Creating the small-trade-area mega drugstore (1993)

A contrarian bet: a big box in a small trade area

The heart of this decision is that Uno turned a retail commonplace on its head — the rule that a large store belongs in a large trade area. Rather than fight over populous towns, he aimed at small trade areas where competitors were thin, and deliberately placed there a large store that carried even food. He funnelled the gross margin on drugs and cosmetics into cheap food, and dropped fresh produce to cut the handling and the labour. Not a drugstore, not a supermarket, not a convenience store, but a format that met all of those needs in a single shop — and Uno assembled it from a small provincial town. The twenty years of patience in Nobeoka can be read as the run-up to this one move.

The strength of having created the format itself did not thin as the company grew. Keep gross margins low but cut SG&A by more, and cheap prices and profit can coexist — this single design ran unbroken from one Kyushu store to ¥1 trillion in sales and some 1,600 outlets. The wholesale abolition of loyalty points in favour of everyday low prices, and the expansion of scale through self-built openings rather than M&A, can both be read as later choices made to defend this design. How to manufacture cheapness, and how to preserve that cheapness after scaling up — Cosmos’s course shows one company’s answer, one that placed the design of the store itself at the centre of competition.