Dollar stores have been in the market for quite a few years now, but it is not until recently that they have become a real threat to retailers. According to CIBC World Markets, Dollar store annual sales are rising by about 9 percent, which is more than three times the annual average in retail sector for the past five years. Other retailers, such as Canadian Tire and Wal-Mart are catching on to the trend of offering one dollar merchandises. These retailers are “counting on consumers coming in for a $1 item and at the same time purchasing other, more expensive, products.”
Canada’s Dollar Stores are finding success in targeting a broad industry with a low cost leadership strategy, according to Porter’s Generic Strategies. Dollar stores attract customers with their competitively low prices, expansive selection of products, convenience, and overall simplicity.
In addition, consumer preferences are now shifting in favour of dollar stores. Well-off shoppers who originally rejected the idea of purchasing dollar items are joining the middle class in shopping at expanding dollar store chains. The dollar stores’ leading position in low cost production is a sustainable strategy that has proven to be successful in today’s competitive market.