NOT everyone is a loser when it comes to inflation.
Owners of budget stores in Asia have amassed billions of US dollars in wealth as customers looking for bargains have flocked to their stores. Sales are rising and their businesses are expanding to meet growing demand from consumers, unlike in places such as the US.
In India, Radhakishan Damani’s US$22 billion fortune is now one of the biggest in the industry. In Japan, Trial Holdings’s listing last month – the country’s largest of the year – made its founder a billionaire. In China, the wealth of Miniso Group Holding’s Ye Guofu has quadrupled since a low in 2022.
And then there’s South Korea, where a little-known family has been creeping up into the ranks of the mega-rich.
Asung Daiso, which Park Jung-boo founded more than three decades ago, has grown into one of the country’s top sellers of cheap stuff, with more than 1,500 stores. Park and his family in December bought back a stake they had sold years ago, putting the company’s value at about US$1.1 billion and giving the clan a fortune of more than US$700 million, according to the Bloomberg Billionaires Index, which is valuing the Parks for the first time.
“In the time of inflation, demand for discount shops will continue,” said Park Sang-hyun, an economist with HI Investment & Securities in Seoul. “In South Korea, it’s backed even more by the risks of slow economic growth.”
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So-called variety stores, including dollar retailers, saw their sales climb 5.1 per cent to US$224.7 billion globally last year, following a 2.3 per cent advance in 2022, according to data compiled by market research firm Euromonitor International. In South Korea, inflation has been eating into paychecks, and policymakers have introduced measures to promote discounts among retailers.
Throughout Asia, those trends have bolstered the fortunes of the discount-store tycoons.
Damani’s wealth has surged by about one-third in the past year with a jump in shares of his Mumbai-based Avenue Supermarts, the company behind DMart. Ye of China’s Miniso and Takao Yasuda, the founder of Japan’s Pan Pacific International Holdings behind the Don Quijote chain, are both worth about US$4 billion or more. Trial’s 50 per cent rise since its listing four weeks ago has given founder Hisao Nagata a US$1.3 billion fortune.
While Park has benefited from the rush to buy inexpensive items, his family’s buyout of the Asung Daiso stake was a major boost to the clan’s fortune.
Japan’s Daiso Industries, the popular Japanese retailer founded by late billionaire Hirotake Yano, acquired the holding from the Parks in 2001 for 400 million yen (S$3.5 million), Park said in a 2022 interview with a local newspaper. Following the deal, he decided to change his company’s initial store name, Asco Even Plaza, to use “Daiso”, which in Korean sounds like “we have everything here”, thinking it would be a fun play of words.
That turned out to be the source of headaches. The new name sounded too much like Daiso Industries, giving the public the impression that the company was Japanese. Asung Daiso became the target of consumer backlash whenever relations between the two countries soured. One of the most damaging periods was in 2019, when Japan imposed restrictions on exports of key materials used by South Korean semiconductor manufacturers: Asung Daiso stores were boycotted and its profit slumped 38 per cent, the most since 2012.
“I didn’t expect the name to become a hurdle to the business,” Park said two years ago. “It’s a Korean company I created, and Daiso Industries has never been involved in business management.”
Park declined to talk to Bloomberg News for this story, and a company representative declined to comment on his family’s wealth.
Before starting his own business, Park worked for 15 years at a firm that manufactured light bulbs in Seoul, leaving when management blamed him for mismanaging labour union conflicts. He then began exporting low-cost household items to dollar shops in Japan, including Daiso Industries, and soon figured he could sell the products without going through an intermediary. He founded what’s now Asung Daiso in 1992.
Despite rising inflation, the retailer has been able to keep its prices stable – every item in its stores costs either 500 won (S$0.49), 1,000 won, 1,500 won, 2,000 won, 3,000 won or 5,000 won. Revenue climbed 17 per cent to 3.5 trillion won last year, while profit gained 27 per cent to 250.5 billion won.
But competition is growing. The rise of Chinese e-commerce platforms such as PDD Holdings’s Temu and Alibaba Group Holding’s AliExpress has already put popular dollar stores under pressure in the US with their low-price strategies. Retailers including 99 Cents Only Stores, Family Dollar Stores and Dollar Tree have closed outlets.
Yet demand for Asung Daiso’s products remains strong because the current economic conditions are increasing the need for value-for-money items that are easy to get, said Park Ju-gun, head of corporate research firm Leaders Index in Seoul. And for all the issues over the company name, the Parks probably won’t change it because of the brand recognition it has earned over the years, he added.
“Asung Daiso has suffered because of its name but now with its new ownership structure, there should be no more blow to their public image,” he said. BLOOMBERG
