Don Quijote Plans 250 New Stores as Japan's Tourism Boom Fuels Expansion

A ¥400 Billion Bet on Tourist Shopping

Don Quijote plans to open 250 new stores by 2035 as its parent, Pan Pacific International Holdings (PPIH), pursues ¥400 billion, about $2.7 billion, in annual tax-free sales. The Japanese discount retailer is betting that growing visitor numbers and demand for cheaper everyday goods will sustain a decade of expansion.

The plan brings together two groups with different reasons to seek bargains: foreign tourists whose money goes further because of the weak yen, and Japanese households facing rising prices. Japan's government aims to attract 60 million visitors annually by 2030, giving retailers a large potential market for snacks, cosmetics, medicines and souvenirs.

As of August 20, 2025, PPIH's ambitions extend beyond its familiar Don Quijote stores, often called Donki. A new store brand focused on food is scheduled to launch in 2026, with 200 to 300 outlets planned over the following decade. Overseas operations, restaurant ownership and partnerships with international brands also form part of its growth strategy.

The financial momentum is already visible. PPIH's latest annual report puts revenue growth at 12 percent from a year earlier, with tax-free sales exceeding forecasts. Consolidated net profit reached ¥90.5 billion in the year through June 2025. Projections for the following year anticipate net profit exceeding ¥100 billion for the first time.

Those targets depend on more than bringing shoppers through the door. PPIH must choose locations that capture tourist traffic, keep domestic customers interested in its prices and manage uncertainty over Japan's tax-free shopping system. Its expansion combines an established shopping experience with new formats designed for different customers.

Why Donki Became a Destination

Takao Yasuda founded Don Quijote in the 1980s, challenging Japan's conventional retail sector with late opening hours, flexible pricing and an unusually broad selection of goods. The formula made a store visit less predictable than a routine shopping trip.

Today, shoppers can find cherry-blossom KitKats, anime figurines, nostril-hair wax and expensive cosmetics in the same chain. Cramped aisles, flashing signs and the familiar Donpen penguin mascot give the stores a busy, sensory atmosphere. For many overseas visitors, that environment is part of the attraction.

Don Quijote's appeal rests partly on discovery. A customer arriving for one souvenir may encounter snacks, beauty products or novelty goods they had not planned to buy. The resulting experience is often described as a treasure hunt, with the search for something unexpected becoming part of the purchase.

A US tourist quoted in Digital Journal described both the overwhelming selection and the value of the purchases:

I was overwhelmed by the variety but pleased with the value, buying a range of items for about $70.

A Reddit user also described the role that bargain hunting and souvenirs play in the chain's popularity among visitors:

Tourists often treat shopping at Don Quijote as a 'treasure hunt,' searching for bargains and souvenirs. The popularity of Don Quijote among visitors is contributing to the store's strong performance in Japan's retail sector.

Two Different Reasons to Seek Lower Prices

Japan's tourism boom following the pandemic has broken records, bringing visitors from South Korea, Taiwan, China, the United States and other markets. A weak yen makes purchases more attractive to travellers paying with foreign currencies because their money buys more yen.

Tax-free shopping adds another incentive. Don Quijote's streamlined system allows tourists to buy many items without paying Japan's consumption tax. For a visitor choosing where to purchase cosmetics, snacks or souvenirs, the combination of exchange rates, tax savings and a broad selection can make the chain a convenient stop.

Japanese households face a different calculation. The country's core inflation rate rose to 3.2 percent in March 2025, increasing pressure on consumers to find affordable everyday goods. Don Quijote's aggressive pricing and private-label products have helped it attract shoppers trying to control their spending. Private-label products are goods sold under a retailer's own brand.

PPIH's growth therefore draws on both tourism and domestic demand. Travellers may be shopping for gifts or products associated with Japan, while residents may be buying essentials and familiar branded goods. The chain's range allows it to serve both purposes, although the balance will vary between locations.

Some tourists have observed that prices at branches aimed at visitors can be higher than at local Don Quijote stores. Those observations point to the value travellers place on convenience and novelty, alongside their interest in bargains. A store's appeal can depend on where it is and what it stocks, as well as the price of an individual item.

New Stores Follow the Travel Routes

Tokyo, Osaka and Sapporo are among the destinations targeted by Don Quijote's expansion. PPIH plans to place new stores along major travel routes and in popular visitor locations, using established tourist centres as gateways to regional markets.

The overhaul of its flagship Sapporo outlet illustrates that approach. The company is seeking overseas visitors who travel beyond the Golden Route of Tokyo, Kyoto and Osaka. Reaching those travellers gives Don Quijote opportunities outside the country's best known tourism corridor.

The planned stores aimed at tourists will have smaller layouts, ranging from 300 to 1,000 square metres, to make navigation easier. Their product selections will reflect foreign shoppers' interests, including snacks, medicines sold without a prescription and anime merchandise.

Late opening hours will accommodate travellers' schedules, while multilingual signs and staff will help international customers find and buy products. These changes adapt the chain's established formula to people who may have limited shopping time and little Japanese language ability.

Bic Camera is also expanding stores aimed at tourists. Its plans include signs in English and Chinese and partnerships with airlines to promote shopping to visitors arriving in Japan. Don Quijote's brand recognition and reputation as a place tourists want to visit give it an advantage, but other major retailers are pursuing the same spending.

Food Becomes Another Route to Growth

PPIH's planned food store brand, due to launch in 2026, will broaden its domestic strategy. The target of 200 to 300 outlets over the following decade places affordable groceries alongside the expansion of the established Don Quijote chain.

The food initiative draws on Japan's strong food culture and demand for lower grocery bills. Consumers under pressure from rising prices may seek savings on frequent purchases, giving a format focused on food a different role from a branch popular for souvenirs and novelty goods.

The two expansion plans also show the scale of PPIH's ambitions. The proposed 200 to 300 food outlets are comparable in number to the 250 new Don Quijote stores planned by 2035, although the schedules are expressed differently. One target concerns the familiar discount chain; the other concerns a new brand beginning in 2026.

Don Quijote's existing private-label products and pricing strategy remain central to serving domestic customers. The new food format adds another way to reach households seeking affordable shopping, while the tourist stores focus on goods that visitors want to take home.

Overseas Stores and International Brands

Don Quijote operates more than 100 stores outside Japan, including in the United States, Taiwan, Thailand and other Asian countries. Its international network gives PPIH a growth channel beyond spending by visitors inside Japan.

The acquisition of Mikuni Restaurant Group in the United States signals a further push into the overseas food business. PPIH is seeking to draw on Mikuni's experience in sourcing ingredients and appealing to international tastes, extending its food interests beyond retail shelves.

Don Quijote's Japanese network also provides a route into the country for brands from abroad. South Korea's Bibigo food brand has expanded its presence by securing shelf space in Don Quijote stores across Japan, reaching new consumers and building recognition.

Another partnership brings physical toys associated with Pudgy Penguins, a globally recognised NFT brand, to Japan. NFT stands for non-fungible token, a type of digital collectible. The toys come with QR codes that unlock digital collectibles, connecting a physical purchase with a digital product.

The Bibigo and Pudgy Penguins initiatives serve different interests, food in one case and toys linked to digital collectibles in the other. Both use Don Quijote's reach to introduce products to customers. The toy partnership also reflects the chain's interest in younger shoppers comfortable with technology.

What the Profit Targets Mean

PPIH is aiming for ¥400 billion in annual tax-free sales by 2035, supported by more visits from international customers. That figure measures sales through a particular shopping channel, while the ¥90.5 billion recorded for the year through June 2025 is consolidated net profit across the group.

Net profit is the money left after a company accounts for its costs and other charges. Operating profit measures earnings from its business operations before certain other financial items and taxes. The measures answer different questions about a company's performance.

Hideki Moriya, PPIH's representative director who is set to become president in September 2025, described the company's operating profit ambition:

We will build a company that can earn ¥300 billion in operating profit.

The forecast for net profit to pass ¥100 billion in the following year would put it at least ¥9.5 billion above the ¥90.5 billion achieved in the year through June 2025. The separate ¥300 billion operating profit ambition points to the wider scale of business that management wants to build.

PPIH's annual report also highlights a focus on customers, digital transformation and sustainability. Management sees further growth in Japan and overseas through innovation and responses to changing shopping habits. New formats, product partnerships and expansion into food give that strategy concrete business directions.

Tax Policy and Other Risks

Japan's tax-free shopping system is a major uncertainty for retailers seeking tourist spending. As visitor numbers rise, some policymakers are questioning whether the country receives enough financial benefit from the influx. Lawmakers have begun discussing the possible abolition of tax-free shopping for tourists.

The debate is ongoing as of August 20, 2025, and no decision or implementation date is given. Removing the exemption would change the price calculation for tourists and could affect retailers such as Don Quijote that use tax savings to attract foreign customers.

PPIH's ¥400 billion target depends on substantial growth in that sales channel. A policy change would require the company to reassess how tax treatment, prices, product selection and convenience influence visitor purchases. For shoppers, the immediate issue would be how much they pay at the checkout.

Don Quijote also faces challenges within its stores. The crowded layouts that appeal to customers seeking unexpected discoveries can feel overwhelming to others. Smaller formats and easier navigation are part of its response for tourist locations.

Trade tariffs pose another risk to international expansion, particularly in the United States. Alongside policy uncertainty in Japan, that exposure gives PPIH several pressures to manage as it grows both its retail network and its overseas food business.

The Dates Behind the Expansion

PPIH's plans span immediate leadership and financial developments as well as targets stretching into the next decade. The main dates put the expansion in perspective:

• March 2025: Japan's core inflation rate rose to 3.2 percent, adding pressure to household budgets.
• Year through June 2025: PPIH's consolidated net profit reached ¥90.5 billion.
• August 20, 2025: The expansion plans and ongoing debate over tax-free shopping frame the company's growth outlook.
• September 2025: Hideki Moriya is set to become PPIH president.
• 2026: PPIH plans to launch a food store brand, targeting 200 to 300 outlets over the following decade.
• 2030: Japan's government aims to welcome 60 million visitors annually.
• 2035: PPIH aims to open 250 new Don Quijote stores and reach ¥400 billion in annual tax-free sales.

For Japan's retail sector, the expansion brings tourism demand, pressure on household budgets and changing shopping preferences into the same business strategy. Discount chains are competing through prices, customer experience, international products and new store formats.

Don Quijote's plan builds on a distinctly Japanese shopping experience while reaching across borders for customers, brands and business opportunities. Its next phase will combine the familiar search for unexpected bargains with more targeted tourist stores, affordable food retail and a larger international presence.

Key Points

• Don Quijote plans 250 new stores by 2035, with tourist routes and major destinations among its priorities.
• PPIH targets ¥400 billion, about $2.7 billion, in annual tax-free sales by 2035.
• Net profit reached ¥90.5 billion in the year through June 2025, with projections above ¥100 billion for the following year.
• A food store brand is scheduled to launch in 2026, with 200 to 300 outlets planned over the next decade.
• More than 100 overseas stores, the Mikuni acquisition and brand partnerships support expansion beyond tourist shopping in Japan.
• Discussion of abolishing tax-free shopping, crowded store layouts and possible trade tariffs create risks for the growth strategy.