Market Overview

In this research, the market size of domestic drugstores is estimated based on various public data, and composition ratio (market share) of top 3 companies is calculated based on the sales of businesses by region for 2019.
Viewing by 8 regions, top 3 companies accounted for 86.1% in Hokkaido, 79.1% in Kyushu/Okinawa, 76.1% in Shikoku, 69.9% in Chugoku, followed by 68.4% in Tohoku. Exclusivity of top 3 companies is conspicuous especially in Hokkaido, where the market share is over 80%, and in Kyushu/Okinawa and Shikoku, over 70%, respectively. Some drugstores are gaining constant share by focusing their operation in specific regions.   
On the other hand, the market concentration to top companies is not seen in city areas like Kinki (36.8%), Kanto (39.1%), and Chubu (43.5%). In the region that has megacities like Tokyo and Osaka, drugstore chains are in close competition for the market share.

Noteworthy Topics

Drugstores Becoming General Merchandising Retailers

The number of drugstores selling household goods as well as healthcare products and beauty-care products is on the rise. From social perspective, increase of the one-stop shop where all living necessities are available is beneficial for ‘shopping refugees’.
Moreover, owing to the factors such as new demand that rose from staying home due to the outspread of COVID-19 infections, food sales at each drugstore chains is making an upward turn. Expansion in the range of products at drugstores is improving convenience for the customers.
In this survey, to verify the trend of drugstores becoming general merchandising retailers, “expertise index” and “convenience index” are calculated for 14 leading drugstore chains. The “expertise index” indicates a ratio of “drugs” and “cosmetics” sales out of total sales, and “convenience index” refers to a ratio of sales from product categories including “food”, “household goods”, and “others”. 
Looking at the average of leading 14 companies, “expertise index” was 44.0 and “convenience index” was 55.2. The values reflect that the drugstore chains have grown their businesses by expanding the product selection from just drugs and cosmetics to a wider range.

Future Outlook

In the country of population decline, future strategy of drugstore chains is a matter worthy of note. It is assumed that some drugstores may pursue expertise as drugstores, while others may continue to develop new business form of drugstores by assorting wider range of products. Moreover, it is possible that small companies with low sales ratio of food sales to reinforce food sales, or companies with low sales ratio of prescription drugs to strengthen drug dispensing business. Nevertheless, as demand for living necessities will diminish in Japan due to decrease of population, in order to grow business, drugstore chains need to consider developing overseas business, sales of value-added products, and conduct target segmentation further. 
The COVID-19 infections caused a temporary shortage of sanitary supplies like facial masks. Having greater social role, drugstore chains today must consider inventory optimization and supply chain management for the sake of providing stable supply at the time of emergency.  

Research Outline