Business is growing for Dollarama

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This article was published 10/04/2023 (925 days ago), so information in it may no longer be current.

Chris Lewis grabs some dog bags, some bird feed.

During other Dollarama trips, she’s purchased mustard, relish, tins of tuna.

“If I see stuff that I know is less expensive here than in the grocery store, I just pick it up,” Lewis said at the Sterling Lyon Parkway discount store. “(Dollarama) seems to have a steady business.”

More than steady — business is growing, in Manitoba and across the country.

The Montreal-based chain added five stores to the keystone province over its last fiscal year, bringing its Manitoba store count to 47.

Its latest financial report showed a 16.7 per cent increase in national sales year-over-year, and an expansion of 65 net new stores during its 2023 fiscal year.

The company plans to open between 65 and 75 net new stores in its upcoming fiscal year, according to Lyla Radmanovich, Dollarama’s spokesperson.

She wouldn’t divulge how many shops are slated for Manitoba.

“Dollarama continues to grow its footprint in line with its previously disclosed long-term store target of 2,000 stores across Canada by 2031,” Radmanovich wrote in a statement.

Currently, the company has 1,486 sites across Canada. Dollarama projects sales growth between five and six per cent over its next fiscal year.

The chain could likely grow in Winnipeg any time, said Sean Buchanan, a University of Manitoba business administration professor.

“What makes their expansion more noteworthy is they seem to be one of the few areas that are expanding as… the economy tightens,” he said.

The number of stores opening is consistent with those Dollarama has opened annually since at least 2018.

The chain’s growth is partially “a symptom of difficult economic conditions,” said Sean MacDonald, another University of Manitoba business administration professor.

The average cost of food rose 10.6 per cent this February compared to last. Manitoba’s overall inflation rate jumped 6.4 per cent during the same period.

Dollar store growth could reflect a “substitution or reprioritization of consumer behaviour,” MacDonald said.

For example, expensive phone bills consuming a squeezed budget could lead someone to purchase more goods, like food, at a dollar store, he said.

One shopper told the Free Press a Dollarama trip might cost her $100 as she stocks up on food, lunch containers, beauty products and other supplies.

It’s still cheaper than grocery retailers, she noted.

Dollarama introduced $5 items last year. The move is part of the corporation’s multi-price point strategy, which began in 2009, according to its latest financial report.

People will keep coming “as long as the prices are lower” than the competition, noted Buchanan.

“The (dollar store model has) just gathered so much steam in the past decade or so,” he said, adding he expects such retailers to sell more expensive products in the future.

Dollar stores have been leaning into food sales and will likely widen their offerings, according to MacDonald.

On Thursday, loaves of bread decorated the aisle leading to self-checkouts at a south Winnipeg Dollarama.

Oat milk was priced at $2.50; some cracker boxes were $1.50.

As inflation rises, people become more willing to stop at several stores and “jump over hurdles” to save money, noted Janice Compton, a University of Manitoba economics professor.

Enoch Omololu now visits Dollarama for home repair tools. If he can’t find what he’s looking for, he’ll head to Canadian Tire or Home Depot — places he’d initially visit before inflation skyrocketed.

“I don’t need an exceptional quality. I just need something that works,” Omololu said.

He’s the founder of Savvy New Canadians, a personal finance blog. He regularly recommends people to shop at discount stores.

“You’re getting value for what you’re paying,” he noted. “If you’re looking for some items that you plan to use for one, four, five years, a discount retailer… might not be the best place.”

Buchanan worries about the environmental costs of dollar store goods. Such products result in more waste, he said.

Lewis, a Dollarama shopper, is happy the chain has roots in Winnipeg — it’s competition for the grocery stores, she said.

Dollar Tree, a discount company based in Virginia, also reported sales growth in its latest financial report. It opened 259 net new stores in its 2022 fiscal year.

gabrielle.piche@winnipegfreepress.com