Cheaper than Walmart and Amazon

As inflation weighs heavily on household budgets, one Quebec retailer is offering prices “40% to 50% cheaper than Walmart and Amazon,” according to a survey conducted by Desjardins. Who is it ? Dollarama.

Posted at 6:30am

Desjardins came to this conclusion by analyzing the prices of 221 items sold in all categories except groceries in July. In his opinion, the Montreal-based company maintains an “attractive price difference” with the two American giants known for their low prices. That’s the least we can say.

Significant differences were also found between Dollarama and Canadian Tire in the two gears studied. Cleaning products (-48%) and seasonal, garden and outdoor items (-65%) are significantly cheaper in Dollarama stores.

About 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: Desjardins estimates its own brands, which take up about 70% of shelf space.

“In most cases, we believe that quality is comparable to the big brands and reflects the retailer’s ability to leverage its strong supplier relationships to source high-quality products at attractive prices, a key competitive advantage,” writes analyst Chris Li.

However, Desjardins agrees, and with good reason, that the brand is important for certain products, particularly in the health and beauty category. However, you can easily find the same brands of shampoo, body or hand soap and toothpaste at Dollarama as you would at the pharmacy. The same applies to the food sector, which has grown steadily in recent years.

On Wednesday, Statistics Canada told us that the price of groceries rose 8.8% in June compared to the same month in 2021. As a result, many households are looking for bargains and alternatives, which in particular explains the popularity of private label, as I wrote in June.

In these circumstances, is it financially beneficial to stop by Dollarama to buy quinoa, Cheerios, cookies, or French ketchup? Desjardins asked the question, although the result of his analysis of 56 foods was not included in his overall conclusion 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. Due to the strong presence of national brands, the gaps are smaller than in the other aisles.

Statistics still show that Dollarama can be a worthwhile trip to complete your shopping basket. An observation the Narcity website also makes in a number of texts certifying bargains, photos of competitors’ prices in support.

I’m already hearing comments about the food options at $1 stores and the fact that price shouldn’t be the only selection criteria.

Well, I insist: no one claims that you can find all the vitamins you need for a healthy diet there and that the olive oil is of the same quality as that sold in specialist shops seven times more expensive. . There are also plenty of urban legends about the health and safety of the products sold there, but it turns out Dollarama doesn’t have any more recalls than anywhere else.

The Matane-born retailer is clearly not in an airtight bubble protected from a surge in inflation. The costs are rising and that is reflected in the shelves.

Desjardins notes that in all categories except kitchenware, price differentials are narrowing in Dollarama’s favor due to an average price increase of 6% since November.

In its sample of 277 regularly reviewed products, including groceries, 97 sell for more. And in April 25 were more expensive than in February. Chris Li speaks of a catch-up race.

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 comparisons, we swear by that. Furthermore, the analysis is based on the regular price of the products and additionally takes into account the differences in quantity and size of the products.

Still, it’s impressive that Dollarama can beat Walmart and Amazon on the low-price front. Investors have long recognized the Quebec company’s tight and efficient management. While this drives the share price higher (+29% year-on-year), the Rossy family’s business model also allows it to maintain favorable retail prices.

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