daiso's competitive landscape is changing. the household goods market is being disrupted by overseas ultra-low-cost brands such as Miniso, Yoyo, and Three Peas, as well as E-Mart's Okay Price. Learn how each brand differentiates itself.
table of contents
- competition in the ultra-low-priced retail market
- chinese and Japanese brands enter the market
- differentiation strategies of competing brands
- low-cost competition from hypermarkets and convenience stores
- consumer Benefits and Concerns
competition in the ultra-low price retail market
daiso's dominance of the ultra-low-price market as the nation's general merchandise store is beginning to crack. as consumers' wallets have become thinner in the recession, the demand for low-cost household goods has increased, and domestic and foreign retail brands are entering the market one after another.
the competition in the ultra-low-priced retail market, which started online, is now expanding offline, signaling a game-changer in the household goods market. competitors from China's Miniso and Yoyo, Japan's Threepee, and even E-Mart's own brand, Okay Price, have emerged.
in recent years, Daiso has become synonymous with flat-price stores and has become a household brand that can be found anywhere in the country, but now competitors armed with various strategies such as character goods, emotional design, and targeting local shopping districts are challenging Daiso's monopoly.
chinese and Japanese brands are making inroads
aggressive expansion of Chinese brands
often referred to as the Chinese version of Daiso, Miniso first entered the Korean market in 2016, only to pull out in 2021 amid COVID-19 and design plagiarism controversies. late last year, however, the brand announced its re-entry, opening stores in Hongdae, Gangnam, and Cheongju, starting with the Daehak-ro store, the latter of which is a highly accessible location as it was once home to a Kakao Friends store. miniso announced plans to expand to 10 stores within the year.
yOJO, a global brand that operates more than 3,000 offline stores in more than 50 countries around the world, also opened its first Korean store in Gunsan, Jeollabuk-do, in August this year. yoyo, which has a number of its own brands, including beauty and household goods, is expected to compete most directly with Daiso in terms of product mix and price point.
bypassing Japanese brands
japan's Daiso parent company, Daiso Industries, formalized its entry into South Korea in April by registering the Three Peas trademark here. threepee is a 300-yen shop concept that Daiso introduced in 2018 and is a household goods brand that targets women in their 20s and 40s.
interestingly, Nippon Daiso had attempted to register the DAISO trademark in Korea in 2019, but was rejected due to conflicts with the existing operator, Aesung Daiso, so this is the first time in six years that the brand has gone around the law.
don Quijote, a staple of any trip to Japan, also tested the Korean market with a pop-up store at The Hyundai Seoul in Yeouido in July. The response was overwhelming, with more than 1,200 people waiting in line on the first day of operation, and 40,000 visitors over 25 days. The company recently registered the trademarks for Don Quijote and DONKI with the Korean Intellectual Property Office and began collaborating with GS25, raising the possibility of a full-scale entry.
differentiation strategies of competing brands
miniso's character merchandise strategy
miniso's biggest differentiator is its focus on character goods in collaboration with global IPs such as Disney, Marvel, and Hello Kitty. It has established its identity as a character-based goods shop and character household goods store, not just a flat-price store that sells household goods.
in particular, the Gangnam store, which is designed as an amusement park concept, has large character sculptures and plush toys that customers can touch, take pictures of, and experience. In fact, it is easy to see many children and foreign tourists visiting and enjoying the store. it's a strategy that provides a consumption experience rather than just shopping.
yoyo's local-first strategy
yoyo, Daiso's most direct competitor, chose to use local shopping districts as a test bed instead of Seoul or the Seoul metropolitan area, gradually expanding into the metropolitan area. Opening its first store in Gunsan is part of this strategy.
yoyo targets Gen MZ women with a minimalist and emotional design, while maintaining ultra-low prices that can compete with Daiso. it's a strategy that aims to kill two birds with one stone: design and price.
threepee's emotional design
although Threepee's price point is somewhat higher than Daiso's, which is aiming to be a 100-yen shop in Japan, it differentiates itself through its emotional design. it is characterized by a product lineup that emphasizes design and quality, including pastel-colored interior items.
by focusing on design and quality rather than price, Daiso intends to target the premium low-end market.
low-price competition from hypermarkets and convenience stores
challenge of E-Mart's Okay Price
e-Mart has also entered the ultra-low-price market. its own brand Okay Price, which sells processed food and household goods for 5,000 won or less, is a strategy that is clearly aimed at Daiso.
on August 14, it started selling 162 products at 370 E-Mart and Everyday stores nationwide and online through SSG.com. The products range in price from 880 won to 4980 won and are mainly food and daily necessities, such as a toothbrush for 880 won, popcorn for 980 won, and olive oil for 4980 won.
compared to existing E-Mart products, it is characterized by a 25-50% reduction in volume and up to 70% lower prices. the merger of E-Mart and Everyday last year increased its purchasing power, enabling it to buy more products from suppliers and secure price competitiveness. In the second half of the year, it plans to increase the number of product types to 250.
competing with ultra-low prices in convenience stores
convenience stores, which are seeing increased sales in an era of recession and high prices, are also joining the ultra-low price competition.
GS25 will introduce killer specialty shelves in the health and beauty category at its 500 stores starting next month, featuring 40 health-related products. it plans to offer shades and basic cosmetics aimed at women in their teens to 20s, with an average price of 3,000 won.
CU sells 70 kinds of health functional foods at a price of 5,000 won or less in more than 6,000 stores nationwide, and 7-Eleven is also planning to expand basic cosmetics in the 3,000-4,000 won range.
consumer Benefits and Concerns
consumers have more choices
as ultra-low-price competition intensifies, consumers' options are greatly expanding. in the past, if you needed low-cost household goods, Daiso was almost the only option, but now you can choose according to the characteristics of each brand.
if you want character goods, you can choose Minisou, if you are looking for sentimental designs, you can choose Yoyo or Three Peas, if you want to buy food and daily necessities at once, you can choose E-Mart Okay Price, and if you want to buy at convenience stores, you can choose convenience store ultra-low price lines.
in the midst of recessionary spending trends, having more options to get what you need at a reasonable price is definitely a positive change.
bleeding competition and lower quality a concern
however, there are some long-term concerns. there will inevitably be hemorrhagic competition between companies, and increased price competition may ultimately lead to the loss of non-price differentiators.
in particular, continued competition in the sub-5,000 won price range could lead to a decline in quality. While consumers may benefit from greater savings, they may also be more likely to complain about the quality or durability of lower-priced products.
it's also important to consider that small businesses, such as small household goods brands or local stationery stores, may suffer. price-destructive competition from large retailers can end up upsetting the balance of the retail ecosystem.
a balanced approach by the industry and policy authorities is needed to ensure that price competition in retail does not end up benefiting consumers, but creates a sustainable competitive structure.
frequently asked questions
Q. what is the main difference between Miniso and Daiso? A. Miniso differentiates itself as a character goods store by focusing on global character IP collaboration goods such as Disney and Marvel. while Daiso focuses on uniformity and practicality, Miniso emphasizes character-based consumption experiences.
Q. how did Yoyo enter the Korean market? A. Yoyoso chose a strategy of targeting local shopping districts first, rather than Seoul or the Seoul metropolitan area. We opened the first store in Gunsan and gradually expanded to the metropolitan area, targeting Generation MZ women with minimalist, emotional designs and ultra-low prices.
Q. how does E-Mart Okay Price achieve such low prices? A. With the merger of E-Mart and Everyday last year, our purchasing power increased and we were able to purchase large quantities from our suppliers. we realized a price point of 5,000 won or less by reducing the volume by 25-50% and lowering the price by up to 70% compared to existing products.
Q. are Daiso Japan and Daiso Korea different companies? A. Yes, they are different. daiso in Korea is operated by Asung Daiso and is a separate company from Daiso Industries in Japan. in 2019, Japan Daiso attempted to enter Korea under the DAISO trademark, but was rejected due to a conflict with Aesung Daiso, and is now pursuing a detour under a different brand called Three Pea.
Q. will quality suffer as ultra-low price competition intensifies? A. It is true that there is a risk of quality decline when price competition intensifies. as companies are under pressure to reduce costs, product quality and durability may be affected. Therefore, consumers are advised to check not only the price but also the quality.
related articles
- recession-era spending trends, all about rationalizing spending
- convenience store ultra-low price competition intensifies, what consumers need to know
- character merchandise market analysis, why Gen MZ is going crazy for it
closing thoughts
the Age of Daiso Monopoly is Coming to an End. the daily necessities market is undergoing a period of upheaval, with overseas ultra-low-cost brands such as Miniso, Yoyo, and Three Peas, as well as E-Mart and convenience stores joining the fray. consumers have more choices and the industry has more competition.
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