Could high overhead costs kill Japan Home, Daiso amid rise of e-commerce? Analysts weigh in
The outlook seems dim, but better manpower management and data analytics may sharpen their edge, they say
[SINGAPORE] Dollar stores in Singapore may need to re-examine their business strategies in order to survive tough market competition and rising labour and rental costs, analysts told The Business Times.
Their comments came in the wake of the shuttering of some branches of household retail chain Japan Home in June and July.
The chain’s remaining outlets have been licensed to fast-moving consumer goods brand Radha Exports to operate, effective Wednesday (Aug 19). Radha Exports also owns DD, which operates a separate dollar store brand, Value Dollar (Valu$).
Japan Home’s losses after tax and total comprehensive loss stood at S$2.3 million for its financial year ended Apr 30, 2025 – up by more than two times from S$858,596 in the year before, based on Accounting and Corporate Regulatory Authority (Acra) records.
No data on its latest financial year results ended Apr 30, 2026 was available; BT has sent queries to Japan Home and Radha Exports.
Prior to 2024, the company’s profits had declined for three years.
Why physical dollar stores struggle
Lee Swee Siong, vice-president of the Association of Small & Medium Enterprises (ASME), told BT that the margins were likely “just too thin” for Japan Home – which probably forced the closure of some outlets.
“Physical stores need to maintain margins to be viable … but competing (simply) on low-price items continues to be challenging,” he said. “Sales volumes would have to be sizeable in order to cover their rental costs.”
He noted that typically, rental and labour costs are a major weight on dollar stores, on top of general utilities expenses; already, the Iran war has caused an indirect impact on those which rely significantly on shipping, logistics and cargo deliveries.
Other factors behind tough in-person competition include more budget Chinese brands such as Miniso appearing in the Republic; the upcoming Johor-Singapore Rapid Transit System Link is also set to make cheaper products in Johor even more accessible to Singaporeans.
But the largest factor for the disruption of Singapore’s dollar stores flagged by market watchers is the rise of e-commerce platforms.
The likes of Taobao, Pinduoduo (PDD) and TikTok Shop do not require an in-person shop front to operate, which reduces their overhead costs significantly; such platforms also provide consumers nearly the same amount of convenience as physical stores, including same-day delivery options.
Lee said: “Such online shops rely on the direct manufacturers to fulfil orders – that kind of competition is hard to beat when physical stores still deal with inventory and rental costs.”
Daiso, a budget shop favourite among Singaporeans, was also named as a chain hit by e-commerce sites. It has so far closed three outlets in 2026 – at 100AM mall in Tanjong Pagar, Tampines 1 and Sembawang Shopping Centre.
Song Seng Wun, economic adviser at fintech company SDAX, said: “Operating costs (for these stores have) clearly gone up in recent times – but it is fundamentally about whether revenue is keeping pace with such costs … and if (product) turnover has been kept in line.”
Business strategy ahead
Commentators BT spoke to were split on the future of in-person dollar stores in Singapore and the region.
ASME’s Lee said sky-high overhead costs make low-cost business retail near impossible to do in-person these days.
He noted that the 7-11 chain has been able to stand the test of time – despite pricing many of its products above those in supermarkets – because 7-11’s attraction lies in its convenient locations across Singapore.
This question mark hanging over the future of dollar stores is not specific to Singapore; e-commerce platforms such as PDD and Taobao are also “severely disrupting the business model” in Malaysia.
But Song thinks there is a sliver of hope for the in-person business model – if physical dollar stores manage their manpower better.
“What becomes crucial is tracking what sells and what doesn’t – especially when the business is operating with thin margins already – so it’s down to how the purchasing manager buys the stock (for the store),” he said.
Data analytics can give these businesses an edge in this tough environment, so they can reduce manpower costs or help employees make more cost-effective decisions, he added.
