Daiso is launching a strong counterattack against Dollar Tree’s dominance of the dollar store industry with an ambitious plan to move into California that will see the Japanese chain opening 17 new stores around the Golden State during 2025. The ambitious expansion plan is one of the biggest retail openings in the dollar industry and represents a legitimate threat to entrenched American dollar store chains.
The rollout started with a bang in January 2025, when Daiso opened four new California stores on January 4th in Santa Maria, Foster City, Apple Valley, and Riverside. Seven days later, the company opened three more stores in Calexico, Corona, and Lemon Grove, indicating the rapid pace of their penetration strategy.
The growth increases steadily throughout the year with further grand openings set in Jurupa Valley in January, Aliso Viejo in March, and Reseda in April. Nine further stores have also been booked later in 2025 by the company, i.e., San Ysidro, La Quinta, Redding, Palm Springs, Salinas, Modesto, and Arroyo Grande, taking the total number of confirmed new stores for the year to 17.
Strategic market positioning against Dollar Tree
Daiso’s roll-out is particularly timely for Dollar Tree since the dollar store chain is facing severe operational and fiscal issues. The US discount behemoth has had to drop its signature $1 price, raising initially to $1.25 and now adopting a multi-pricing strategy with products as high as $7. This deviation from the dollar store format that characterised the brand is a complete strategic realignment triggered by inflation and margin stresses.
The competition situation is even more favorable to Daiso when it takes into account Dollar Tree’s intended closure of almost 1,000 Family Dollar stores by 2025. The closures of some 15% of the Family Dollar outlets are caused by inflationary pressure on poor households, diminishing government subsidies, and rising shoplifting. Store closures leave voids in the market that Daiso is able to fill with its differentiated product profile and higher perceived value.
California is one such target market, for the state has already proved to be Daiso’s most well-performing U.S. market with 38 stores already operational prior to the 2025 expansion. Daiso’s Chief Development Officer John Clarke has also specifically named California as significant, stating that “California shoppers have embraced Daiso’s concept, and we’re excited to make our products more accessible with these new locations.”
The cult following phenomenon
One of the most potent competitive strengths Daiso has is that it has a cultish fan culture, and now this is the momentum driver for the company’s expansion plan. The Japanese retailer has managed to have an ardent fan culture that actively campaigns for where new stores should be erected via social media, with the company even having a specific webpage upon which customers can recommend areas for potential store openings.
The cult-like customer base goes well beyond standard retail loyalty, with customers reporting that Daiso shopping is almost addictive. Experts in the industry observe that 75% of Daiso’s customer base are middle-income women of all ages, attracted by the chain’s exclusive Japanese look and rock-bottom prices. The income and age demographic is an important edge over Dollar Tree shoppers, who tend to be lower-income families more susceptible to economic downturns.
Social media has also been a powerful promotional tool for the Daiso brand, with consumers sharing their “Daiso hauls” and finds on social media such as YouTube and Instagram on a daily basis. The company has leveraged this organic marketing energy and even established an official fans’ club called “DAISO no Wa” to organize customer interaction and brand engagement.
Product differentiation and quality perception
Daiso’s competitive advantage is built on the provision of higher quality products and distinctive Japanese design features that distinguish it from the standard American dollar stores. Whereas Dollar Tree has built its image on the provision of prices at rock bottom levels for commonplace basics, Daiso stands as providing economical entry into Japanese culture and design, with items ranging from classic Japanese food and cosmetics to state-of-the-art kitchen appliances and organizing aids.
The price differential between the two chains reflects this positioning strategy. Daiso’s base price point of $1.75 for most items, with premium products reaching $15.25, allows the company to offer larger sizes, higher quality materials, and more sophisticated designs compared to Dollar Tree’s constrained $1.25 price point. This pricing flexibility has proven crucial as inflation pressures have forced Dollar Tree to abandon its fixed-price model entirely.
The quality perception gap between Japanese and American dollar stores is particularly pronounced among consumers. Japanese consumers and American expatriates frequently note that American dollar stores suffer from a “cheap and inferior” quality reputation, while Japanese 100-yen stores like Daiso are perceived as offering genuine value for money. This quality differential has become a key selling point for Daiso in the U.S. market.
