Dollarama Inc

Dollarama Inc. (“Dollarama” or the “Corporation” or “Company”) is Canada’s leading dollar store operator selling consumer products, general merchandise and seasonal goods at fixed retail prices of up to $2. 00. The company has made its success by offering consumers consistent and good quality merchandise at value prices for over twenty years. The company’s leading market position is attributed to a strong supplier network, a diverse merchandise mix, and convenient store locations.

Despite its successes, Dollarama faces many competitive forces from rival companies, and new entrants entering the industry since there are no significant economic and regulatory barriers in the dollar store business. Should the company fail to respond effectively to these competitive pressures, it could adversely affect their business. Therefore Dollarama needs a strategy to confront these and other challenges.

One strategy Dollarama can adopt to maintain a competitive advantage in the industry is to expand its store network geographically into new markets; second the company can widen its consumable food product line by increasing price points to $5. 00; and third, it can increase its advertising and marketing activities. Keeping in line with Dollarama’s vision, the recommended strategy for the company is to continually expand its store network into new and unsaturated Canadian markets.

This strategy would leverage Dollarama’s strong brand name, leading position in the market, and established supplier and distribution networks. To implement this strategy, a geographical structure should be adopted where some specialized functional groups remain centralized at the corporate level, while other functional resources such as marketing and human resources are decentralized allowing each division to tailor its policies and practices to fit the specific region in which it serves. Introduction Dollarama is Canada’s largest operator of dollars stores with close to 700 retail stores across the county.

Although, the company has grown into a successful and profitable business since its inception in 1992, it continually faces challenges in maintaining its lead in the industry. As a result, the company needs to have a clear and appropriate strategy to guide it over the next decade in order to fulfill its mission in maintaining a competitive advantage over its competitors This report begins with a brief history of the company and its industry, and a discussion of its current situation and mandate.

Secondly, its external environment, specifically the impacts of competitive and macro environmental forces are reviewed using the SWOT and Porter’s Five Forces Model. Next, the company’s strengths and weaknesses are analyzed in its internal environment, followed by three strategic options the company can adopt. Lastly, one strategy is recommended with a discussion of the implementation issues. Information on this report has been obtained from Dollarama’s 2011 annual report and from industry data retrieved from various financial sources such as Yahoo Finance and Reuters, and other third party websites and online articles.

Company Overview Dollarama Inc. was founded by Larry Rossy (CEO) in 1992 when he transitioned a third generation family retail business to a single price point “dollar store”. The first Dollarama store opened in Matane, Quebec offering a moderate selection of valued priced items for only $1. 00. After only two decades, the Company has successfully expanded its stores in every province across the country, and is now headquartered in Montreal, Quebec. Today, Dollarama has about 690 corporately-owned stores across Canada and carries more than 4,000 quality everyday products.