Why Daiso's New Higher-Priced Brands Are Gaining Popularity

Daiso Industries, headquartered in Hiroshima, operates Japan's famous ¥100 store chain Daiso. Since launching the brands Standard Products in 2021 and THREEPPY in 2022, Daiso's offerings have featured more upscale items compared to traditional ¥100 shops. These items are priced at ¥300–¥1,000 (about $2–7 USD), with most around ¥300 (excluding tax).

Standard Products and THREEPPY place greater emphasis on using eco-conscious materials and offering aesthetic designs on top of functionality. This approach enhances their appeal and distinguishes them from traditional low-cost household items. The selection at THREEPPY is particularly aimed at female customers. 

A New Strategy for a Saturated Market

Japanese 100-yen shops experienced rapid growth during the 1990s "strong yen" era, thriving by leveraging low-cost manufacturing in China. However, by around 2018, the market began to show signs of saturation. 

Furthermore, the COVID-19 pandemic in 2020 and Russia's invasion of Ukraine in 2022 increased logistics costs and overall expenses. This created significant challenges for 100-yen shops, squeezing their profit margins. As a result, many companies were forced to compromise on quality, durability, and design to maintain low prices.

One company that managed to differentiate itself early on was Pal, which specializes in clothing and everyday goods. Its 3COINS brand launched 30 years ago offers products at ¥300 (excluding tax) or more. The pricing has allowed the company to develop more sophisticated products compared to traditional ¥100 shops. 

In the low-cost retail sector, raising prices above competitors can be challenging. However, Pal uses its clothing design expertise to create stylish products. Similarly, Can Do and Seria, which initially focused on low-priced items, have been offering products priced over ¥100 in their stores for about the past 10 years, recognizing the limitations of the ¥100 model.

Daiso's Strategy

In this context, Daiso Industries has adopted a new strategy by launching two brands that emphasize quality and design. At Standard Products, approximately 70% of items are priced at ¥300 (excluding tax). The store also features collaborative products with local companies, including knives, cosmetics, linens, and tableware. Such collaborations encourage customers to explore the store further and discover unique items.

This strategy differs from that of 3COINS, Can Do, or Seria. In some locations, all three Daiso brands are available, providing customers with a wide variety of products and a sense of exploration.

Daiso also began offering bulk purchases on its online shop in 2020. It launched a fan website called "DAISO Community" in December 2023, showcasing the company's creativity and innovation.

Global Expansion

Daiso Industries operates 5,325 stores worldwide. Outside of Japan, it has 984 stores in 25 countries and regions as of the end of February 2024. The company aims to open 1,000 stores in the United States by 2030, with 121 already in operation as of December 2023. It has also signed a multi-year sponsorship deal with the Los Angeles Dodgers starting in 2024.

In July 2024, the company began constructing a large automated warehouse in Malaysia, with plans to start operations in spring 2027. By expanding globally, Daiso aims to build resilience against currency fluctuations.

Japan's 100-yen shops continue to evolve and adapt to changing times.

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(Read the article in Japanese.)

Author: Hidemitsu Kaito