Daiso: The courage to destroy one's own 100-yen 'success'. The lifestyle revolution starting at 300 yen that Daiso is launching.

[Series] Redefining True Value: 'Next-Generation Winning Strategies' to Break Through Commoditization [Part 3]

The previous article on 'Skylark' unexpectedly reached many people and was even featured in the official note 'note money'. Thank you very much.

■ Introduction

If you step into prime locations like Shibuya Mark City or Ginza, you might doubt your eyes at the sight. Sophisticated gray-toned fixtures and unified package designs. Lined up are exquisite items packed with the dedication of their production regions, such as cutlery from Tsubame City in Niigata Prefecture, towels from Imabari, and kitchen knives from Seki City in Gifu Prefecture. This is 'Standard Products,' a new business format developed by the well-known 'Daiso'.

Once upon a time, Daiso was the 'symbol of the deflationary era where you could buy things for 100 yen,' an entity that covered 'cheap and low quality' with overwhelming volume and convenience. However, now they are destroying the '100-yen wall' that was their own identity and rushing into the high-price range of 300 to 1,000 yen.

Why did the king of deflation decide to discard the success formula he built himself? Hidden within is a precise countermeasure against their powerful rival '3COINS' and a grand 'redefinition of true value' that democratizes the 'comfortable living' that Muji had monopolized.

■ Escaping from the 'Cage of Success'

For Daiso Industries, the '100-yen uniform' business model was their strongest weapon, generating over 500 billion yen in annual sales, but at the same time, it was a huge 'cage' that bound them. With soaring raw material costs, a weak yen, and rising logistics costs, maintaining all products at 100 yen was reaching a physical limit in a rapidly changing macroeconomic environment. Many companies enter a defensive posture here with 'stealth price hikes (reducing capacity)' or 'compromising on quality'.

However, Daiso went the opposite way. Instead of trying to stay within the 100-yen frame, they chose to 'destroy the frame itself.' What they aimed for was not just a price hike. It is a brand uplift (upgrading of value) from 'buying because it's 100 yen (passive choice)' to 'definitely wanting it if it's this quality at this price (active choice).' The courage to deny their own success experience opened the door to the next stage.

In terms of frameworks, in Porter's 'Five Forces Analysis,' they changed their initial 'industry definition,' that is, their own battlefield and the arena of competition. It is a transformation from the '100-yen shop industry (100-yen goods industry)' to the 'valuable goods industry starting at 300 yen.'

■ Against 3COINS: A precise 'pincer' strategy

In advancing into the 300-yen and up price range, there was a huge barrier that could not be avoided. It is '3COINS,' the pioneer of 300-yen shops. Boasting '1,000 yen value for 300 yen' and providing 'slightly stylish goods' targeting trend-sensitive segments, 3COINS boasted overwhelming strength in this market. If they collided head-on, the latecomer Daiso would not be able to avoid a struggle.

Therefore, the strategy Daiso adopted was a highly strategic 'pincer' (encirclement). They prepared not one, but two new brands.

Standard Products: Provides basic, high-quality standard items with the concept of 'A little good is good forever.' (Against Muji/Nitori territory)

THREEPPY: Provides trendy, adult-cute goods with the concept of 'Heart-fluttering.' (Against 3COINS territory)

While 3COINS covered the broad area between 'trends and basics,' Daiso broke it down into 'quality practicality (Standard Products)' and 'emotional trends (THREEPPY),' and by sandwiching it from the left and right, they began to erode 3COINS' customer base.

Furthermore, as seen in Ginza, Shibuya, and Wakayama, they are rolling out 'three-brand complex stores' that combine these two brands with the original 'DAISO'. This has created a powerful circulation flow that allows customers to complete every aspect of their daily lives within the group, such as 'consumables at Daiso, long-lasting towels at Standard Products, and cute accessories at THREEPPY'.

■ The democratization of 'comfort': A challenge to Muji

What made Standard Products truly revolutionary is that it democratized 'high-quality living (mindful living)'.
Until now, simple, unified, and material-conscious lifestyle goods were the exclusive domain of 'Muji'. However, Muji's price range is not something that every demographic can afford on a daily basis.

Daiso broke through this barrier. Backed by 'economies of scale'—an overwhelming procurement network spanning the globe and sales power on the scale of tens of thousands of stores—they teamed up with local domestic industries.

For example, kitchen knives crafted by artisans in Seki City, Gifu Prefecture—one of the world's three major cutlery production centers—are 1,000 yen. Domestic pencils packed with the technology of long-established manufacturers and towels made in Imabari are just a few hundred yen. These are of a quality that would normally cost several times more at specialty stores.
Daiso repurposed the 'mass production and mass sales' infrastructure they cultivated in their 100-yen shops, not to 'sell cheap goods,' but to 'sell good goods at surprisingly low prices.' This can be called a revolution in lifestyle culture, making a 'comfortable life,' which was previously only enjoyed by a wealthy few, accessible to everyone with a 300-yen ticket.

■ Abstraction: Lessons for business professionals - 'Redefine your company's weapons'

The Daiso case study offers hope to all business professionals struggling with commoditization.
Can the 'strengths' your company possesses only be used as they are now? For Daiso, their strength was not 'selling for 100 yen,' but the 'power to procure and sell large quantities cheaply from around the world (supply chain)' itself.

They changed the 'way' they used that strength. Not to pursue cheapness, but to pursue quality.
What is your company's true core competence?
Can you repurpose that strength for a completely different price range or target audience?
Just as the 'King of Discount' was able to transform into a 'Missionary of Quality,' if you can redefine the context, your existing weapons can become a source of entirely new value.

■ Conclusion: A question for the reader

Have you ever found yourself putting something in your basket at a Standard Products store? At that moment, what 'value other than 100 yen' moved your heart?
I would love for you to share your thoughts in the comments about the new scenery you can see by breaking down the 'walls' you have built yourself.

Next preview:

In the 4th installment, we will analyze 'Workman'. How did a specialty store for workwear become a threat to the giants of the apparel industry? We will delve into their astonishing category expansion strategy, which translated 'functionality' into 'fashion'.

Such industry definition shifts and repositioning are incorporated as central topics in our training programs.

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【Source Information】

・PR TIMES: Daiso Industries Co., Ltd. Press Release (2022/3/7)
'DAISO, Standard Products, and THREEPPY gather in Ginza. Global flagship store to open on April 15'
(*Official announcement regarding the three-brand complex strategy and the concept definition of each brand)
https://prtimes.jp/main/html/rd/p/000000032.000039955.html

・Standard Products Official Brand Site
(You can check the concept 'A little better, is always better.' and examples of initiatives with domestic and local industries)
https://standardproducts.jp/

・PR TIMES: Daiso Industries Co., Ltd. Press Release (2024/2/14)
'First store in Wakayama Prefecture, opening a three-brand complex store of DAISO, Standard Products, and THREEPPY on February 22nd'
(*Release regarding the latest complex store expansion and its objectives)
https://prtimes.jp/main/html/rd/p/000000123.000039955.html

[Marketing Column No. 133]

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