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Buck up, dollar-store fans: Competition for your loonies heats up with major new player

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Manitoba is the newest battleground in the latest Canadian invasion by a U.S. retail giant, and this time the war is being waged in one of the fastest-growing segments of Canadian retailing -- dollar stores.

The Canadian retailer with the target on its back is Montreal-based Dollarama, the country's undisputed dollar-store king with 690 locations.

And the challenger is Dollar Tree Inc., a Virginia-based company that’s more than six times Dollarama’s size. Dollar Tree entered Canada with a bang in November 2010 when it acquired the Vancouver-based Dollar Giant chain, which had 86 stores in four provinces -- British Columbia, Alberta, Saskatchewan and Ontario. Its goal is to eventually have 1,000 stores from coast to coast.

Its aggressive expansion plans include opening six new stores in Manitoba this year -- it has one at the moment -- and six to 10 more in 2013.

"We love the (Manitoba) market," Dollar Tree Canada president Joseph Calvano said Tuesday. "In the Manitoba market, we feel we could have upwards of 25-plus stores."

He said Dollar Tree differentiates itself from Dollarama by being the only Canadian operator with a price point of $1.25 or less.

Although Dollarama started off with a single price of $1, in recent years it has been adding items priced at up to $2 to broaden its product selection. Calvano said it's expected to soon boost that to $3.

Dollar Tree stores can range from 8,000 square feet to 15,000 square feet, although it prefers 9,500 to 10,000 square feet.

Canada's reigning champ has made it clear it won't take this challenge sitting down.

Dollarama spokeswoman Lyla Radmanovich said in an email the company intends to open 50 new stores this year in Canada, although she wouldn't say where.

"In terms of growing, Dollarama is proud to have an increasing presence in every Canadian province, and its expansion includes Manitoba, where it does plan on opening new stores in the future," she said.

The chain has 23 stores in the province, including 15 in Winnipeg.

Calvano said Winnipeg will get four of the six new Dollar Tree stores; Brandon and Winkler will get the other two.

Two stores confirmed

Two of the Winnipeg locations have been confirmed -- an 8,000-square-foot store opening this spring in Tyndall Market Mall at 850 Keewatin St. and a 10,400-square-foot store opening in April or May at 937 St. James St. Calvano wouldn't say where the other two stores will be because leases haven't been settled, but one is believed to be on St. Mary's Road.

Bring them on, said one couple shopping Tuesday at a Dollarama on McPhillips Street.

Although John and Gerri Chartrand are from Sault Ste. Marie, Ont., they're frequently in Winnipeg because he's a long-haul driver for Winnipeg-based Payne Transport. When they're in Winnipeg, or anywhere else, for that matter, they always hit a few dollar stores, usually two or three a week.

Gerri said they like the broad selection of goods dollar stores offer -- everything from non-perishable food items and household supplies to seasonal products.

"All of the decorations for almost every occasion, they have it," Gerri said. "They had everything for Valentine's Day and they have all the Easter stuff there, as well. They're the greatest."

Bargain-hunters like the Chartrands aren't the only ones high on dollar stores.

Investors also like them because they're one of the most profitable and fastest-growing segments of the North American retail market. And property landlords who once shunned them are now clamouring to sign them up as tenants.

John Prall, vice-president of retail with the Winnipeg office of Colliers International, said large-format dollar stores like Dollarama and Dollar Tree can attract as many as 300 shoppers a day.

"They are a good draw for a shopping centre and a good anchor."

They've proven to be good in both good and bad economic times, he said. "Their model has proven to be quite recession proof."

Colliers represented the landlords at all three locations Dollar Tree has leased so far, Prall said, including the 12,000-square-foot outlet that opened without fanfare last fall at Kildonan Crossing Shopping Centre on Regent Avenue.

He said the big dollar-store operators like to be in retail centres that boast at least one other good retail draw -- usually a drugstore or a supermarket -- because they rely heavily on spontaneous purchases by shoppers who might come to buy one or two items, but walk out with a bagful of goods because they can't pass up the deals.

murray.mcneill@freepress.mb.ca

MONTREAL-based Dollarama is Canada's only national dollar-store operator and its biggest by far, with 690 stores. But it's small compared to its newest challenger -- U.S.-based Dollar Tree Inc.

Dollarama Inc.

-- Founded in 1992 by Montreal retailer Larry Rossy.

-- Began with one outlet in Quebec, now has 690 from coast to coast.

-- Annual sales of $1.5 billion.

-- Earnings of $151.9 million.

-- Return on equity of 18.79 per cent.

-- Assets of $1.3 billion.

-- Liabilities of $502.4 million.

-- Latest share price: $43.70.

Dollar Tree Inc.

-- Founded in 1986.

-- Began with one store, now has 4,500 in the U.S. and 86 in Canada.

-- Annual sales of $6.5 billion.

-- Earnings of $462.9 million.

-- Return on equity of 30.51 per cent.

-- Assets of $2.4 billion.

-- Liabilities of $984.3 million.

-- Latest share price: US$87.69.

Source: Globe Investor

Republished from the Winnipeg Free Press print edition February 16, 2012 B6

History

Updated on Thursday, February 16, 2012 at 2:38 PM CST: Updates third paragraph with more accurate figures

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