The “King of Retail,” Stronger than Convenience Stores: Fierce Competition in the Drugstore Industry

The Challenge of Opening Stores in Urban Centers

Sandrag, ranked sixth in terms of sales, and Sugi Pharmacy, ranked fifth in terms of sales and based in Aichi Prefecture, are also facing the challenge of expanding into urban areas. Roadside stores in the suburbs will not be spared from the effects of a declining and aging population, and if they continue to rely on “one-stop shopping,” they are certain to taper off.

Each chain is working hard to open urban stores, but labor costs and rising rents are becoming a bottleneck. In the Tokyo-Osaka area, where the top chains are struggling to expand, Matsumotokiyoshi, the industry’s fourth largest retailer with over 3,000 stores nationwide, is the dominant player (it merged with Kokokara Fine in 2009 and changed its name to Matsumotokiyoko Kokokara & Company). The former industry leader is trying to regain its footing with the resurgence of inbound sales.

The Matsumatsukiyo store facing “Sunshine 60 Street” in Ikebukuro (Toshima-ku, Tokyo) underwent a major renovation in 2007. The store offers cosmetics, cold remedies, supplements, and other products popular among foreign tourists.

During this year’s GW (Golden Week), when the city center was crowded with foreign tourists, this reporter went to the Matsukiyo store in question. Instead of a cluttered display of products like you would find in a typical drugstore, the shelves had a luxurious feel like those in an airport duty-free store, with products such as facial creams and mascaras lined up in rows. Foreign tourists carrying large shopping bags formed a long line at the cash register, and the clerk who handled them had a nametag indicating that he or she could speak English and Chinese. The image of Matsumotokiyoshi as “the best drugstore in Japan” seems to be gaining ground among foreign tourists.

Matsumotokiyoshi has maintained its brand by specializing in urban areas, mainly for inbound customers, without daring to get involved in the fresh food business, which is expanding in the industry. Shigeki Unozawa, a securities analyst, says, “Matsumotokiyoshi has been a major player in the online medical market.

Matsumoto is focusing on digital strategies, such as online ordering of pharmaceuticals, in preparation for the full-fledged introduction of online medical services. The company is ahead of its competitors in home delivery services, and in this area, Matsukiyo may have an advantage in the medium to long term.

It is no longer certain how long the “Aeon Allied Forces” will remain in power. There is a good possibility that Cosmos, which is steadily expanding its “territory,” and Matsukiyo, which has taken a step forward into next-generation pharmaceutical sales, will turn the industry map upside down.

The business model of this industry depends largely on the ability to sell pharmaceuticals with a half vested interest. A senior executive of a drugstore chain expressed his concern, saying, “If convenience stores and supermarkets are deregulated, Matsumoto will be the first to take over.

If deregulation allows convenience stores and supermarkets to sell pharmaceuticals freely, we will lose our advantage. Also, Amazon is considering entering the online prescription drug market. I don’t see any drugstore chain that can compete with Amazon’s powerful delivery network. The very structure of the industry itself will change.”

Chains that can see several moves ahead will be the allies of the “king of retail.

From the June 9, 2023 issue of FRIDAY