CHALLENGES OF COVID-19
Still, the retailer has its share of challenges amid the protracted pandemic.
The ever-changing public safety measures meant that it had to “react very quickly” to adjust its operations, be it crowd control, dine-in related rules at its food courts or cleaning protocols if its stores were visited by confirmed COVID-19 cases.
The on-off tightening of curbs during the “heightened alert” periods was also challenging, with fluctuating sales making it difficult to manage inventory, said Mr Hanawa.
It also had to grapple with shipment delays amid port congestions and a shortage of shipping containers due to the pandemic.
Don Don Donki receives about 10 to 15 containers of goods each month, given how its stores carry more than 90 per cent of products that are imported directly from Japan, Mr Hanawa said.
The delays were a big problem for perishable goods, he added, recalling how an entire container of fruits and vegetables had to be discarded after arriving in Singapore one month later than scheduled.
Some popular items also ran out temporarily last year, such as instant noodle packs from famous ramen chain Ichiran.
“(They) were sold out quite quickly and even though we (placed our orders), we couldn’t receive the product on time and we were out of stock for quite a long time,” said Mr Hanawa.
To cope, the local team had to make quick changes in product selection and resorted to other modes of transport, such as air freight, despite the higher cost. It also developed a network of local suppliers for certain products to act as “insurance” during the uncertain period.
Asked how confident it is in keeping prices low if other operating costs continue to increase, Don Don Donki said it relies on its “strong buying power” back home to get the best price for goods.
It then ships the goods directly to its warehouse in Singapore, bypassing middlemen like wholesalers and importers. “I think that’s the best way to lower the cost of our goods,” said Mr Hanawa.
The company is also not too worried about rent.
Since opening its first store in Orchard Central about four years ago, the retailer has seen high footfall. With that, it has been approached by many malls offering attractive rental rates.
And with new tenants hard to come by, landlords have also become more open to negotiation, Mr Hanawa said, noting that rents for its new stores have seen a 10 per cent decline.
The bigger challenge for its operations in Singapore is manpower.
Don Don Donki now employs 770 people, including part-timers. It also has a pool of 100 temporary workers to fill roles such as temperature screening. But it will need more as it pushes ahead with expansion.
“We want to hire Singapore people,” said Mr Hanawa. “We believe that local people should run the local business and that’s the main goal for us.”
The Japanese firm hopes its continued expansion here can convince people that there are opportunities for career development in the retail industry.
Mr Hanawa raised the example of a local employee who joined the firm three years ago as a retail associate, but is now a store manager handling 50 to 100 workers.
Don Don Donki also has a unique culture that is unlike other retail chains, he added.
“We give them the authority to think about the (store) layout, product selection and also how much to set the price. That’s all up to them,” he said.
“We give them the authority for pretty much everything and they enjoy this, which is a little different compared with other regular chains.”