Donki redesigning Daiei Kaheka store

Tokyo-based retailer Don Quijote has been slow to make changes at the local Daiei stores it bought

By Allison Schaefers
aschaefers@starbulletin.com

Tokyo-based Don Quijote Co. Ltd., a discount store chain that rolled into the United States for the first time in February with the purchase of Hawaii's four Daiei stores, has been slow to rebrand its new holdings. Now, word in the investment community is that shoppers will see a significant difference come this fall.

Mitsubishi UFJ Securities, a Japan-based equity research company, said in a May report that Don Quijote marketing personnel have been dispatched to the islands and that they are focusing efforts on the Kaheka store near Ala Moana Center.

According to Mitsubishi UFJ Securities, Don Quijote will complete its refurbishment of the Kaheka store in September.

No major changes have been made to the Don Quijote stores in Hawaii, but the company is working on changes for the store design and logo, said Theresa Chang, a spokeswoman for Don Quijote in Hawaii.

"We are targeting September for an opening, but that's not definite," Chang said. "Right now we are still in the planning stages and are discussing architecture and design changes."

When the changeover is complete, the Don Quijote stores in Hawaii will likely carry similar merchandise to that stocked by Daiei, Chang said. However, Don Quijote decorations and store layouts will be different, she said.

"Most people from Japan, they know Don Quijote, but some local people might be surprised," Chang said.

At the time of the sale, Kozo Yamagishi, president of Daiei (USA) Inc., assured Hawaii shoppers that no sudden or drastic changes would be made to the stores, merchandise or operations.

The launch of Don Quijote's Hawaiian subsidiaries is key to the company's medium-term growth strategy, the Mitsubishi UFJ Securities report said.

The report also indicated that the company got a good deal from financially struggling Daiei on the Hawaii acquisition. In accounting for the purchase, Don Quijote has booked nearly $4 million in "negative goodwill," a gain incurred when buying a property whose assets are worth more than the actual purchase price.

The target recurring profit margin for the Hawaii operations of Don Quijote is 5 percent, the report said.

Don Quijote, called Donki by customers in Japan, is known for what the Japan Times calls "chaotic store layouts and quirky merchandising." Donki, whose 115 or so stores in Japan grossed about $2.1 billion in sales last year, stocks home electrical appliances, daily sundries, food, watches, fashion products and sports and leisure goods.

Since the company bought the Hawaii Daiei stores, loyal Daiei consumers have been speculating about what the changeover will mean for them. The volume of posts on HawaiiThreads.com, detailing the few observable changes at the former Daiei stores, indicate that at least some customers may care about their consumer brand.

While store signage, grocery store ads and grocery bags still say Daiei, customers have noted that the public-address system has begun to thank shoppers for visiting Don Quijote and that checks must now be written to the new owner. Help-wanted signs at former Daiei stores advertise buyer Don Quijote and its penguin mascot, which also has appeared on store receipts.



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