Canadians are increasingly shopping at discount stores like Dollarama as a cost-of-living crisis changes how we spend money.
The discount chain’s quarterly numbers have consistently shown a boost in sales for a while, and percentage-wise, that boost is larger than that of giants like Loblaw.
Dollarama reported its second-quarter earnings on Wednesday morning. Sales increased 7.4% to $1,563.4 million compared to the first quarter; Q1 was already impressive, with sales rising 8.6%. In comparison, the more expensive Loblaw’s retail sales in 2024 were up 4.4% in Q1 and 1.4% in Q2.
In addition, several new stores have opened each quarter: 18 in Q1, 14 in Q2, and 21 in the final quarter of the last fiscal year. The chain has been opening 65 stores on average annually for the last seven years.
Operating income — a company’s adjusted revenue after all operational expenses and depreciation are subtracted — has also increased throughout the last three quarters despite the new store additions, likely because Dollarama generally keeps operational expenses slim.
Q4 of the last fiscal year boasted a 21.4% spike in operating income, and this year’s Q1 and Q2 have also seen 16% and 15.3% spikes, respectively.
For reference, retail sales in Canada have been up and down this year but have decreased overall since January.
Latest retail sales numbers in billions (Statistics Canada)
The 2024 edition of Canada’s food price report from Dalhousie University also noted that the expected food expenditure per capita in Canada was lower in 2023 than predicted, meaning, overall, people spent way less money on food across groups.
Consumables alone make up 46% of Dollarama products.
Dalhousie University
A lean business model
In September 2023, Sylvain Charlebois, director of the agri-food analytics lab at Dalhousie University, told Daily Hive that Dollarama’s rising popularity can be tied to Canadians’ “looking for options to save money.”
Earlier that year, the chain hit a huge milestone of opening 1,500 stores. Charlebois said that this was “a huge network” of locations where people knew they could find deals.
“[Dollarama’s] business model is very lean. They keep things tight with operational costs. And so that’s why typically when Dollarama sees more traffic, they see more profits,” he said.
Now, Dollarama has 1,583 locations and aims to have 2,000 stores by 2031. The investment in new Dollarama stores averages $920,000 per store, including leasehold improvements, fixtures, and inventory. Within the first two years, new stores see sales averaging $3.2 million and pay for themselves.
The brand boasts accessibility, with 85% of Canadian households having a store within 10 kilometres. It was named among the top 10 most reputable companies in Canada.
Do you shop at Dollarama? What do you think about the chain’s prices? Let us know in the comments or email us at [email protected].
With files from Daily Hive’s Simran Singh