Discount Daiso to open more $2.80-a-pop shops

BLAIR SPEEDY
December 13, 2013
The Australian

JAPANESE discount retailer Daiso is set to open 20 new stores in Australia next year as shoppers clamour for its quirky merchandise, all of which sells for $2.80 a pop.

Daiso Australia chief Kit Cheong said the company was seeing rapid sales growth from its 21 existing stores in Australia despite poor consumer sentiment and increasing competition as Target seeks to revamp its operations and The Reject Shop maintains an aggressive store opening strategy.

“The competition is getting very hot, but that’s the same everywhere in the world, but we have a concept that’s pretty unique and goods that are better than anyone else is selling at that price,” she said.

Almost all of the merchandise is Daiso’s own brand, and unlike competitors who focus their efforts on meeting everyday needs at low prices, the merchandise at Daiso has a groovy, designer feel with a particularly Japanese aesthetic.

“We’re not like a normal $2 shop — the quality is much better, the shopping experience is light, colourful and welcoming. We’re very different to The Reject Shop, which people are always comparing us to,” she said.

“The brand philosophy is to give more value than the price of the article — everybody who comes in says it’s cool, and the second thing they say is they can’t believe it’s $2.80.”
The first Daiso stores opened in Australia two years ago as franchises, and proved such a hit with shoppers that the parent company began to put its own stores on the ground in April.
Since then, the company has opened a further 15 stores in Sydney, Newcastle, the Gold Coast, Brisbane and Melbourne, including a flagship 1800sq m site on Melbourne’s central Flinders Street, the largest in the southern hemisphere.

The 20 new stores would be located in Sydney, Melbourne and Brisbane, with the company planning to concentrate on building its presence in the eastern states for the next three years.
Ms Cheong said Daiso’s unusual pricing, which applies to everything from calculators to lipstick and from coffee mugs to coathangers, was a quirk of economics and culture.
“Ideally we would have liked it to be $2.50 but the franchisees couldn’t make the financials work at that price, and the number eight is very lucky in Asian cultures so they decided to go for $2.80, and it stuck,” she said.

However Ms Cheong, who previously ran Kathmandu founder Jan Cameron’s discount business Retail Adventures, conceded that the pricing policy did place some restrictions on the company’s expansion plans.
“When you’re selling at $2.80 you can’t afford to be in the best shopping centres, and while we’re in some of the bigger centres, we’re not in the best locations within them,” she said.
The product range could be expanded in the future, she said.