Dollarama Huge Success! Fail and Recession proof business in Canada.

[glamphotographer]

They will also add in mobile registers that take debit to reduce the huge lineups.

http://www.cbc.ca/news/business/dollarama-plans-mobile-registers-to-speed-checkout-lines-1.3107618

 

[Yoga Face]

I would think such stores like Canadian Tire (do it yourself projects) , Dollarama, etc actually profit from recession as sales increase



Smart

MacDonalds, Subway etc may see an increase in sales but loose their high profit sales in soda drinks

The make soda drinks for pennies on the dollar

 

[glamphotographer]

I wish I bought shares in 2009 when the company went public.

 

[lakebear]

I wish I bought shares in 2009 when the company went public.

True: Canadian Tire is catching the home improvement boom. The store offers a diverse line of goods from tires to pots and pans.
Dollarama is also marketing to middle and upper class people now. Some good finds are there: kitchen utensils, etc.

 

[spraggamuffin]

It was easy to see how big a success they would be when you look at Dollar Tree in the US and the success of smaller dollar stores in Canada like Everything For a Dollar and Buck or Two etc.

The only thing you have to worry about it the Monopoly effect.

We see the government sanctioned ones in the telecom industry etc but then there are the Walmarts and Dollaramas that squeeze out all the small guys, then start raising prices.

I'm not saying the cost of business has not increased or there is no inflation, but I've seen prices rising at Dollarama lately.

This after they have squeezed out many smaller dollar stores even in areas like the Junction area up to St clair and down to Bloor.

They now have Monopsony power to dictate everything about the products they sell just like Walmart has with many of it's products.

I normally only buy snack/chocolate items from dollar stores and ever since the extinction of Choclairs and subsequently EFADS(Everything For a Dollar Stores), I've pretty much stayed away from Dollar stores.

For cheap items I prefer to support smaller stores like Giant Tiger instead of Walmart.

I do my best not to buy Chinese made products whenever I can and this has also kept me away from Dollarama and Walmart a lot.

 

[explorerzip]

There's no such thing as a fail or recession proof business. It wasn't so long ago that there were 2 discount stores just like Dollarama called BiWay and Bargain Harold's that both went bankrupt.

Honest Ed's is also closing down (not because of bankruptcy) next year.

The plastic smell of a Dollarama is always distinctive.

 

[glamphotographer]

Biway and Bargain Harolds were loss leaders and did little in it's business plan to regain profits, they were doomed to fail. Dollarama on the other hand is not a loss leader and operates on a %50 markup, plus they do not accept refunds unlike Biway and Bargain Harolds. A business model sure to succeed for along time.

 

[Anynym]

Dollarama are doing very well, but there is likely to come a day when other vendors take notice and introduce a "dollar corner" in their stores with selection and prices to compete with Dollarama - along with a broader selection of other merchandise with higher margins.

Dollarama are already feeling the squeeze from a reduced selection available for $1, and have put prices of $1.25 or more on many items. As their costs continue to rise, they will feel the pressure from having built out their presence to so many stores.

 

[explorerzip]

Dollarama are doing very well, but there is likely to come a day when other vendors take notice and introduce a "dollar corner" in their stores with selection and prices to compete with Dollarama - along with a broader selection of other merchandise with higher margins.

Dollarama are already feeling the squeeze from a reduced selection available for $1, and have put prices of $1.25 or more on many items. As their costs continue to rise, they will feel the pressure from having built out their presence to so many stores.

Any business has to keep costs under control, expand carefully, keep focused and also keep its shareholders happy.

 

[SkyRider]

http://www.dollarama.com/about_us/

https://en.wikipedia.org/wiki/Dollarama

 

[saxon]

Any business has to keep costs under control, expand carefully, keep focused and also keep its shareholders happy.

Costs will rise as the minimum wage starts to go up.

 

[Carvher]

Their prices are going up by design. This is how they will grow in store sales. I also think that customers will be ok with paying 3 or 4 or 5 bucks for items as there will be many more items to buy. As a guy I'm finding the store much more interesting now than when they only sold the dollar stuff.

Funny thing about that store that I thought about the other day is that who the hell is going to return something that costs less than 3 or 4 dollars? Hell I won`t even return things at other stores unless it`s worth about 15-20 dollars. Not worth my time! So basically they get a free ride on that aspect of the business.

 

[squigg23]

I have followed Dollarama since the beginning. Their logistics and distribution are all done manually. When I saw the merge to scanning register; I knew they would be a good investment. And when they offered a 2 for 1 stock split few years ago; I wish I had the extra money because it would have doubled by now.

With Dollarama, the logistics and distribution will be better this time because of scanning system. They can automate the ordering and minimize the operating overhead. But I am not sure what system they are using and I believe they are still using manual ordering in their stores. A computerized logistic also help source vendors for upcoming holiday specials. Like valentines, Easter, summer, etc. They can spend more effort in getting the right vendor, with lower cost and quality product - one who can satisfy the purchase order with near 100% fill rate. If they are in this stage yet, they will be awesome company. You will see more locations opening up because of this, more product selection and who knows, maybe some fresh grocery item. With the right vision -- Dollarama is a threat to the grocery industry market and this is good for the consumers all around

 

[squigg23]

In due time. Apparently Dollarama has operations in Central America - and most produce come from Mexico.. So they do have distribution already in place

After making my previous post, I'm going to submit my interest to Dollarama for this venture. They can do it, just a matter of structuring and fine tuning some things

With regards to selling cheaper produce, it's possible to have fresh produce for convenience rather than drive the produce market share down. The store image, everyone knows it's cheaper because it's Dollarama. So reducing the cost of produce, isn't really helping the market. It will increase basket size, instead of average shopper spending $10 per trip, they may spend an extra $5 for convenience of buying loaf of bread and some bananas. But to compete with larger grocers in terms of lower produce price; that's gonna be tough. Say you go and secure a purchase order for tomatoes at $10,000. You find the farmer(s) who will sell them to you, deliver on time for logistic to spread to all store. What if half of that order ended up rotting away - that can be a massive hit to the profitability it's tough to pull off. Unless the team leading this venture is pretty awesome

 

[glamphotographer]

The thing with produce is that it's not very profitable. Most produce spoils and goes to organics recycling cutting the bottom line of most grocery stores where they have to make profits selling other products. Not sure Dollarama will do do this.

 

[bazzok]

The thing with produce is that it's not very profitable. Most produce spoils and goes to organics recycling cutting the bottom line of most grocery stores where they have to make profits selling other products. Not sure Dollarama will do do this.

I agree, their line of business is more towards non-perishables. Margins are pretty small and going down this route wouldn't work very well for them.

 

[squigg23]

Margins in produce is upwards from 40%
Dry goods are usually operating 25%; but these stats are not based on Dollarama. I can imagine the markup would be 40-50%. The thing with produce is a consumable product. You have to keep buying apples and bananas. Whereby most items in Dollarama, you buy pens when you need em, buy party supplies when you need em. The frequent rate is lower compared to perishable items.

Retail companies, most location fail is due because of theft. That is what kills this simple business model. And most avoid complicating their business to keep risk of theft at lower end. Theft in shopping carts hurt a lot. The risk level of theft depends on your shoppers and your employee. True you can deter internal theft by insisting bag check when leaving after their shift ends. With your customers, it's harder to enforce. Especially the customer that's attracted by bargain are usually ones with little disposable income; and stereotypically more adaptable to stealing. So it's not fool proof, but is hard running retail. It's like a double edge sword: offer lowest price and attract the lowest scumbags of ppl

 

[JohnLarue]

Margins in produce is upwards from 40%

Grocery stores run on very thin margins and high volume

No way produce is 40%+

They have to throw out a lot of produce as well due to spoilage

 

[Kilgore Trout]

Dollarama is a huge hit with women, they account for about 75% of sales.

I was in a Dollarama store a couple of years ago and there was this huge enormous mountain of a woman just in front of me in line, buying about 250 chocolate bars, all different kinds.
She must be dead by now, you can't keep doing shit like that forever.
But anyway, thank got they opened another cashier or I would have been there forever waiting for her to buy all her chocolate bars.

 

[Butler1000]

Dollarama is a huge hit with women, they account for about 75% of sales.

I was in a Dollarama store a couple of years ago and there was this huge enormous mountain of a woman just in front of me in line, buying about 250 chocolate bars, all different kinds.
She must be dead by now, you can't keep doing shit like that forever.
But anyway, thank got they opened another cashier or I would have been there forever waiting for her to buy all her chocolate bars.

Considering women make up an estimated 80-90% of all consumer shopping and choices this sounds a bit on the low end......

OK I'm having a bit of fun here but that Stat above is the truth.