Dollarama Set To Add $3 Merchandise In August

As far as Canadian dollar stores go, Dollarama is at the top of the heap. According to a recent financial report, first quarter profits rose 14.9 per cent to $398.0 million in the first quarter this year, up from $346.3 million during the first quarter last year.

In 2009, the retailer made the move to add items costing up to $2, a move well received by consumers that now Dollarama is set to add $2.50 and $3 merchandise starting in August. This doesn't mean that the stuff they already sell will be increasing in price, only that brand new items will be added in each category.Lyla Redmanovich, Public Relations representative for Dollarama, said that it's not a question of $2 items suddenly becoming more expensive but merely an opportunity for Dollarama to bring in new items in each of the existing categories.

The decision to include items costing from $1.25 to $2 boosted traffic and sales and as financial results show, about 51 percent of the company's sales were from items costing more than a buck. However, according to Ms. Redmanovich, the move to include the $3 merchandise is not aimed at repeating that scenario.

"It's not expected to have the same impact on sales by any means," Ms. Redmanovich said, "it's about long-term growth. They haven't even fixed a target about how many (new items). It's really going to be based on opportunity, so they've already become excited about the stuff that they can sell at these new price points right now to kind of offer more value and it's going to be really slow. Just a few items here and there."


Marketing expert, Jeff Doucette, of Sales is Not Simple in Alberta, believes that the jump to $3 items is the next logical step for Dollarama after moving to multiple price points. "There are a lot of shoppers going through their stores already so expanding the types of merchandise to include those in the $3 range will help them grow their overall basket size and continue the impressive growth Dollarama has shown since going public in 2010," he said.

And Doucette also thinks it will give the dollar store giant some wiggle room to increase prices on some merchandise when inflation makes that move unavoidable. "I do not expect a bunch of mass price increases to $3," he said, "In essence, it is a growth-driven decision and I think that they will become a formidable competitor in this price range, which likely opens up new categories, including an expanded dry food assortment," suggests Doucette.

When I asked Ms. Redmanovich to give some examples of the new items, she laughed. "We weren't going to give any, it was kind of going to be a surprise but I did notice that he (CEO Larry Rossy) broke the rule. I think he mentioned something like baby sleepers, something that you couldn't sell at a $2 price point because the quality wouldn't be there," she said, referring to an interview Mr. Rossy gave to the Globe and Mail earlier this month.

And CFO Michael Ross also let a cat out of the bag when he admitted to a Toronto Star reporter that soccer balls would be one of the new items. As for the rest, we'll just have to wait and see.

"It's not like Dollarama is going to sell things they didn't sell before in the sense that you'll be shocked they'll be there, it's just rounding out each offering. So let's say in a sports offering, it's something that you can get a better quality so it's worth having it on shelves," Ms. Redmanovich said. "What's really important for them is that most of the items are going to stay at $1 because they want to stay true to the dollar store concept."


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Marlene Alexander is a freelance writer and Dollar Store Diva. She writes tips and tricks for finding and using the best that dollar stores have to offer.