By Katie Davis T he reports of how business is going the dollar stores retail sectors depends on which side of the 49 th parallel border you are on. North of the border line, Dollarama, Canada’s biggest discount retailer, with 1,100 stores across in the country, has seen it shares reaching new highs with company’s results exceeding analysts’ earnings estimates. Which is great news for Dollarama as the company is planning to accelerate its aggressive expansion plans which saw 26 new stores open last quarter and looks to open 1,700 stores in the next eight to 10 years, which is more than the 1,400 previously anticipated. Meanwhile, south of the 49 th , Dollarama’s U.S. counter- parts Dollar General Corp. and Dollar Tree Inc. shares have been dropping faster than their prices with decreases of 20 percent or more from recent highs. The news could be getting worst for those south of the border as this segment buys more than half of its goods outside of North America, which would effected if the Trump administration implements a border tax on imported goods
in the U.S. as this would have no impact on Canadian based retailers, but could be another heavy blow to those south of the board in the battle to make America great again. So what is the secret to success in the north? Well it is not much of a secret but more of being one with their custom- ers. Dollarama is just as frugal using the same cost saving strategies as its customers. However, it is not all about being frugal for Dollarama it is also about being selective of the markets and segments that it offers. Staying out of fresh food segment has played an important part of their success as U.S. rivals like Metro Inc saw opportunities in using food to attract customers however this was a poor decision as a recent run of food deflation has hurt margins for grocers and discounts chains on both sides of the border. Although Dollarama is very selective of productive segments, it is constantly testing new ideas, but knows the key is to keeping costs low, allowing them to give more value to their customers and them coming back for their party accessories, kitchenware and seasonal goods.
16
SPOTLIGHT ON BUSINESS MAGAZINE • APRIL 2017
Made with FlippingBook HTML5