“Let’s buy it cheap and stock up”… ‘Ultra-low-price products’ in the 1,000 won range that have exploded in popularity

‘Shop (#) Daiso Recommended Items’. This is the channel name that appeared on ‘Today’s House’, a home decoration e-commerce company. Today’s House’s ‘Shop (#) Channel’ is a function that allows users to search for content that interests them using hashtag keywords. This channel is similar to a small community where you can upload and share your experiences, product tips, etc. When the search volume is high, related categories are automatically created, and a channel was created recently as the number of people looking for Daiso products, which represent ultra-low-price products in the 100 to 1,000 won range, has increased rapidly.

An official from Today’s House said, “Although it has only recently been opened, the number of contents exceeds 150, attracting a lot of attention from users. It is unusual for a specific company name to appear as a channel, and the demand for cost-effective (price-performance) household items is increasing.” “We are analyzing this phenomenon as it grows.”

E-commerce opens ‘ultra-low price shop’ in the 10,000 won range

1,000 won, 4,900 won, 9,900 won… Recently, e-commerce companies have been releasing ultra-low-price products like this. This is because as prices soar and the economic recession prolongs, demand for premium products such as luxury goods and high-priced goods is slowing down, and the number of consumers trying to save money is increasing. Large supermarkets, e-commerce stores, and even household goods specialty stores are working hard to launch cost-effective products and brands.

G Market, an e-commerce company, analyzed customer purchase data this year (cumulative until the 25th of last month) and revealed that the transaction amount for low- to mid-priced products under 100,000 won increased by 12% compared to the same period last year. In particular, the transaction amount of ultra-low-price products under 10,000 won increased by 7%. Representative examples include key rings and bag accessories (76%), flour (31%), pet snacks (24%), and ramen (16%). On the other hand, the transaction volume of high-priced products worth more than 100,000 won, such as imported luxury goods, audio equipment, golf equipment, and furniture, decreased by 7%.

The e-commerce industry believes that as high prices continue to prolong, frugal ‘high consumption’, which involves buying daily necessities and food at low prices and stockpiling them instead of buying high-priced products or overspending, is becoming an online shopping pattern. A representative example is the ‘9900 Won Shop’ opened by 11th Street last September. This shop, opened by 11th Street with the goal of specializing in cost-effective items, sells everything from daily necessities to cosmetics, fashion, sports goods, and pet supplies, all priced at less than 10,000 won. It is reported that the average daily transaction amount last month increased approximately twice compared to the first month of opening. Sales of household and kitchen items such as foot mats, paper foil, trash cans, and laundry tissues are rapidly increasing. An 11th Street official said, “There is a clear tendency to prefer cost-effectiveness over high prices.”

The popularity of cosmetics sold at Daiso, a household goods store, also provides a glimpse into the trend of cost-effective consumption. Daiso’s cosmetics sales from January to August increased by about 160% compared to the previous year. The prices of over 250 types of cosmetics sold at Daiso range from 500 to 5,000 won. Everything is uniform. The market believes that Daiso has grown so rapidly that it threatens the stronghold of CJ Olive Young, Korea’s No. 1 cosmetics multi-shop. In the industry, the general view was that the ‘price’ of cosmetics had a limited impact on product sales. As it is a product that touches the body directly, it is believed that there are many consumers who are relatively picky about quality and brand competitiveness. However, as severe inflation continued, this trend changed.

Hypermarket PB products are also popular

Euromonitor, a global market research company, selected ‘Premium Jjantech’ as ​​a consumption pattern to pay attention to in Korea next year through ‘2024 Global Consumer Trends’. This means that due to the continued rise in prices, consumers are pursuing ‘Jjdan Tech’ (Jada + Investment), which is a step forward from the existing simple saving.

This also applies to the fact that private brand (PB) products with good cost-effectiveness (price-performance) have recently been attracting attention. According to the distribution industry, sales of E-Mart’s representative PB brand, ‘No Brand’, increased from KRW 830 billion in 2019 to KRW 1.27 trillion last year. E-Mart’s other PB brand ‘Peacock’ increased sales from 250 billion won in 2019 to 420 billion won last year.

E-Mart sells about 1,500 types of PB products and 800 types of PB products at No Brand and Peacock, respectively. No Brand, which started with 9 products in 2015, covers all daily necessities, from food and daily necessities to bedding and home appliances. With the philosophy of ‘producing reasonable quality products at the lowest price’, we lowered the price by minimizing branding, design, and packaging. Peacock, which promotes the advancement of processed foods, continues to grow every year.

Homeplus also sells over 3,000 types of PB products through its own brands, ‘Homeplus Signature’ and ‘Sim Plus’. ‘Signature’, which focuses on sophistication and specialization, attracted attention as a high-quality PB product. ‘Sim Plus’, which consists of products frequently sought by customers such as milk and bean sprouts, is also steadily gaining popularity due to its high cost-effectiveness (price-performance ratio). Last year, Homeplus Signature showed a sales growth rate of close to 219% compared to 2019.

Lotte Mart launched the integrated PB brand ‘Today Good’ early this year. ‘Today’s Good’ is a master PB brand that integrates all PB brands of household goods with high turnover, such as processed foods and daily necessities, through a one-year collaboration between a PB specialist MD (product planner) and Lotte Central Research Institute. In addition, the company is focusing on operating two PB brands by launching over 750 types of PB products, including the home meal replacement (HMR) brand ‘Yorihada’.

Reporter Ahn Hye-won of Hankyung.com anhw@hankyung.com