DOLLARAMA INC

January 2020
DOLLARAMA INC

Key company facts

▪ Dollarama was founded in Quebec in 1992, and had Dollarama

expanded to over 1,000 locations throughout Canada
as of 2019. Dollarama is focused on selling Headquarter country: Canada
discounted goods across an array of categories, and Major country Canada, Colombia, El
introduced an online store to sell bulk goods in early involvement: Salvador, Guatemala
2019. Major channel Variety stores, e-
▪ In August 2019, Dollarama acquired a controlling involvement: commerce
interest in the Latin American retailer Dollarcity. The
acquisition marks the first international expansion
for Dollarama, although it had previously supplied
inventory to Dollarcity for several years.
▪ Dollarama’s core customers are value-oriented
shoppers searching for low prices and a wide
assortment of products. The company’s stores are
mainly located in metropolitan areas and mid-sized
cities, attracting customers who are reflective of the
Canadian population at large.

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DOLLARAMA INC

Strategic objectives and challenges

Acquisition of Majority Stake in Dollarcity Opening of online store

▪ In 2019, Dollarama acquired 50.1% of Dollarcity, a ▪ In early 2019, Dollarama announced that it was
chain of discount stores in Latin America. This marks launching an online store with over 1,000 product
the first time that Dollarama has expanded outside offerings for sale to consumers and businesses.
Canada, and provides a substantial opportunity to ▪ The online store is unique in that it only sells items
grow its business in another region. Dollarcity in bulk or by the carton. As such, the company
currently has locations in Colombia, El Salvador and acknowledges that the online store is not meant to be
Guatemala. Dollarcity aims to add more than 400 a significant growth opportunity in the near or
stores in the next 10 years, with the majority of these medium-term.
to be located in Colombia.

Managing Price Points Physical store expansion

▪ Dollarama has historically thrived on value and ▪ Dollarama has consistently expanded its physical
consistency by establishing consistent price points footprint since its incorporation in 1992, and claims
across its inventory. Dollarama’s merchandise is never to have closed a store due to poor
currently sold at fixed price points up to CAD4. While performance. The company plans to continue
the company says that this will not increase in the opening stores in Canada throughout 2020.
near future, it will eventually have to adjust to keep ▪ Store openings in 2019 met expectations, but also
up with inflation and rising costs. Maintaining a clear cut into profit margins for the company, as it is
value proposition will be key to Dollarama’s focusing on expanding while maintaining its current
continued success in the variety store category. price points.

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DOLLARAMA INC

Omnichannel strategy details

▪ In early 2019, Dollarama announced that it was launching an online store with over 1,000 product offerings for
sale to consumers and businesses. The online store is unique in that it only sells items in bulk and not individual
items. Dollarama has acknowledged that its online store is meant to meet the needs of a specific subset of
customers and therefore will not materially affect its financial results. Items ordered from the online store are
available for delivery across Canada and are priced identically to in-store offerings.
▪ Aside from the newly launched online store, Dollarama generally has not put a significant amount of energy
into developing an omnichannel strategy. In many ways, the company takes an “old school” approach to its
business. There is no Dollarama mobile app. There is not much of an online store other than what has been
described above. There are typically no sales, specials, discounts or coupons, and the company only began
accepting credit cards in 2017.
▪ Even though its strategy might seem archaic in the context of other leading Canadian retailers, Dollarama has
refined its business model over decades of experience, and has found a strategy that allows it to succeed in a
competitive environment without having to commit valuable resources to omnichannel development. Instead,
Dollarama focuses on creating value for consumers through the provision of a wide range of products at
consistent price points. While focusing on a simple business model and consistent expansion throughout
Canada, Dollarama has found success in not attempting to do too much. The company knows what it is good at,
and it sticks to the model that has brought it success for many years. Dollarama continues to see success with
this model today, and is thus unlikely to depart from the current strategy unless its business begins to suffer
significant setbacks due to a lack of omnichannel innovation.

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DOLLARAMA INC

Private label overview

▪ Private label brands have long been a staple of dollar stores’ product inventory, and Dollarama is no exception.
The company has branded its own products since the early 2000s, including the launch of its well recognised
house brand “D”, in 2009. By carrying a large quantity of private label brands, Dollarama is able to keep prices
low and margins high on a variety of goods throughout its stores.
▪ Private label brands are extremely valuable to variety stores, and Dollarama in particular. Most consumers
shop at discounters with the intention of saving money and have very little brand loyalty when making
purchasing decisions. Dollarama markets its private label brands in a way that mimics well-known brands
through similar packaging and product descriptions. This creates a sense of familiarity for customers, allowing
them to clearly understand what they are purchasing while also getting a good deal on private label items.

Key Private Label Ranges in Canada 2019

Segment Hardware Kitchenware Office supplies Miscellaneous
•D
Economy • Duramax • Plastico • STUDIO
• Celebration

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FOR FURTHER INSIGHT PLEASE CONTACT
Matt Godinsky
Research Analyst
Matt.Godinsky@Euromonitor.com
Experience more...
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