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Dollar Tree Gets Ready to Challenge the Discount Dominance of Dollarama
By Marc Weisblott | Canada - Daily Brew – Wed, 22 Dec 12:00 PM EST
A dollar store showdown is set for Canada in 2011, as Chesapeake, Va.-based Dollar Tree recently completed its acquisition of 86 locations of Dollar Giant across the country, which will compete with Dollarama to offer bargain hunters more bang for their buck.
The Wall Street Journal reported this week on how dollar stores became the biggest retail winners during the recent recession. Now, they hope to hang on to all those higher-income customers who were originally trading down.
Dollar Tree, with 4,009 stores in 48 U.S. states, has become one of the hottest American retail stocks lately, due to its ongoing expansion since taking on the brand name in 1993.
The $52-million buyout of Dollar Giant represents a significant step in those plans. And, in light of Dollarama's decision to increase prices on selected items to $1.25, $1.50 and $2, a chain still dedicated to selling all its merchandise at one set price could pose a challenge.
"Everything's a Dollar! Everything's a Dollar! Everything's a Dollar!," scream the signs on the front window of a Dollar Tree in Charlotte, N.C., where Time magazine ventured to report a story for its current issue, "The Buck Shops Here."
Dollar Tree also boasts an e-commerce website in the U.S., whereas debit cards and point-of-sale scanners are a relatively recent development at Dollarama, whose first location opened in 1992 in Matane, Que.
While all discount retailers were seen as vulnerable as the economic downturn took hold two years ago, dollar stores generally improved their product mix enough to significantly dent the fortunes of the indomitable Walmart.
Dollar Tree comparable store sales were up 9 per cent in the latest quarter, compared to a 1.3 decline at Walmart locations.
The improved selection of consumables and fresh food in American dollar stores are credited with boosting the bottom line at chains like Dollar General, Family Dollar and Dollar Tree. Buying power has increased the number of national brands on their shelves.
Smaller packages of popular products have also proven successful at dollar stores. People running out of cash to spend between paycheques has been a factor in their popularity.
Dollarama hasn't had the national Canadian market to itself, but has emerged as the dominant player, and claimed a recent jump in quarterly profits: $31.3 million, compared to $1.1 million a year earlier.
As part of its plan to fend off its new rival, a few hundred more Dollarama stores are being planned for locations across Canada, with hopes of eventually reaching 1,000. Dollarama plans to add 50 locations in 2011, with at least one-third of that growth planned for Western Canada, where Dollar Giant didn't pose as much of a threat prior to its sale to Dollar Tree.
http://ca.news.yahoo.com/blogs/dail...-dominance-dollarama-20101222-083011-999.html
Dollar Tree Gets Ready to Challenge the Discount Dominance of Dollarama
By Marc Weisblott | Canada - Daily Brew – Wed, 22 Dec 12:00 PM EST
A dollar store showdown is set for Canada in 2011, as Chesapeake, Va.-based Dollar Tree recently completed its acquisition of 86 locations of Dollar Giant across the country, which will compete with Dollarama to offer bargain hunters more bang for their buck.
The Wall Street Journal reported this week on how dollar stores became the biggest retail winners during the recent recession. Now, they hope to hang on to all those higher-income customers who were originally trading down.
Dollar Tree, with 4,009 stores in 48 U.S. states, has become one of the hottest American retail stocks lately, due to its ongoing expansion since taking on the brand name in 1993.
The $52-million buyout of Dollar Giant represents a significant step in those plans. And, in light of Dollarama's decision to increase prices on selected items to $1.25, $1.50 and $2, a chain still dedicated to selling all its merchandise at one set price could pose a challenge.
"Everything's a Dollar! Everything's a Dollar! Everything's a Dollar!," scream the signs on the front window of a Dollar Tree in Charlotte, N.C., where Time magazine ventured to report a story for its current issue, "The Buck Shops Here."
Dollar Tree also boasts an e-commerce website in the U.S., whereas debit cards and point-of-sale scanners are a relatively recent development at Dollarama, whose first location opened in 1992 in Matane, Que.
While all discount retailers were seen as vulnerable as the economic downturn took hold two years ago, dollar stores generally improved their product mix enough to significantly dent the fortunes of the indomitable Walmart.
Dollar Tree comparable store sales were up 9 per cent in the latest quarter, compared to a 1.3 decline at Walmart locations.
The improved selection of consumables and fresh food in American dollar stores are credited with boosting the bottom line at chains like Dollar General, Family Dollar and Dollar Tree. Buying power has increased the number of national brands on their shelves.
Smaller packages of popular products have also proven successful at dollar stores. People running out of cash to spend between paycheques has been a factor in their popularity.
Dollarama hasn't had the national Canadian market to itself, but has emerged as the dominant player, and claimed a recent jump in quarterly profits: $31.3 million, compared to $1.1 million a year earlier.
As part of its plan to fend off its new rival, a few hundred more Dollarama stores are being planned for locations across Canada, with hopes of eventually reaching 1,000. Dollarama plans to add 50 locations in 2011, with at least one-third of that growth planned for Western Canada, where Dollar Giant didn't pose as much of a threat prior to its sale to Dollar Tree.
http://ca.news.yahoo.com/blogs/dail...-dominance-dollarama-20101222-083011-999.html