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A dollar just doesn't go as far as it used to

Ivana Pelisek | Interrobang | News | September 29th, 2008



A loonie just won't cut it at Dollarama next year

We all love a great bargain. Getting bargains is at the top of most people's priority lists, especially at the $1 mark.

What would you say if the cost of shipping has been so high over the past year and a half that Dollarama had no choice but to raise their prices to possibly $2 on some products?

“It's an outrage! It was the only store of its kind that sold quality merchandise for $1,” admitted Lead Hand Finish Carpenter Miguel Cabral.

Dollar stores are said to be one of the fastest growing sectors in the retail industry today in Canada and in the United States.

Shipping costs are at an all time high, and soon 40 per cent of products sold at Dollarama stores will be affected.

For example, the price of a high cube container to ship goods from China is now about $5,000, compared to $4,000 back in 2004.

Recently price hikes have been evident in our country in most sectors, including gas stations, grocery stores and even taxi and bus fares; and now dollar stores will soon be affected.

Unlike many parts of the economy Dollarama is growing. This September, the company had 430 stores and they are planning on opening more nationwide. Locations vary in and around Canada and soon all stores will be feeling the pressure to hike prices.

The company, which is based in Montreal, has announced that their plans to begin introducing additional assortments of exciting new products in its stores will begin in the first quarter of 2009; which will be priced between $1 and $2. The store does make it a point in their statement to say that the vast majority of products in its stores will continue to be $1. It is the new selection of merchandise that will have consumers seeing a price hike; on products that have never been supplied by Dollarama. The new price hike will mainly affect giftware, toys, glassware and plastic products within Dollarama stores across Canada.

“I'm excited to announce the introduction, in the first quarter of 2009 of new product assortments priced between $1 and $2,” explained Chief Executive Officer of Dollarama Larry Rossy. “This new selection will average distinct merchandising strength-delivering tremendous value to our customers across a broad and exciting array of products, always at the lowest possible price points. It will also continue to enhance our customers' shopping experience.”

A press release clearly states that “while higher costs affect all retailers; discount giants like Wal-Mart can adjust prices to protect profit margins. Dollar stores, which by definition sell products at a fixed price, don't have that option.”

Some time ago, it was presumed that only lower income families used stores such as Dollarama to their advantage making the dollar store most ideal to its competitors. Today, the notion has changed completely, making the dollar store more widely acceptable; now stores are appearing to be more popular by the general public allowing for stores to be built in upper-middle-class societies than ever before.

It is not going to be long before consumers start seeing changes within Dollarama stores across Canada. It has been in the market for a few months now, and the changes will be in effect in early 2009.

At this present time, management at Dollarama stores were unable to comment due to not having been provided enough information regarding the final layout of what the general public will soon be seeing in their stores.
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