The Cult Japanese Retailer Making Billions Breaking All the Rules

Entering a branch of Don Quijote, the ubiquitous Japanese discount chain, can be a jarring experience. At the entrance of every location is an array of exotic fish that would put many pet stores to shame. It might feel like a drugstore inside, with rows of obscure unguents—think cream for damaged skin made from fish roe—for sale. Go upstairs, and every floor takes on a different identity: a clothing shop with rows of kitschy shirts next to a boutique area with Coach bags, then an electronics shop that sells iPhone accessories as well as cassette tapes.

For years, Don Quijote—an unclassifiable seller of everything from humidifiers to sex toys—has been a cult phenomenon in Japan, favored by the cash-strapped households of the so-called recession generation. Now it’s big business. Thanks largely to the discounter’s rabid fan base, its parent company, Tokyo-based Pan Pacific International Holdings Corp., is on track to become Japan’s fifth-largest retailer, with revenue likely to reach 1.4 trillion yen ($12.5 billion) in the fiscal year ending June 30. That’s a remarkable feat for a chain that barely sells online and does almost no conventional marketing.