Why Matsukiyo Isn't a "Discount Store": A Strategy That Competes on Value, Not Price

The conclusion the speaker presents at the start of the video is that this company competes not on cheapness but on value, and that the key lies less in "what it sells" than in "what it doesn't sell."

In the video, the interviewer raises a reasonable question. Don't customers come because water and snacks are cheap, and then buy other products while they're there? If the store stopped discounting, wouldn't customers leave? So why is it so profitable?

The speaker's answer is that it's "the opposite." Matsukiyo deliberately avoids selling too much food. As a point of comparison, the speaker cites large suburban drugstores. They have spacious parking lots and sell food and water at rock-bottom prices. This is a strategy of drawing customers in with cheap food, but because the food is so cheap, almost no profit is left over, the speaker explains.

Matsukiyo doesn't follow that path. Instead, it sets up shop in busy locations such as in front of urban train stations and competes with high-margin cosmetics and pharmaceuticals. According to the speaker, beauty and health products account for about 70% of sales. In the speaker's view, customers aren't lured in by low prices; they choose the store based on value—"this is where I want to buy this."

The speaker says there are two weapons that support this state of "being chosen for value." The first is PB, or the company's own original products. Matsukiyo's shelves carry many cosmetics and skincare products that can only be found at Matsukiyo. The speaker describes this as "killing three birds with one stone":

• Because the company makes them itself, profit margins are high
• They become a reason to visit in themselves: "you can't buy it unless you go to Matsukiyo"
• Simply lining the shelves with them serves as advertising, building the brand without spending extra on promotion

The second is data. According to the speaker, the Matsukiyo app has been downloaded about 15 million times. Across the entire group, including loyalty point members, the figure reaches about 45 million people—roughly one in three Japanese people.

What the speaker emphasizes is how the data is used. Rather than broad segmentation like "she's a woman in her 20s, so this is recommended," the company can look at each individual's actual purchasing behavior and make pinpoint suggestions: "this one is for you." The goal is to earn the position of being the first place people think of when it comes to cosmetics, and if it can secure that, it will be truly strong, the speaker says.

What the speaker cites as the strategy's greatest strength is that other companies can't easily imitate it. Matsukiyo chooses urban locations and has built its product lineup and data around that premise. As a result, even if a suburban-focused company tried to do the same thing, the pieces wouldn't fit together. The speaker's assessment is that it is highly profitable yet hard to copy.

The speaker believes this isn't a story only about drugstores. Do you jump into the price war that everyone else is fighting, or do you compete on a strength that makes people choose you—"it has to be you"—even if you're a bit more expensive? This, the speaker says, applies directly to how individuals work as well. Will you become a cheap, convenient jack-of-all-trades, or someone people ask for by name—"for this, it's got to be that person"? The speaker asks viewers, "Are you competing on price right now, or on value?" and adds that they themselves felt a jolt at the question too.

Finally, the speaker notes that with the business integration of industry leader Welcia and No. 2 Tsuruha, the balance of power among drugstores looks set to shift considerably. Even among drugstores, the target customers and ways of competing are completely different. The speaker concludes by saying it would be interesting to compare the shelves the next time you visit a store.