How Korea's 'Daiso Effect' Is Reshaping Fashion and Beauty Retail

South Korea's "Daiso effect," the chase for ultra-cheap value goods named after the country's dominant dollar-store chain, is no longer just about household items. It is now spreading into fashion and beauty, reshaping how young Korean shoppers spend.

With inflation still weighing on consumers, shoppers in their teens and 20s are turning to stores that cut out middlemen and lead with price. The shift is most visible at brick-and-mortar retailers, according to industry sources on June 27.

In fashion, the clearest example is NYUNYU, a multi-brand accessories and apparel shop that began in the wholesale district of Dongdaemun. By sourcing directly and stacking products in high volume, the chain keeps prices low: earrings for 4,000 won, summer sleeveless tops for 11,000 won, and bags around 16,500 won. The model has pulled in young Korean shoppers and foreign tourists alike. NYUNYU posted 60.6 billion won in revenue last year, up 40.6 percent from 43.1 billion won in 2024.

Beauty is following a similar path. Off Beauty, an urban outlet chain that sells authentic cosmetics at up to 90 percent off list price, is growing fast. Q&B International, which runs Off Beauty, reported 97.4 billion won in revenue last year, a 40.1 percent jump from the year before. Operating profit more than doubled to 11.3 billion won. The company runs a warehouse-style model built on bulk direct sourcing from indie brands that struggle to meet traditional retail margins. It has opened 40 stores in just one year.

Online, Chinese e-commerce platforms are gaining ground on the same value pitch. Shein and Temu, often grouped together as "C-commerce," are expanding their share of Korean shoppers' carts. Analysts read it as a sign that consumers have moved past domestic mid-tier brands and gone straight to ultra-cheap Chinese apparel.

The trade numbers back it up. According to the Korea Customs Service, imports of Chinese clothing reached 4.89 billion dollars last year, up 8.09 percent from the previous year and an all-time high. Volume topped 300,000 tons for the first time, hitting 301,169 tons, a 44.7 percent rise over five years.

The card-spending data tells the same story. According to the alternative data platform Hankyung Aicel, Korean shoppers' card payments on Temu came to about 751.9 billion won last year, up 34.5 percent. Estimated payments on Shein reached about 42.7 billion won, a 262.4 percent jump.

For Korea's established fashion companies, the rise of ultra-cheap retail is a real threat.

On the surface, the country's major fashion firms had a clean first quarter this year. Samsung C&T's fashion division reported revenue of 573 billion won and operating profit of 38 billion won, up 13.7 percent and 11.8 percent from a year earlier. Handsome and Shinsegae International posted operating profit gains of 67.7 percent and 452.6 percent.

Still, the industry is not calling it a recovery yet. Last year's weak first quarter, hit by high prices and unusual weather, made this year's numbers look better by comparison. Companies also tightened marketing budgets and cut underperforming lines, which lifted profit on paper.

"Foreign demand and some brand sales have improved, but it's too early to say domestic consumption has truly bounced back," an industry official said. "Legacy fashion companies are protecting profit through cost cuts. But with consumers shifting hard toward extreme low prices, the strongest players for now will keep being the ones leading with ultra-cheap pricing, both online and offline."