With all the major drugstore chains introducing new value added services in efforts to compete in the increasingly saturated sector, last month the leading chain, Matsumotokiyoshi, added to the competition with the first of an entirely new format. Matsukiyo LAB is aiming for 50 stores within five years, targeting single person households in urban areas with a large range of beauty, health and lifestyle merchandise.
Matsumotokiyoshi, the country’s leading drugstore operator, opened the first of a new format in late September. The store concept is dubbed a ‘Lifestyle Healthcare Shop’ and carries the banner, Matsukiyo LAB, with the first store opening at Shin Matsudo Station. Matsukiyo LAB aims to support single person households with both health and beauty services, as well as standard drugstore merchandise ranges. It employs qualified nutritionists as well as the more usual pharmacists, offers the first ever drugstore based oral health checks, and has added beauty specialists too.
While Matsukiyo has introduced a number of sub-formats over the years, none have developed any real size. Matsukiyo LAB is to be the exception. The company says it plans for at least 50 stores over the next five years in a move that emulates the strategy of several of its competitors. Like typical Matsukiyo stores, the new format will open predominantly in high footfall urban areas, especially stations, and the rollout will include both new locations and refits of existing Matsukiyo stores.
There are close to 3 million single person households in Tokyo alone, and Matsukiyo will aim squarely at this market. The LAB format will stock new ranges of supplements for sale by the chain’s nutritionists, while its beauty consultants will promote a wide range of skincare products – both areas are seen as particular concerns for singles. Approval for oral health checks in drugstores was given just a few weeks ago, so Matsukiyo has wasted no time in introducing this service too.
There is still a little room for organic expansion of standard drugstores, but the next few years will see a shift towards consolidation, and the bigger chains are eagerly buying up those regional companies willing to sell. In urban areas, drugstores are already at saturation and new service innovations and brands help to differentiate and add value (see Chart).
The total market in 2014 remained at around ¥6 trillion with the core chains and affiliates of Matsumotokiyoshi, Welcia Holdings and Cocokara Fine Holdings now accounting for well over half of the market.
Matsumotokiyoshi looking overseas
In August Matsumotokiyoshi announced its entry into Thailand in a joint venture with local company Central Food Retail. The plan is to have three stores open by March next year, selling a wide range of Japanese manufacturer and Matsukiyo private brands.
In September Matsukiyo then opened an online store on Alibaba in China after seeing how popular Japanese household brands are among Chinese tourists visiting Japan.
The chain’s Ginza and Ueno stores are both swamped with tourists on an almost daily basis, and from April to June tourists accounted for 8% of total sales across the entire company.
This is Matsukiyo’s first international non-store venture and will begin with around 100 SKUs, expanding to 200 by the end of the year. It has used data from Chinese Union Credit cards to analyse tourist customer preferences and will merchandise the online store based on these findings.
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