Chapter 1: What Is OMO? Why Home Improvement Stores and Drugstores Now?

Apr 14
4 min read

The term OMO (Online Merges with Offline) has become widely recognized, yet it is often misunderstood as a set of channel-specific initiatives such as strengthening e-commerce sites or introducing mobile apps. In reality, OMO is not about deciding whether to sell online or offline. Its essence lies in designing the entire customer journey—from information gathering and comparison to purchase, fulfillment, and repeat purchase—as a unified experience. In other words, OMO is not merely “channel integration,” but “experience design.”

This concept is particularly effective in lifestyle-oriented retail sectors such as home improvement stores and drugstores. Both serve everyday needs and address small but critical concerns in daily life, making the boundary between online and offline naturally fluid for customers. Major chains such as Cainz, Konan, Tsuruha Drug, and Matsumoto Kiyoshi have been advancing OMO strategies tailored to their respective business models, highlighting both the similarities and differences between these two retail formats.

The Essence of OMO: Designing Experiences, Not Channels

The growing attention to OMO is closely linked to changes in consumer behavior since the 2020s. According to the Ministry of Economy, Trade and Industry (METI), Japan’s BtoC e-commerce market reached 26.1 trillion yen in 2024 (up approximately 5.1% year-on-year), with an e-commerce penetration rate of 9.8%. Today, it has become standard for consumers to conduct online research—such as searching, reading reviews, comparing prices, and checking inventory—before making a purchase. In this process, online and offline channels are no longer separate but continuously interconnected.

A representative example of this shift can be seen in Matsumoto Kiyoshi, a leading drugstore chain. Its official mobile app integrates functions such as point management, coupon distribution, product search, and inventory checks, supporting customer behavior both before and after store visits. In categories such as daily necessities and pharmaceuticals, repeat purchases are encouraged through purchase history tracking and reminder functions. As a result, consumer behavior shifts from “buying when remembered” to “purchasing naturally at the right time.”

Similarly, Cainz, a major home improvement retailer, has been advancing OMO-driven initiatives. Its online store provides store-level inventory visibility and in-store pickup options, enabling customers to research products online and confirm them physically in stores. This is especially relevant for DIY supplies and large items, where customers often prefer to compare specifications online before making final decisions in-store. In this structure, online and offline channels play complementary roles.

Similarities and Differences Between Home Improvement Stores and Drugstores

Both home improvement stores and drugstores share the characteristic of being lifestyle-oriented retail formats. The drugstore industry in Japan has grown into a market of approximately 8 trillion yen, with more than 10,000 locations nationwide, functioning as a key part of everyday infrastructure. The home improvement sector also represents a significant market of around 4 trillion yen, supporting housing and living environments.

However, their purchasing behaviors differ. Home improvement stores tend to have a higher proportion of mission-driven visits, where customers come with specific goals such as home repairs, DIY projects, or disaster preparedness. In contrast, drugstores are characterized by high visit frequency, driven by routine purchases of daily necessities and consumables. These differences significantly influence how online and offline touchpoints are designed.

For instance, in home improvement retail, pre-visit online research plays a critical role in purchasing decisions. Companies like DCM Holdings have strengthened their online product information and inventory visibility to support this process. In drugstores, on the other hand, mobile apps play a key role in driving store visits through coupons and loyalty programs, positioning online channels primarily as tools for customer engagement and retention.

Why Home Improvement Stores and Drugstores Are Well-Suited for OMO

There are three main reasons why these sectors are particularly compatible with OMO strategies.

First, customer needs are clear and problem-driven. In home improvement, customers seek information on DIY and repairs, while in drugstores, they look for guidance on health and hygiene. This creates a natural flow from online information gathering to in-store confirmation.

Second, both sectors offer wide product assortments across diverse price ranges. From low-cost items to high-value goods, purchasing decisions are significantly influenced by product details, pricing, and availability—areas where online information plays a critical role.

Third, both sectors benefit from dense store networks within everyday living areas. With stores located close to residential zones, online research easily translates into physical store visits, reinforcing the integration of online and offline channels.

Case Study 1: Tsuruha Holdings – App and Store Integration

Tsuruha Holdings integrates functions such as point management, coupon distribution, inventory checks, and prescription services through its official mobile app. By linking digital services with in-store experiences, the company enhances convenience, particularly through features like prescription reservations and reduced waiting times. The app serves not merely as a promotional tool but as a core platform for customer experience.

Case Study 2: Cainz – Online Inventory Visibility and In-Store Pickup

Cainz combines online product search and inventory visibility with in-store pickup services, supporting customer decision-making before store visits. This is especially effective for large or specialized products, where customers prefer to confirm items in person. In-store staff further enhance the experience by providing additional explanations and recommendations.

Case Study 3: DCM Holdings – Inventory Visibility and Store Traffic Design

DCM Holdings has strengthened its online product and inventory information to support pre-visit decision-making. Customers can gather necessary information online and use physical stores for final confirmation and consultation. This clear division of roles between online and offline channels enables an efficient and seamless purchasing experience.

Conclusion: Common OMO Strengths of Both Sectors

Home improvement stores and drugstores share a strong affinity with OMO strategies. Both sectors directly address everyday consumer needs, making it natural for customers to gather information online and confirm purchases in-store. OMO should therefore be understood not as channel integration, but as the optimization of the entire customer experience.

In the following chapters, we will further explore OMO strategies in these sectors. Chapter 2 will examine their similarities and differences in greater detail to support more effective OMO design.