There are four reasons a dollar store is able to sell
merchandise at such a low price:
1. The product is a generic or "knock-off", often specially
manufactured for such stores.
2. The product was manufactured cheaply for a foreign market but
was then imported by an unauthorized distributor (grey market
goods).
3. The product is purchased from another retail store or
distributor as overstock, closeout merchandise, or seasonal
merchandise at the end of the season.
4. The items were manufactured to coincide with the promotion of a
motion picture, television show or special event (e.g. Olympic
games), and are past their prime.
http://en.wikipedia.org/wiki/100-yen_shop
Daiso sets itself apart from other 100 yen shops by choosing not to
sell closeout or factory second merchandise. Instead they keep
prices low by purchasing directly from manufacturers in very high
volume, a strategy often compared to Wal-mart. While the prices are
low, and in many cases identical items are sold for more elsewhere,
in some cases the quality reflects the low price.
Daiso often uses such locations as disused pachinko parlours for
its retail outlets. They spend a lot of money on shelving and
fixtures to help the stores compete with more high-end retailers.
The stock of items retailed at each shop is varied frequently in
order to increase repeat customers.
http://en.wikipedia.org/wiki/Daiso
