The low-cost, high-margin model — and twenty straight years of growth (1994)

Running an unglamorous formula, for a very long time

The heart of this decision lies in a second-generation leader from outside the founding family running one unglamorous formula for a very long time. What Saizu brought was neither a new product nor a new market, but a thoroughness of plain operation: confine locations to residential and suburban sites, pare costs to the bone, and raise the strength of the sales floor by developing people. That he could flatly say retailing creates nothing new, and that turning a profit is therefore only to be expected, was surely because he believed profit is born not of luck or a booming economy but of the daily design of operations. The length — twenty straight years — shows that this conviction was no passing thing.

That said, marrying low cost to high profit has a hidden face. The refusal to yield on price in contested areas, and the hard terms imposed on wholesalers, were the reverse side of that efficiency. The larger the scale grows, the heavier the question of how far this formula can be preserved. In later years, in fact, Sundrug kept its distance from the industry’s large mergers, choosing its own path through the two-format shift with Direx and loose capital alliances. Amid a competition that chases scale, how to inherit the low-cost, high-margin formula Saizu honed — that question remains with the company now that the manager from outside the founding family has gone.