Dollarama | More food sold, same shelf space

Dollarama clearly seems to have become the destination of choice for many consumers who purchase certain foods and household products there. But despite an increase in sales in all categories, including food, the number of aisles devoted to groceries has not increased in stores and is likely to remain unchanged.

“We are satisfied with the space occupied by each category in store,” said Neil Rossy, president and CEO of Dollarama, during a conference with financial analysts following the presentation of the results of the second fiscal 2024 quarter ended July 30.

The Quebec retailer’s sales increased by 19.6% and those of comparable stores saw an increase of 15.5%. “ [Cette augmentation] is mainly attributable to the increase in sales for all of the Company’s product categories, in particular to demand which remains higher than in the past for everyday consumer products”, we can read in the press release announcing the results financial officers of Dollarama. Food and household products fall into this latter category.

“When you see slight changes in sales trends, they are more related to volume than a change in our offering,” Rossy added. I know it’s the flavor of the month with all these deals on YouTube about groceries and Dollarama. The reality is that we have not expanded our food section [en magasin]. It remains a small part of our offer. »

Numerous articles in the media have reported the deals to be found for consumers who buy biscuits, cereals or other cans from the retailer with the yellow and green brand. The phenomenon even had an echo as far as Quebec where, recently, the co-spokesperson for Québec solidaire, Gabriel Nadeau-Dubois, challenged Prime Minister François Legault, accusing him of being disconnected from reality because he did not “often meet people who do their grocery shopping at Dollarama.”

However, Maryse Côté-Hamel, assistant professor of consumer sciences at Laval University, recalls that in fact, the food offering has not increased much at Dollarama over the last two years. She underlines at the same time that it is more the behavior of the consumer, more concerned with their budget, which has changed.

A serious competitor?

But despite this increase in popularity for Dollarama’s grocery aisles, the brand is not likely to overshadow large supermarkets, believes M^me Côté-Hamel. “It is not a perfect competitor because it does not offer all the products. Apart from bread, there are very few perishable products. »

“For consumers who want to buy fresh fruit and vegetables, eggs, milk, meat and cheese, they certainly have no choice but to shop at other brands. »

She also emphasizes that when it comes to groceries, the Quebec brand is not suitable for everyone, since it generally does not offer large formats, often popular with families.

$5 Items

Furthermore, the increased traffic, a 12.9% increase in the number of transactions as well as the increase in the average amount per transaction which increased by 2.3% prove that the introduction of $5 items n has not cooled the ardor of consumers. “Anyway, everything has increased everywhere,” recalls Maryse Côté-Hamel. They have increased, but so have the others, so consumers who have no choice in purchasing goods will still continue to turn to Dollarama. It remains, for several products, more affordable than the competition. »

Results

The retailer revealed a net profit of 245.8 million, compared to a profit of 193.5 million in the same period last year. Adjusted earnings per share were 86 cents. Revenues, for their part, rose by almost 19.6% to 1.46 billion. Dollarama had 1,525 stores at the end of its latest quarter, up from 1,444 a year earlier.

With The Canadian Press