---
title: "Japan's Lost 30 Years: How Did He Keep Raking in Profits for 30 Consecutive Years?"
description: "Yasuda Takao, who named his company Don Quijote, has led a fantastical life akin to Don Quixote. He built Japan's most profitable retail enterprise, achieving a record 35 consecutive years of revenue and profit growth, yet is often called the 'retail monster.' His success story, business philosophy, and innovative strategies are explored in this article."
author: "华商韬略"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-11-18"
language: "en"
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---

# Japan's Lost 30 Years: How Did He Keep Raking in Profits for 30 Consecutive Years?

> Yasuda Takao, who named his company Don Quijote, has led a fantastical life akin to Don Quixote. He built Japan's most profitable retail enterprise, achieving a record 35 consecutive years of revenue and profit growth, yet is often called the 'retail monster.' His success story, business philosophy, and innovative strategies are explored in this article.

Yasuda Takao, who named his company Don Quijote, has led a fantastical life akin to Don Quixote. He built Japan's most profitable retail enterprise, achieving a record 35 consecutive years of revenue and profit growth, yet is often called the 'retail monster.'

**Success Story**

In August this year, news broke that Japan's 7-Eleven, the world's largest convenience store chain, might be acquired by Canadian retailer Alimentation Couche-Tard (ACT). Although this dramatic 'snake swallowing elephant' saga ultimately ended when Seven & i Holdings, 7-Eleven's parent company, deemed ACT's $39 billion offer undervalued, it highlighted 7-Eleven's struggling performance.

Public data shows that in the first half of fiscal 2024 (March-August 2024), Seven & i Holdings' revenue was ¥6,035.5 billion, up 8.8% year-on-year, but net profit fell 34.9% to ¥52.242 billion.

Beyond Seven & i, other major Japanese retailers have also been weak. For example, AEON, a large retail conglomerate focused on shopping malls and general retail, reported revenue of ¥4,999.4 billion in the first half of fiscal 2024 (March-August), up 6.1% year-on-year, but net profit plummeted 76.5% to ¥5.488 billion.

However, there is always an exception.

**Yasuda Takao's Don Quijote, Japan's largest discount retailer, is the biggest exception.**

In fiscal 2024 (July 2023-June 2024), Don Quijote's revenue surpassed the ¥2 trillion mark, rising 8.2% year-on-year to ¥2.0951 trillion (approximately RMB 99.27 billion). Operating profit soared 33.2% to ¥140.2 billion. This also marked its 35th consecutive year of revenue and profit growth.

Don Quijote's predecessor was a general store called 'Thieves' Market,' founded in Tokyo in 1978. It was named for selling goods 'as cheap as if they were stolen.' The original store was only 60 square meters and mainly sold surplus goods from bankrupt companies and factories.

At that time, 'Thieves' Market' had no warehouse. Discontinued products, defective items, returned goods, and samples filled the store to the brim, with cardboard boxes stacked to the ceiling and aisles blocked by goods and boxes, turning the entire sales floor into a maze-like 'product jungle.' Hand-drawn POP (point-of-purchase) signs explaining products covered all shelves. Its prominent label was:

'Super cheap.'

**Initially, 'Thieves' Market' had few customers, but its 'treasure hunt' shopping experience in the 'product jungle' proved surprisingly successful, gradually gaining popularity by satisfying consumers' curiosity.**

People would browse with anticipation, seeking out bargains that offered great value.

After the success of 'Thieves' Market,' the first upgraded large-scale discount store opened in Fuchu, Tokyo, in 1989. The store was named after Cervantes' famous novel 'Don Quixote.' The brand symbol, a knight tilting at windmills, represents the pursuit and ambition to defy common sense and authority, creating a new distribution model.

Don Quijote's initial business was not ideal, as Japan was on the eve of the bubble economy's collapse, and consumerism was rampant, with few willing to shop at discount stores.

But soon, Don Quijote's time came. After 1990, Japan's real estate and stock markets crashed, the economy plummeted, incomes stagnated or declined, unemployment rose, and society entered a new phase of low consumption that lasted 10, 20, even 30 years.

Don Quijote, focused on being super cheap, seized the opportunity of Japan's consumption downgrade.

With its unique product and pricing strategies, including the 'treasure hunt' shopping experience, Don Quijote quickly became a new choice for consumers, with sales soaring against the trend and stores multiplying.

After perfecting its model, Don Quijote expanded its network through acquisitions. Notably, in 2007 and 2018, it acquired Nagasakiya, which operated GMS (general merchandise store) business, and UNY, a supermarket chain under FamilyMart, respectively. It then closed underperforming stores with limited improvement potential and converted the rest into MEGA Don Quijote stores.

Currently, Don Quijote operates 632 stores in Japan: 262 focused on discount retail, 143 MEGA Don Quijote stores with larger areas and more categories including fresh food, 62 MEGA Don Quijote UNY stores emphasizing supermarket features, and over 100 community-based small stores.

**While continuing to grow domestically, Don Quijote has also actively expanded overseas, including:**

Entering the U.S. market by acquiring DQUSA, the U.S. business of Daiei, and subsequently acquiring supermarket chains like MARUKAI, QSI, and Gelson's, transforming them into its own model.

In 2017, it opened its first Asian store outside Japan in Singapore; in 2019, it entered Hong Kong and Thailand; and in 2021, it entered Taiwan, Macau, and Malaysia. As of the end of June 2024, Don Quijote had 110 overseas stores.

Today, Don Quijote is not only Japan's largest discount retailer but also the fourth-largest retail group after Seven & i Holdings, AEON, and Fast Retailing (parent of Uniqlo). It is even seen as a potential 'third force' challenging AEON and 7-Eleven in Japan's retail industry.

**Business Philosophy**

The saying 'Never judge a book by its cover' perfectly describes Yasuda Takao!

Graduating from Keio University's law faculty, a prestigious institution, Yasuda, due to his commoner background, lacked access to alumni network support and could only find a job at a small real estate company with low entry barriers.

However, he lost that job due to the first oil crisis. Afterward, Yasuda spent his days in mahjong parlors, earning a living by playing mahjong. His life turnaround began with the ¥8 million he won.

What helped Yasuda achieve his turnaround was 'innovation,' the lifeline for many companies.

From the original 'Thieves' Market' to the world-renowned Don Quijote, Yasuda pioneered the 'CVD+A' concept and developed it into a unique business model:

**'CV' (Change and Variety):**

Most people perceive supermarkets as neat, orderly, categorized, and fixed. But Yasuda made Don Quijote constantly change its product assortment and displays. The layout is frequently adjusted, and the product range is extremely diverse, from snacks and groceries to clothing, electronics, and sporting goods. Together, these create a sense of freshness for consumers and, through dense product displays, bombard them with a vast array of choices and information, weakening their rational thinking during shopping.

**'D' (Discount):**

From the original 'Thieves' Market' to Don Quijote, Yasuda has always featured surplus goods, clearance items, and discounted regular-priced products, offering low prices. Through large-scale purchasing and close cooperation with suppliers, he has strengthened his low-price capability: the larger the scale, the more discounts he can offer, passing savings to consumers.

**'A' (Amusement):**

Whether in store layout or shopping atmosphere, Don Quijote is unique. The seemingly cluttered displays are actually carefully designed, with discounted items interspersed with high- and low-margin products to create a 'treasure hunt' shopping experience, making the entire process fun and surprising.

Unlike other supermarkets that mechanically display product names and prices, Don Quijote extensively uses handwritten product description cards (POP) and distinctive slogans, using vivid copy to awaken consumers' awareness of product value and strengthen interaction.

To perfect the 'CVD+A' concept, Yasuda also innovated in site selection, business hours, and supply chain construction, differentiating from other retailers.

In terms of location, Yasuda placed most Don Quijote stores in city centers or near subway stations for convenient shopping. Regarding business hours, he catered to workers, especially those working late, keeping stores open until late at night. This not only met the needs of overtime workers but also became a signature feature, making late-night Don Quijote shopping a habit.

These innovations have yielded results. Data shows that in most stores, sales after 8 p.m. account for 30%-40% of daily sales. Many urban stores operate 24 hours.

In supply chain, Yasuda established long-term, stable relationships with suppliers to secure quality surplus goods, forming a price advantage. Starting in 2000, after becoming more attractive and influential to suppliers, he introduced a 'consignment inventory' model: he only helps suppliers sell surplus goods, sharing profits on sales, while unsold goods are returned to suppliers, shifting inventory risk to them and achieving zero inventory risk.

Additionally, Yasuda developed private brands to offer more low-price, high-quality products, meeting consumer demand for affordable, quality goods.

In the last two years, Don Quijote has also developed a store operation model centered on part-time workers, becoming another key factor in its continued success.

Starting in October 2023, Don Quijote abolished the traditional staffing of one store manager, one assistant manager, and multiple category managers per store, replacing them with a single part-time store manager and all other positions filled by part-time workers, who are given full authority. Part-timers can decide what to sell, how much, and how to display, and have communication rights with product and contract departments. As of June 2024, five such stores have been opened.

Yasuda often attributes his success 'largely to luck,' which is partly true—he was 'lucky' to encounter Japan's economic bubble burst, ushering in an era for low-price models.

But there are many discount retailers; why is Don Quijote more innovative and successful? The core reason lies in Yasuda's business philosophy, which differs from conventional thinking.

**Revelations**

'Not playing by the rules' is Yasuda's hallmark!

He always deliberately differs from others, even completely overturning existing models, 'taking completely opposite approaches.'

In Yasuda's view, the most important rule for winning competition is to create difference.

'Imitation is futile; mediocrity means rapid death,' Yasuda wrote in his autobiography 'The Discount King: My Don Quijote Life.' 'Following existing industry common sense and rules will ultimately lead to being devoured by larger companies with more capital and strength.'

He believes that for latecomers to compete with and surpass large enterprises, the greatest weapon is to use reverse thinking to hone originality and uniqueness, becoming the only player in the industry, thus remaining invincible. And the 'wisdom' (not knowledge) born from unrestricted free thinking is the entrepreneur's greatest asset!

Yasuda's 'wisdom' comes from deep observation and deep thinking!

Through years of managing 'Thieves' Market' and Don Quijote, Yasuda developed his own 'fragmentary' thinking method: 'I don't concentrate on a problem for a short time. Instead, I keep it in my mind for a week to ten days, and during the day, I use five or ten breaks—meals, bathroom, or walks—to ruminate on it several times.' Changing perspectives to find solutions is also an effective method for overcoming business bottlenecks.

**Deliberately seeking different deep thinking allows Yasuda to always form new strategies, methods, and models, while his other habit enables him to continuously refine and perfect them.**

The core is: strategically despise the enemy, believing your innovative direction is correct, and persistently pursue your goals; tactically respect the enemy, constantly reviewing possible mistakes, correcting them promptly, and striving for excellence.

Yasuda's innovative model, especially his innovative thinking, is worth referencing for domestic enterprises in the current economic environment.


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