Daiso, a uniform-price general goods store, and CJ Olive Young, a powerhouse in K-beauty, continue to show sharp growth amid economic downturns, reshaping the landscape of the retail market. The retail market, which was previously dominated by large discount outlets and department stores, is being restructured due to the trend of value-for-money consumption and the K-beauty boom.
According to the retail industry on the 6th, last year's annual sales of Daiso and Olive Young are expected to exceed 4 trillion won. Both have emerged as shopping destinations for foreign tourists, showcasing value-for-money and K-beauty products. Retail channels, including large shopping malls, are also seeing them as anchor tenants based on their strong attraction.
◇ Daiso targets 'high volume, low price' to challenge existing retail powerhouses
After surpassing 2 trillion won in sales in 2019, Daiso's operating company, Aseong Daiso, broke through the 3 trillion won barrier in just four years. Looking at its annual sales figures, the numbers were 2.2362 trillion won in 2019, 2.4216 trillion won in 2020, 2.6048 trillion won in 2021, 2.9458 trillion won in 2022, and 3.4605 trillion won in 2023. It is projected to exceed 4 trillion won in 2024.
This growth can be attributed to Daiso expanding its business beyond the existing uniform-price general goods market into areas such as beauty, clothing, and food. Consumer perception of Daiso is shifting from a simple value-for-money provider to a lifestyle platform, with beauty being a prime example. The sales of Daiso's beauty product line saw a 150% increase from the same period the previous year, based on cumulative figures from January to November last year. There are now 49 beauty brands available at Daiso, making it especially popular among the 10-20 age group for affordable access to K-beauty.
Daiso operates on a 'high volume, low price' policy based on uniform pricing. This is the reason for Daiso's explosive growth amid the economic downturn. All products are sold at six price points: 500 won, 1,000 won, 1,500 won, 2,000 won, 3,000 won, and 5,000 won. They keep manufacturing expenses in line with uniform prices and buy in bulk. Marketing expenses are also minimized. Although margins are small, they offset this by selling in large quantities, which distinguishes them from traditional retail channels such as discount stores and department stores.
When it comes to processed foods, the differences with other channels become clear. Daiso also sells food items like low-calorie rice and ramen in bulk. For instance, a '3-pack of large rice bowls', sold for 6,950 won at convenience stores, is available for 5,000 won at Daiso.
The number of stores is also showing rapid growth. From 1,361 stores in 2019, it increased to 1,519 in 2023. Last year, they received praise for opening large stores and entering new territory. A Daiso representative noted, "Daiso's strength is its high volume, low price, but a certain level of quality is also guaranteed. Hundreds of new products are introduced each month, creating a virtuous cycle where many new products provide customers with new excitement."
◇ Olive Young, a K-beauty representative… Aiming for global beauty powerhouse status with U.S. expansion
Olive Young, a key player in K-beauty, is also expected to surpass 4 trillion won in annual sales last year. Some estimates suggest it could approach 5 trillion won. Olive Young's growth has been explosive, surpassing 2 trillion won in annual sales in 2021 and exceeding 3 trillion won by 2023, just two years later.
Olive Young has established itself as the representative distribution channel for domestic emerging beauty brands, leading the K-beauty boom. It quickly adapts to rapidly changing K-beauty trends, earning attention from consumers in the MZ generation (born from the 1980s to the 2000s).
There is also a perception among overseas consumers that rising brands from Olive Young are representative brands of K-beauty. It is a prime shopping spot for foreign tourists.
According to the Tourism Knowledge Information System, the number of foreign visitors to Korea for tourism purposes is estimated to be around 6 million in the first half of last year. During the same period, approximately 4 million foreign tourists visited Olive Young. Data shows that 7 out of 10 tourists visiting Korea last year went to Olive Young. Sales to foreigners at six locations in the popular tourist area of Myeongdong increased by 168% compared to the previous year.
Olive Young is a prominent example of successful establishment of an omnichannel framework that connects online and offline sales. Olive Young opened its online store in 2017 and implemented same-day delivery 'Today’s Dream' the following year. The 'Today’s Dream Pickup' service, which allows customers to order popular products online and pick them up in-store, is also popular. According to Olive Young, around 30% of total sales come from online sources.
Olive Young has announced its establishment of a U.S. corporation, marking the beginning of its full-scale overseas expansion. The company is planning to open its first offline store in the United States. They aim to become a global beauty corporation, leveraging the popularity of K-beauty.
A representative from the retail industry noted, "As the economic downturn continues, consumers are increasingly seeking products that offer high satisfaction relative to their prices," adding, "Daiso is enhancing its influence enough to compete with existing large retail channels based on its rapid expansion pace." They further remarked, "Olive Young is also solidifying its position as a leader in the K-beauty market."