Major Retailers Challenge Daiso with Low-Cost Household Goods Stores

Major retailers that previously rented space to Daiso are now entering the low-cost household goods market directly. As inflation persists, Daiso has gained popularity among younger consumers for its affordable products, prompting a shift in the retail landscape. Retailers are responding by launching their own uniform-price stores that offer a range of household items, fashion, and beauty products to attract younger customers and increase their time spent in stores.

According to the retail industry, Emart's low-cost household goods store, 'Wow Shop,' which began operations in December with four locations, has expanded to 13 stores by the end of this month. Additionally, 116 Emart locations without separate stores are selling 30 to 40 representative products on regular shelves, focusing on items priced under 5,000 won.

The popularity of Wow Shop amid rising prices has led to its expansion. On July 7, the Wow Shop at Emart Eunpyeong moved from the third to the sixth floor, increasing its size from 62.8 square meters (19 pyeong) to 337 square meters (102 pyeong). The number of products offered also grew from about 1,300 to nearly 1,980. In the week following the expansion, average weekday sales increased by 52.1%, while weekend sales rose by 78.4% compared to before the move.

Wow Shop's competitive pricing stems from direct sourcing overseas, allowing Emart to reduce intermediary distribution steps. The store features products that were not previously available in large retailers, as well as items popular on social media. An Emart representative stated, "We may consider further expanding Wow Shop based on customer feedback and store conditions, but no additional openings are currently planned."

Lotte Mart opened a 'Big Price Uniform Shop' at its Hwajeong location in Goyang City at the end of last month, covering approximately 99 square meters (about 30 pyeong). The shop offers around 700 everyday items, including storage containers, laundry products, underwear, and socks, all priced uniformly under 10,000 won, ranging from 500 to 9,000 won. Lotte Mart plans to enhance its lineup based on customer demand for specific product categories. A Lotte Mart representative noted, "The Big Price Uniform Shop is currently in a testing phase, and there are no plans for store expansion at this time."

The low-cost household goods sector has traditionally been operated by specialty stores like Daiso, which rented space in large retailers. This arrangement allowed large stores to generate stable rental income while outsourcing the management of a wide variety of non-food items, which can be challenging to handle. Daiso has also expanded its presence in large retailers, occupying 40 of Emart's 157 stores and 90 of Lotte Mart's 112 stores.

The shift by Emart and Lotte Mart to expand low-cost household goods offerings is seen as a strategy to attract consumers during this inflationary period. By enhancing their selection of household goods, fashion, and beauty products, they aim to increase the reasons for customers to visit and extend their time in stores.

Industry insiders predict that for the time being, large retailers will continue to maintain Daiso's presence while testing the competitiveness of their own stores in a coexistence-driven competition.