Canada’s retailers discounted the rise of the dollar store?
The country’s fasting growing sector in retailing, the simple dollar stores, are forcing the mainstream competitors, including Wal-Mart Canada Corp. and Canadian Tire Corp., to increase their dollar promotions. Dollar stores have been an ongoing threat for the many years in the industry, but today, they are becoming a bigger force as Canadian market leader Dollarama Inc. is expanding aggressively and U.S. rival Dollar Tree Stores Inc. ramps up its operations here after having scooped up a domestic chain. The dollar stores have been attracting customers with its cheap prices, convenience, and the overall simple style. On the other hand, Canadian Tire and Wal-mart are trying to retaliate by introducing dollar programs, for example Canadian Tire’s “dollar deal”. The big players are hoping that the consumers will come in for a $1 item and at the same time purchasing other, more expensive, products.
The biggest attraction of the “dollar stores” is the low cost products, which on the other hand, the mainstream retailers sells high-quality goods. When Canadian Tire and Wal-Mart begin to match the low costs, they will need to reduce the product quality of the items. Instead of filling the aisles with merchandise with a dollar price tag, Canadian Tire should instead explain to the customers the differences, and let them make the decision of whether to choose quality or cost. For example, Canadian Tire should only provide high end and top notch automotive accessories, instead of providing low quality items. The migration towards the same dollar stores’ style has definitely lowered the product quality at the high-end department stores.
I think it is bad that every retailers are chasing the same consumer. In return, it would only create a boring and homogenous retailing experience for the customers.