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The Honolulu Advertiser
Posted on: Sunday, July 30, 2006

Bye, Daiei — hello, Don

By Andrew Gomes
Advertiser Staff Writer

Signs with the Don Quijote penguin mascot, Donpen, already have gone up at the Kaheka Street Daiei store. The flagship store will be remodeled starting next month, with the other three O'ahu stores to follow. Product inventory is expected to remain the same.

DEBORAH BOOKER | The Honolulu Advertiser

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DON QUIJOTE CO.

Headquarters: Tokyo

Established: 1980 as Just Co. Ltd. to sell miscellaneous goods wholesale.

Evolution: Opened its first Don Quijote retail store in 1989; later expanded with mostly small convenience shops; added large discount stores in recent years; operates 118 stores today.

Sales: about $2.2 billion (projected for fiscal year ended June 30).

Profit: about $91 million (projected for fiscal year ended June 30).

Source: Don Quijote Co. and Advertiser research

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THE DAIEI (USA) INC.

Headquarters: Hawai'i

Established: 1972 by Kobe, Japan-based The Daiei Inc. as retail store at Pearlridge Center.

Evolution: Acquired three Holiday Mart stores (Kaheka, Kailua and Pearl City) in 1980; closed Pearlridge store in 1986; bought GEM store in Waipahu in 1994; sold stores and wholesale affiliate Oriental Seafoods Inc. to Don Quijote in February.

Sales: $156 million (fiscal year ended January 2005)

Profit: $1.7 million (fiscal year ended January 2005)

Source: Don Quijote Co. and Advertiser research

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The Daiei name soon will come off Hawai'i retail stores familiar to generations of kama'aina shoppers, though much of the chain's Japanese and domestic mix of food and general merchandise will remain the same.

Japan-based discount retailer Don Quijote Co., which bought Hawai'i's four Daiei stores in February, said it plans to start remodeling the flagship Kaheka Street store next month. The makeover will include rebranding the store Don Quijote, and is slated for completion in October.

Remodeling and rebranding Daiei stores in Pearl City, Waipahu and Kailua will follow, according to Theresa Chang, a spokeswoman for Don Quijote USA.

The soon-to-begin overhaul of Daiei's main store will be the first major change in what promises to be a gradual transition from Daiei to Don Quijote.

So far, Daiei customers have been exposed to only minor changes, such as seeing the Don Quijote name printed on store receipts and employee name tags, or perhaps noticing the company's cartoonish penguin mascot named Donpen in advertisements, or hearing the occasional in-store announcement ending with "thank you for shopping at Don Quijote." The retailer also has required customers to make checks payable to the new company and also identifies stores as Don Quijote (pronounced Don KEE-ho-tay) when answering phones.

Many longtime Daiei customers, some of whom have shopped there since the Japan-based retailer entered Hawai'i in 1972, said it will be hard to adopt the Don Quijote name, which comes from a 17th-century Spanish novel about a fictional character imagining he's an errant knight.

The company chose the name, a more modern spelling of Don Quixote, to embody its ideal for employing unorthodox retail strategies to "smash the established system" even when competing with giants (represented by windmills in the literary tale), according to a 2004 published report by the Hong Kong Trade Development Council.

Iris Lee, a 25-year-old student from Makiki who occasionally shops at the Kaheka Daiei, has trouble envisioning the store as a Don Quijote. "You think of the literary Don Quixote," she said. "I don't think I'll switch to (calling the store) Don Quijote. It's just too strange."

Lee also said Daiei was a more ethnically fitting name for the retailer filled with Japanese imports. "It doesn't match," she said of Don Quijote, which in Japan is also known by its nickname, Donki. "It'll be weird."

Edward Polendey, an Aloha Airlines employee who shops twice a week at the Kaheka Daiei, also has been perplexed by the Don Quijote name since it began appearing on store receipts. "That sounds like Mexican, but it's Japanese," he said. "I'm still going to use the word Daiei. It's a trademark word."

Many older customers, however, still refer to Daiei's Kaheka, Kailua and Pearl City stores by their previous name, Holiday Mart, a retailer Daiei bought in 1980.

"I still call it Holiday Mart," said Harry Yoshida, a 57-year-old retiree who lives in the McCully area. "Holiday Mart/Daiei, I use it interchangeably. Maybe the change (to Don Quijote) will be good. I hope so."

Don Quijote in February estimated that it would spend $8 million refurbishing the Daiei stores, and signs on cash registers at the Kaheka store advise customers to look forward to "exciting new changes" now that Daiei is Don Quijote.

Chang said details of the redesign are still being planned, but in general will involve upgrades to the stores and addition of more general merchandise and the same amount of food items.

The stores won't closely resemble Don Quijote's format in Japan, where narrow store aisles are jam-packed with merchandise — some of it even hung from the ceiling, and in no logical order — to give shoppers a feeling they are hunting for treasure in a kind of retail jungle.

"It won't be the same," said Chang.

Don't expect amusement park rides outside or on top of stores either, even though Don Quijote stores in Japan have featured thrill rides to help convey the company's image as an amusement-packed shopping arena.

Shoppers, however, can expect changes to Daiei employee uniforms, shopping carts and the music they hear inside stores, which will convert from pop tunes to Don Quijote's theme.

"I have a whole CD," Chang said. "I haven't played it yet."

Leading the transition from Don Quijote is Kozo Yamagishi, who was president of Daiei's local subsidiary and was retained by Don Quijote. Daiei's other roughly 950 employees also were retained.

Paul Migliorato, a Hawai'i-based analyst who studies public companies listed on Japan's stock exchange and has met with Don Quijote officials, said the company is attempting to make the transition from Daiei smooth.

"For them, it's a new venture," he said. "They recognize that it is a work in progress."

Reach Andrew Gomes at agomes@honoluluadvertiser.com.