While inflation weighs heavily on household budgets, a Quebec retailer offers prices “40 to 50% cheaper than Walmart and Amazon,” a Desjardins survey finds. Who is it about ? dollarama.
Posted yesterday at 6:30 am
Desjardins reached this conclusion by analyzing the prices of 221 items sold in all categories except food in July. In his opinion, the Montreal company maintains an “attractive price gap” with the two American giants known for their low prices. It is the least we can say.
Significant differences were also observed between Dollarama and Canadian Tire in the two analyzed aisles. Cleaning products (-48%) and seasonal, garden and outdoor items (-65%) are noticeably cheaper at Dollarama stores.
Some fifty health and beauty items were compared to those sold at Shoppers Drug Mart (Pharmaprix in Quebec) and the difference amounts to 60%.
The secret behind Dollarama’s low prices: Its private labels, which take up about 70% of shelf space, Desjardins estimates.
“In most cases, we believe the quality is on par with the big brands and reflects the retailer’s ability to leverage their strong supplier relationships to source good quality products at attractive prices, a key competitive advantage,” writes analyst Chris Li.
However, Desjardins agrees, and rightly so, that branding is important for certain products, particularly in the health and beauty category. That said, you can easily find the same brands of shampoo, body or hand soap, and toothpaste at Dollarama as you can at the drugstore. The same goes for the food aisle, which has grown steadily in recent years.
On Wednesday, Statistics Canada informed us that the price of food increased by 8.8% in June, compared to the same month in 2021. Therefore, many households are looking for bargains and replacement options, which explains in particular the popularity of private labels, as I wrote. in June.
Under these circumstances, is it financially advantageous to visit Dollarama for quinoa, Cheerios, cookies, or French ketchup? Desjardins asked the question, even if his 56-food test result was not included in his overall conclusions to “better highlight Dollarama’s strong value proposition” in the other categories.
It shows that Dollarama is 2.4% cheaper than Walmart, 16.1% cheaper than Amazon, and 11.1% cheaper than No Frills, the equivalent of Maxi in English Canada. The gaps are smaller than in the other aisles due to the strong presence of national brands.
Statistics still show that a detour to Dollarama to fill out your shopping basket can be worth it. An observation that the Narcity site also elaborates in a series of texts that attest to the bargains, photos of the prices of the competitors in support.
I’m already hearing the buzz about “$1” food deals in stores, and the fact that price shouldn’t be the only selection criteria.
So I insist: no one claims that all the necessary vitamins for a healthy diet can be found there and that olive oil is of the same quality as organic, which is sold seven times more expensive in a specialized store. . There are also many urban legends about the health and safety of the products sold there, but it turns out that there are no more recalls in Dollarama than in other places.
The Matane-born retailer is obviously not in an airtight bubble protected from any inflationary surge. Their costs are going up and that is reflected on the shelves.
Desjardins notes that in all categories except cookware, the price differentials in Dollarama’s favor are eroding due to an average price increase of 6% since November.
In its regularly reviewed sample of 277 products, which includes food, 97 sell for more. And in April, 25 were more expensive than in February. Chris Li talks about catching up.
Such a comparison exercise is obviously not perfect, and Desjardins is aware of this. But every effort has been made to find the best possible comparables, we swear. In addition, the analysis is based on the regular price of the products in addition to taking into account the differences in quantity and size of the products.
It’s still impressive that Dollarama manages to beat out Walmart and Amazon in the low price arena. Investors have long recognized the strict and efficient management of the Quebec company. While this drives up the share price (+29% over the past year), the Rossy family’s business model also helps maintain advantageous retail prices.
#Cheaper #Walmart #Amazon