From its roots as a single store in Montreal opened in 1910 by Salim Rossy, Dollarama now has nearly 1,400 stories across Canada with Rossy’s great grandson Neil as the CEO.From its roots as a single store in Montreal opened in 1910 by Salim Rossy, Dollarama now has nearly 1,400 stories across Canada with Rossy’s great grandson Neil as the CEO.

Dangerous financial information for us may be excellent news for low cost retailers as individuals pinch pennies. However not all greenback shops are created equal


Between alarmingly-high inflation and a rising variety of economists predicting Canada’s headed for a recession, most of us are attempting to save lots of each penny we will today.

That’s excellent news for greenback shops, together with Dollarama and Greenback Tree.

“That is actually the best time for low cost retailers to do nicely,” stated Lisa Hutcheson, managing director at retail consultancy J.C. Williams Group.

However whereas all low cost retailers sometimes see an increase in site visitors throughout troubled financial occasions, that doesn’t imply they’re all created equal.

Within the U.S., the place Dollarama doesn’t function, Greenback Tree has roughly 16,000 shops.

In Canada, Montreal-based Dollarama has a wider attain, with 1,400 shops throughout the nation, in comparison with U.S.-based Greenback Tree, which has simply 240 Canadian shops (126 of that are in Ontario). Dollarama additionally has formidable growth plans, and final yr introduced it intends to open one other 2,000 shops throughout Canada within the subsequent decade.

That’s a good distance from its roots as a single retailer in Montreal in 1910 owned by Salim Rossy. By 1973, the corporate had grown to twenty shops, and was run by Salim’s grandson Larry.

In 1992, Larry launched the Dollarama model with a single low cost retailer, earlier than changing the remainder of the corporate’s shops to the identical format. Larry’s son Neil is now the corporate’s CEO.

However measurement isn’t all that issues. Hutcheson likes Dollarama’s mixture of suburban and metropolis areas, and says its provide chain has confirmed to be resilient throughout a time when many retailers have struggled.

“They’re very well-stocked, they usually at all times do an important job with seasonal merchandise,” stated Hutcheson, who additionally says Dollarama presents a lot better customer support than many greenback shops.

“You’ll be able to often discover workers that will help you, which isn’t at all times the case in different discounters,” Hutcheson stated.

Greenback Tree

From an acorn of a single Virginia retailer opened in 1953, a mighty Greenback Tree has grown.

The corporate, which remains to be headquartered in Chesapeake, Va., now has greater than 16,000 shops throughout the U.S. and Canada. It’s additionally price a whopping $31.68 billion (U.S.) in market cap.

However an enormous scale doesn’t imply Greenback Tree is massively profitable.

For one factor, says Hutcheson, its mixture of shops, even within the U.S., are usually closely targeted in suburban areas or smaller city centres. Lacking out giant swathes of huge cities means Greenback Tree is giving up a number of potential income.

“Their shops simply aren’t as interesting as Dollarama’s,” stated Hutcheson.

As a U.S.-based firm, Greenback Tree can be doing battle in one of the vital highly-competitive retail markets on the planet. That’s maybe one cause why the corporate has a comparatively paltry revenue margin on 5.77 per cent.

“Eight to 12 per cent is an effective margin for a retailer. Below six isn’t very a lot,” stated Hutcheson.

Activist investor Mantle Ridge evidently didn’t assume so both; earlier this yr, beneath strain from Mantle Ridge, Greenback Tree revamped its board, putting in Richard Dreiling, ex-CEO of rival Greenback Normal, as government chair.

Backside line

Whereas it’s costlier than its bigger rival (as measured by worth to earnings ratio), Dollarama is a greater guess.

“Dollarama is a really well-run firm. And a 16.1 per cent revenue margin is superb,” stated Hutcheson.


Conversations are opinions of our readers and are topic to the Code of Conduct. The Star doesn’t endorse these opinions.

Extra from The Star & Companions