Cosmos Drug

Basic Information

Stock Code
3349
Industry
Retail Industry
Category Detail
Specialty Stores & Drugstores
Prefecture
Fukuoka Prefecture
Establishment Year
December 1983
Listing Year
November 2004
Official Website
https://www.cosmospc.co.jp/
TSE Information
TSE Information
Yahoo! Finance
Yahoo! Finance
Other Companies
Kawachi Drug, MatsukiyoCoco, Welcia Holdings, Create SD Holdings, Tsuruha Holdings, Kusuri no Aoki Holdings, Sugi HD, Yakuo-do Holdings, Genky DrugStores, Sundrug

Overview

Cosmos Drug is a major player in the retail industry that has achieved rapid growth by operating a drugstore chain centered in Kyushu since its founding in 1983, leveraging large stores and an EDLP sales strategy.

Current Situation

Cosmos Drug achieved consolidated sales of ¥964.9 billion and operating profit of ¥31.5 billion in the fiscal year ending May 2024, boasting top-class profitability in the industry. Headquartered in Fukuoka City, Fukuoka Prefecture, it operates approximately 1,500 stores from Kyushu to the Kanto region. Its strength lies in a unique dominant strategy deploying large stores in small trade areas. Through a thorough EDLP strategy, it has gained strong customer support in the highly competitive drugstore market. It continues to grow independently without M&A, while strengthening private brand products. It adheres to a policy of not accepting electronic money payments and achieves efficient operations with large suburban stores accessible by car. Moving forward, it aims for growth by expanding food assortments and advancing into the Tokyo metropolitan area. It also actively engages in social contributions and community-based initiatives, pursuing sustainable growth.

Trivia

Interesting Facts

  • Has never engaged in M&A since founding, focusing solely on organic growth
  • Unusually specializes in large stores for a drugstore chain
  • Drugstore chain with the most stores in Kyushu
  • Pioneered point program abolition in 2003, shifting to EDLP strategy
  • Rare policy of basically not introducing electronic money payments
  • Operates approx. 1,500 stores nationwide
  • Numerous stores with attached pharmacies to meet medical needs
  • Achieved rapid growth by balancing community focus and efficient management
  • Maintains near-family business structure while operating as a listed company
  • Most stores are large format at 1,000-2,000 square meters

Hidden Connections

  • Founder's personal holding company by Masahiro Uno occupies the top shareholder position
  • Pursues unique growth path amid competitors' M&A expansions
  • Kyushu-origin drugstore drawing attention for urban small store entry in Kanto
  • Pioneered EDLP strategy in the industry for successful differentiation
  • Employee stock ownership plan fosters strong sense of belonging
  • Owns logistics centers, strong in logistics efficiency
  • Suppresses operating costs with contrarian non-electronic payment strategy
  • Product assortments tailored to regional customer needs are well-received

Future Outlook

Growth Drivers

  • Aggressive store openings in new regions like Tokyo metropolitan area
  • Increased visits through strengthened food category
  • Expansion of private brand products
  • Cost reductions via further logistics center efficiency
  • Improved customer satisfaction through enhanced community-oriented services
  • Expansion of digital promotion measures
  • Expansion of pharmacy services and deepened medical collaborations
  • Thorough EDS (Everyday Low Price) strategy
  • Enhanced brand value through strengthened community ties
  • Expansion of non-face-to-face sales and EC channels
  • Advancement of sustainable management and environmental considerations
  • Continued employee development and workstyle reforms

Strategic Goals

  • Achieve 3,000 stores in major cities nationwide
  • Expand private brand sales to 30% of total
  • Reduce CO2 emissions by 50% from 2010 levels
  • Improve regional contribution through sustainability activities
  • 30% cost reduction via full automation of logistics systems
  • Complete introduction of advanced IT systems in all stores
  • Increase attached pharmacy ratio to 40%
  • Launch online health consultation services
  • Maintain employee satisfaction above 90%
  • Achieve over ¥100 billion in annual sales from new growth markets

Business Segments

Wholesale to Retail Stores

Overview
Provides wholesale supply of a wide range of products to retail companies.
Competitiveness
Stable supply via large logistics centers
Customers
  • Drugstore chains
  • Supermarkets
  • Specialty stores
  • Convenience stores
Products
  • Pharmaceutical wholesale supply
  • Cosmetics wholesale supply
  • Daily necessities supply
  • Food supply

Logistics Services

Overview
Efficient logistics services utilizing logistics centers.
Competitiveness
High-efficiency logistics via owned logistics centers
Customers
  • Subsidiaries
  • Retail business division
  • Business partners
Products
  • Warehouse management
  • Delivery management
  • Inventory management system

PB Product Planning and Development

Overview
Planning and supply of private brand products.
Competitiveness
Product development aligned with customer needs
Customers
  • Own stores
  • Retail partners
Products
  • Food PB
  • Daily goods PB

Store Support Services

Overview
Services supporting efficient store operations and promotions.
Competitiveness
Dominant strategy support leveraging regional characteristics
Customers
  • Store operations division
  • New store opening division
Products
  • Store design support
  • Marketing support
  • Sales promotion planning

IT System Provision

Overview
Provides IT infrastructure supporting the entire business.
Competitiveness
High customizability from in-house development
Customers
  • Head office management division
  • Stores
  • Logistics division
Products
  • Sales management system
  • Inventory management system
  • Customer management system

Regional Medical Collaboration

Overview
Pharmacy collaboration and health support services for regional healthcare.
Competitiveness
Responsive capacity from numerous attached pharmacies
Customers
  • Medical institutions
  • Nursing facilities
Products
  • Pharmacy service collaboration
  • Health consultation services

Competitive Advantage

Strengths

  • Solid dominant presence centered in Kyushu
  • Efficient operations with large stores
  • Thorough EDLP sales strategy
  • Strengthened private brands
  • Self-driven growth without M&A
  • Rapid expansion into new areas
  • Robust logistics center system
  • Community-oriented store operations
  • Wide product lineup
  • High service quality from employees
  • Numerous stores with attached pharmacies
  • Sound financial position
  • Stable customer base
  • High brand recognition
  • Environmentally considerate store design

Competitive Advantages

  • High credibility as a Tokyo Stock Exchange Prime Market listing
  • Continued independent growth while competitors expand via M&A
  • Operational efficiency and sales growth from suburban large store focus
  • Comprehensive daily essentials increasing customer visit frequency
  • Cash management via non-acceptance of electronic money
  • Cost reductions from efficient logistics center operations
  • Differentiation via unique private brand development
  • Accelerated regional market share gains through multi-store expansion
  • Covers medical needs with attached pharmacies
  • New market development via rapid Kanto region entry
  • Enhanced customer loyalty through thorough EDLP strategy
  • Improved motivation via employee stock ownership plan
  • Food category expansion tailored to customer needs
  • Improved store operation efficiency
  • High-quality customer service system

Threats

  • Intensified competition from major chains' M&A offensives
  • Market shrinkage risks from population decline and aging
  • Stricter regulations or tax changes on food and medicines
  • Decline in consumer purchasing power due to economic fluctuations
  • Competitive lag in payment methods amid electronic payment spread
  • Ongoing upward pressure on logistics and labor costs
  • Business impacts from novel infectious diseases and external factors
  • Profit compression from intensified regional competition
  • Risks of logistics and store halts from natural disasters
  • Intensified private brand competition
  • Risks from fluctuations in overseas raw material prices
  • Service degradation from delays in rapid digitalization

Innovations

2023: Entry into urban small stores in Tokyo metropolitan area

Overview
Opened small stores in areas like Shibuya Ward, Tokyo, to develop new markets.
Impact
Succeeded in increasing store count and expanding sales areas

2021: Logistics center automation investment

Overview
Introduced labor-saving equipment at the logistics center in Hirokawa Town, Fukuoka Prefecture.
Impact
20% improvement in logistics efficiency and cost reductions

2022: Major PB product renewal

Overview
Refreshed food and daily goods private brands to strengthen competitiveness.
Impact
Improved customer satisfaction and sales growth

2020: Reaffirmation of non-cashless payment policy

Overview
Maintained cash-based policy despite digitalization trends.
Impact
Maintained stability in store operations

2024: Introduction of energy-saving store designs

Overview
Began introducing energy-saving materials and LED lighting in new stores.
Impact
Reduced store operating costs and environmental impact

2023: IT system overhaul and inventory management enhancement

Overview
Overhauled sales and logistics management systems with in-house development.
Impact
Improved inventory turnover and reduced stockouts

Sustainability

  • LED lighting installation in stores to reduce environmental impact
  • CO2 emissions reduction via logistics efficiency
  • Strengthened efforts to reduce food waste
  • Environmental conservation activities in collaboration with local communities
  • Employee environmental awareness training
  • Plastic reduction campaigns
  • Promotion of recycled product use
  • Introduction of energy-saving store design standards
  • Establishment of guidelines for sustainable product procurement
  • Promotion of local agricultural product use