daiso, Yo-Yo, Three Peas, and E-Mart's Okay Price! We analyze the competition in the ultra-low-price retail market. from the perspective of an expert, we examine each brand's must-have strategies, including character goods, emotional design, and the consolidated buying power of large retailers, as well as the future of the market.
the economic downturn and high prices are driving consumption trends to extremes. while luxury goods are selling like hotcakes, the recessionary spending trend isdominated by the desire to save every penny for everyday expenses. In this environment, the ultra-low-priced retail markethas paradoxically experienced an unprecedented boom, and Daiso, the "nation's general store," has been at the center of it.
in fact, in 2024, Aesung Daiso's revenue grew 14.7% year-on-year to KRW 3.968 trillion, reaching nearly KRW 4 trillion, and its operating profit surged 41.8% to KRW 371.1 billion. 1 This phenomenal growth has intensified the competitive landscape for Daiso.
aiming to challenge Daiso's dominance and share the ultra-low-cost retail pie, domestic and foreign retail giants are entering the market with aggressive strategies and brick-and-mortar stores. from overseas miscellaneous goods brands such as Miniso and Yoyo from China and 3PPY from Japan, to E-Mart's own brand Okay Price (5K PRICE) and the convenience store industry, the ultra-low-price market has entered the "Spring and Autumn Warring States Period".
daiso's forte: unbreakable 'economies of scale'
a robust system to support prices
no matter how cheap the competition gets, Daiso remains the "king of the hill" in the ultra-low-price retail market, thanks to its long-established economies of scale androbust systems. daiso operates more than 1,500 stores nationwide and manages a vast inventory of more than 20,000 items.
it's not just the volume that matters, but the systematic ability tomanage this vast array of products efficiently. daiso has built its own logistics centers and an AI-powered transportation management system (TMS) to digitize the entire process from dispatch to warehousing. this advanced logistics and IT infrastructure is a key driver of optimizing its cost structure and enables it to consistently maintain a level of cost advantage that competitors cannot easily match.
at the end of the day, it's important to understand that the biggest barrier to entry that late-comers face in competing with Daiso is not "sourcing low-cost goods" per se, but rather the ability to build a systemlike Daiso's that can consistently deliver high-quality, ultra-low-cost goods across the country and do so profitably.
global competitors' must-win strategy: target emotional consumption instead of price
to avoid a head-to-head price battle with Daiso, international brands employ a flankingstrategy that targets the emotional and experiential consumption segments that Daiso does not cater to. backed by deep pockets, they are shifting their strategy from flat price to character and design.
miniso: A merchandise shop transformation combining IP and experience
china's leading household goods brand, Miniso, had previously failed to enter the Korean market and pulled out in 2021, but it re-entered the market late last year with a completely different look. its new identity is not just a general merchandise store, but a character-based merchandise shop and character lifestyle store.
beyond Disney, Marvel, and Hello Kitty, Miniso has focused on selling merchandise in collaboration with popular global IPs, including Harry Potter, to tap into the "nerd psychology" of the 2030s. harry Potter merchandise has been particularly successful, accounting for nearly half of the store's sales, with customers lining up at the door every week on arrival day. the Gangnam store was designed as an "amusement park concept" with large character sculptures and plush toys, emphasizing the experience and experience for customers. This is a strategy to increase dwell time by making the visit to the store an enjoyable experience, not just the purchase of goods.
elements and three-peats: design premiums and niche dominance
another Chinese brand, Yoyo,is a global player with over 3,000 stores in more than 50 countries around the world. avoiding the capital cities where it faces direct competition from Daiso, Yoyo opened its first store in Korea in Gunsan, Jeollabuk-do in August of this year, adopting a test-bed strategyin rural areas [Input Content]. yoyoso has a large number of PB products with minimalist yet emotional designs, and targets the MZ generation of women, offering an emotional design premiumthat differs from Daiso's "practicality"-oriented products.
on the other hand, 3PPY, a subsidiary of Daiso's parent company in Japan, also focuses on design. 3PPY has a "300 yen shop" concept, which is a higher price point than Daiso's "100 yen shop" model, and differentiates itself with quality and design-enhanced household goods such as pastel-colored interior accessories [Input Content]. this is a strategy to break away from Daiso's flat-price image and capture female customers in their 20s and 40s who are looking for value for money in design.
brand key differentiators key Target Audience competitive Positioning miniso global IP character merchandise, experiential stores women in their 20s and 30s, fandom consumers experience value, targeting geek psychology key factors emotional design, high quality/value for money Generation MZ women, design-oriented consumers targeting local shopping areas and design segmentation three Peas (3PPY) 300 yen base, design-enhancing accessories women in their 20s and 40s, interior interest quality premium in addition to pricedomestic retail giants fight back: Head-to-head competition utilizing economies of scale
while international brands are taking a detour, Korean retail giants are leveraging their strongest weapon: consolidated buying power and access to theultra-low-price retail market.
e-Mart's 'Okay Price': A line of defense aimed at the daiso price point
the competition for Daisohas intensified with the entry of hypermarket giant E-Mart into the ultra-low-price race. E-Mart launched its own brand, "5K PRICE," with all items priced at 5,000 won or less, aimed squarely at Daiso's core price point.
e-Mart maximized its purchasing powerthrough the merger of E-Mart and Everyday, which allowed it to purchase a larger volume from its suppliers at a lower price. E-Mart has stated that it will reinvest the cost competitiveness gained into customers and products to create a sustainable virtuous cycle.
in terms of the actual product mix, it is dominated by food and daily necessities, such as olive oil (250ml) at 4,980 won and canola oil (500ml) at 3,480 won. through the parceled essentials strategy, which reduces the volume by 25-50% compared to the existing E-Mart products, while lowering the price by up to 70%, Daiso is effectively defending the area of daily necessities where E-Mart has tried to expand based on its credibility and is making an aggressive move to absorb customers into the grocery channel.
convenience store ultra-low-price strategy: the magic of '1000 won or less' and accessibility
another key player in the ultra-low-price retail marketis convenience stores. GS25, CU, and 7-Eleven are expanding their 'ultra-low-cost ' products to target one- to two-person households in high-income neighborhoods, and are positioning themselves as a grocery channel. In particular, the sales growth rate of '1,000 won or less' products has been explosive, exceeding 30% on average.
convenience stores offer fresh food, ready-to-eat meals, and H&B products in small quantities and at low prices through PB (private label). GS25 recently introduced killer shelves in the health and beauty category, offering tinted and basic cosmetics for an average of 3,000 won [Input Content], and CU is also expanding the category by selling dry food for 5,000 won or less.
convenience stores' most powerful weapon is their overwhelming proximity, whichDaiso does not have. combined with the expansion of quick commerce, convenience stores are positioning themselves as the "closest everything store," absorbing the low-volume, immediate purchase demand that Daiso struggles to cover at sub-1,000 won price points.
the contrast of ultra-low price competition: Toward a sustainable retail ecosystem
increased competition in theultra-low-cost retail markethas the positive effect of providing consumers with a wide range of choices and price benefits. However, in the long run, there are also growing concerns about the inevitable hemorrhaging of competition and declining quality among players, as well as the disruption of the retail ecosystem as daiso competitionheats up.
the Daiso dry food controversy: system friction caused by price disruption
the recent incident of Daiso introducing a dietary supplement (dry food) in the 3,000 to 5,000 won range, which is much lower than the pharmacy price, is a stark example of this structural friction. this led to a strong backlash from the pharmacy association, and eventually to some pharmaceutical companies suspending supply and considering withdrawal.
this case goes beyond a simple battle between distribution channels. daiso has disrupted the pricing practices of the existing distribution structure by innovating to lower the price burden by adjusting the ingredients or content of the product or introducing a one-month supply package. Consumer organizations argue that it is unfair for certain interest groups to pressure pharmaceutical companies to restrict consumers' free choice of purchase.
in the end, the sustainability of the ultra-low-price distribution marketwill be determined beyond price competition. The brands that survive in the market will be those that build a solid foundation of "quality," "trust," and "differentiated value" on top of their "price" advantage." The success of Daiso's competitors will not simply depend on their sub-5,000 won price tags, but on how reliably they can maintain quality while providing an emotional experience like Miniso and trust like Okay Price.
frequently Asked Questions (FAQ)
Q. why are Daiso's competitors priced below 5,000 KRW?
A. Because Daiso's successful core price point is concentrated at 5,000 won or less. In particular, having all items at 5,000 won or less, like E-Mart's Okay Price, is a direct challenge to Daiso and a strategy to create a "flat price" perception that is most attractive to consumers.
Q. miniso has withdrawn and re-entered in the past, will it succeed this time?
A. Unlike in the past, Miniso has completely changed its strategy to character goods (global IPs such as Harry Potter and Marvel) and experiential stores. This is a differentiated strategy that targets the 'value consumption' of the 2030 generation through emotional consumption and fandom marketing, rather than simply competing on price, so it is highly likely to succeed.
Q. why is E-Mart's Okay Price a threat to Daiso?
A. E-Mart has secured overwhelming cost competitiveness through its integrated purchasing power with Everyday. E-Mart's strategy is to absorb Daiso's customers into its grocery channel by offering ultra-low prices in categories of daily necessities such as cooking oil and processed food, where Daiso may be vulnerable.
Q. why is Yoyo in China entering the provinces first and not the metropolitan areas?
A. Yoyo avoids direct competition with Daiso in the metropolitan area, and uses local shopping centers with relatively low competition intensity as a test bed to gradually gain brand awareness and logistics stability. This is a detour strategy to reduce risk and stabilize its entry into the Korean market.
Q. what are the underlying causes of the recent increase in ultra-low price competition in the retail industry?
A. The underlying cause is the recessionary consumption trend caused by prolonged high inflation and high interest rates, which has led consumers to severely cut back on spending but not lose sight of practicality, forcing all distribution channels to engage in price destruction competition to survive.
conclusion and call to action
the dyso competition in theultra-low-end retail market is no longer just a 'price' battle, but is evolving into a war of survival for retail dinosaurs combining 'experience' and 'emotion'. miniso and Yoyo are attacking Daiso with 'value', while Okay Price and convenience stores are attacking Daiso with 'accessibility' and 'reliability of essential goods'. while this fierce battle will be a boon for consumers, it will require constant vigilance and a balanced approach to ensure long-term quality and sustainable growth of the retail ecosystem.
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