How Canada’s retailers discounted the rise of the dollar store

The above article analyzes the rapid growth of dollar stores in Canada. The economy is the main reason behind the rapid rise of dollar stores. The poor economic conditions cause shoppers to purchase cheaper goods. Dollar stores are reaping the poor economic conditions because they follow a cost-leadership strategy. This strategy allows them to attract customers who are looking for cheap prices.

Larger stores like Wal-Mart, Targets, and Canadian Tire, in a bid to attract customers, are beginning to further pursue the cost-leadership strategy –Canadian-Tire launched “dollar deals”. However, according to CIBC retail analyst, Perry Caicco, the larger stores have not been very successful in pursuing the dollar store strategy. A possible explanation for this could be that the dollar stores are more suited for pursuing the cost-leadership strategy, since they are incredibly specialized. For instance, they could have a more efficient distribution channels or more efficient manufacturing, both of which could be the result of greater experience with the cost-leadership strategy. Additionally, the larger retail store pursue many different strategies(they are “stuck in the middle”), which is not as effective as pursuing a single strategy. In that sense, dollar stores have an advantage because they follow a single strategy.