running through my mind: Who exactly are the problems that the domestic retail industry has been vigorously addressing in its renovation direction over the past few years? Yonghui learns from Pangdonglai, lowering shelves, widening aisles, and creating a sense of openness; shopping malls upgrade public areas, introduce internet-famous formats, and polish display details. The logic of this path is: better shopping experience equals better business. But Don Quijote made me feel that "good experience" has never had just one definition. Making people unable to stop, unable to resist browsing, and feeling they've found a treasure—that is also an experience, and in driving average transaction value and repeat purchase rate, it may be no worse than "clean and open." When everyone is renovating in the same direction, your tidiness only meets the industry passing line, not establishing true differentiation. More fundamentally: the opponent of offline retail is never peers, but e-commerce. Competing on efficiency and low prices, offline has no chance of winning. Don Quijote's answer is to turn shopping from "completing a task" into "enjoying a process"—emotional value is something e-commerce algorithms cannot provide. Pangdonglai's core is ultimate service, Sam's Club's core is member trust, and Don Quijote's core is emotional experience. The three paths differ, but all answer the same question: give consumers a reason they must come offline. Order is business; disorder is legend. In a market where everyone runs in the same direction, going the opposite way is sometimes the fastest path.