Daiso, which started life as a flat-price variety store, has become one of the most frequently invoked names in Korean retail right now. The reason is simple: its shelf mix has changed completely. One wall of a store once dominated by stationery and household sundries is now filled with color cosmetics and skincare; another wall has expanded into storage and organizing goods and small appliances. The price band hasn't moved — still KRW 1,000 to 5,000. As that combination of quality and price reshapes consumer perception, Daiso is shifting its position from "low-price variety store" to "category killer across the board."
The Beauty Category — Price Disruption, Replayed
The pace at which Daiso's beauty shelves have expanded has outrun the retail industry's expectations. Categories have fragmented into color cosmetics, cleansers, sheet masks, and hair care, and a growing number of stores now carve out dedicated beauty corners. Prices sit at a third to half of what H&B store private labels charge, yet observers say packaging design and formula quality have caught up to consumer expectations.
The core of this strategy is a direct-sourcing structure with manufacturers. Daiso signs bulk contracts with small and mid-sized cosmetics OEM/ODM makers, squeezing distribution margin to a minimum and stripping brand-marketing costs from the price entirely. Because the price point lets consumers try a product with little to lose, repeat-purchase rates are reportedly running higher than expected.
What Is the Category-Killer Expansion Strategy
A category killer is a retailer that leverages overwhelming price competitiveness and assortment depth in a specific product category to become the dominant channel for that category. This model traditionally focused on a single category — toys, appliances, sporting goods.
What sets Daiso's shift apart is that it has extended this formula across multiple categories at once. On top of its original strength in stationery and household sundries, it has layered beauty, living, and small appliances in sequence, functioning as the "low-price ruler" of several categories simultaneously within a single store. For category specialists, that means facing not a single competitor, but a competitor appearing on multiple fronts at the same time.
Living and Household Goods — Expanding on Multiple Fronts at Once
It isn't just beauty. Daiso's shelf share is rising quickly in storage and organization, kitchenware, and interior accessories too. Demand to "organize a space on a small budget" — fueled by the single-person household and small-living-space trend — is underpinning growth in Daiso's living category.
Its move into small appliances is also worth watching. As it expands its lineup of low-price, low-margin small appliances — mini fans, portable lighting, compact storage-style appliances — Daiso is drawing traffic away from both traditional household-goods specialists and low-price online platforms.
Pressure on Existing Retail Channels
Daiso's category expansion is squeezing H&B stores, household-goods specialists, and low-price online platforms all at once. H&B chains are responding by leaning on "experiential beauty shopping" as a point of differentiation, but the industry consensus is that low-involvement, low-price beauty demand has already shifted substantially to Daiso.
For household-goods specialists, the impact is more direct. As Daiso offers comparable quality at far lower prices in the same categories, the exodus of price-sensitive consumers is accelerating. In the end, each channel has little choice but to reposition toward the premium, specialist territory Daiso doesn't touch.
Comparison With Overseas Cases
This trend isn't confined to Korea. Miniso has expanded rapidly across Southeast Asia and Latin America with a similar low-price category-killer model that blends lifestyle goods with beauty. Daiso's domestic strategy is tracing a trajectory similar to Miniso's overseas expansion, and this same category-expansion formula is likely to travel with Daiso when it eventually moves abroad.
Daiso's expansion isn't simply about bigger stores — it's a strategic experiment in transplanting an ultra-low-price model across multiple categories simultaneously. If the experiment lands, Daiso will be positioned to effectively define the "reference price" across beauty, living, and general goods throughout Korean retail.
✦RIT's Insights
The real threat in Daiso's expansion isn't any single category — it's the "simultaneity." As beauty, living, and general goods all expand together within one store, competitors are forced into a structure where they must respond on multiple fronts at once.
What RIT is watching in this trend is that the room each channel has to maneuver is narrower than it looks. H&B stores need to accept that going head-to-head with Daiso in low-involvement, low-price categories is a low-odds fight, and rebuild their positioning around value Daiso can't replicate — experience, expert consultation, premium assortment. The situation is similar for household-goods and living brands. Shifting the product mix toward high-involvement, higher-price categories Daiso hasn't entered yet — large furniture, specialist interior pieces — is effectively the only defensible line.
From an operator's perspective, the party that actually needs to be more cautious is the beauty OEM/ODM makers and brands supplying Daiso. They need to keep SKUs and brand lines separated so that supplying low-price volume to Daiso doesn't erode their own channels' price positioning. Private-label cooperation may help secure volume in the near term, but it carries a long-term risk of diluting brand value — a risk that shouldn't be forgotten. How carefully the scope of cooperation and the categories exposed are designed will determine whether that arrangement succeeds or fails.
Given Miniso's overseas expansion playbook, Daiso's next step is likely to be transplanting this category-killer model into international markets. In RIT's view, this point still needs further confirmation — whether a formula validated domestically will translate abroad remains an open question, since maintaining the same margins in markets with entirely different rent and labor-cost structures is a separate problem altogether.
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