With inflation squeezing budgets, popular chains like Dollarama and Dollar Tree are becoming the new retail powerhouse. Here’s how brands can build the right strategy to tap into this booming market.
By Carrie Baker, Mars UnitedSM Commerce
The retail landscape in Canada is undergoing a significant transformation, and at the heart of this shift are dollar store chains like Dollarama and Dollar Tree. Once thought of merely as places to pick up inexpensive trinkets or seasonal items, these retailers have evolved into key players in the daily shopping habits of consumers: More than 1 in 5 Canadians purchase their groceries at dollar stores, according to Coresight Research.
For consumer packaged goods brands, this shift presents a compelling opportunity to connect with a rapidly growing and increasingly price-conscious customer base.
Why are dollar stores gaining influence and relevance with Canadian shoppers?
As inflation continues to put pressure on Canadian households, discretionary spending is shrinking, and consumers are looking for ways to stretch their budgets. By offering everything from toiletries and snacks to cleaning supplies and seasonal goods, dollar stores are stepping in to fulfill that need. What once was an afterthought in retail strategies is now a must-consider channel for brands needing to reach budget-conscious shoppers.
The numbers tell the story: Dollarama, Canada’s largest dollar chain, operates more than 1,500 locations across the country and generates over $5.8 billion in annual sales. With 85% of Canadians living within 10 kilometers of a Dollarama location (according to the company’s estimates), it’s clear that dollar stores are deeply embedded in the fabric of Canadian retail.
The rise in popularly of dollar stores is not just a result of their affordability but also their convenience. A recent Ipsos/CIBC poll found that 77% of Canadians are seeking ways to change their spending habits. And Dalhousie University’s latest Canadian Food Sentiment Index finds that 48% are more often seeking out sales and discounts when grocery shopping.
For these busy Canadians, dollar stores offer a quick shopping experience where they can pick up everything from basic groceries to household items without having to navigate the often-complex world of sales, coupons, and multiple-store trips. It’s a model that speaks directly to a growing desire for both savings and simplicity.
How are dollar chains influencing basket growth?
There’s more to the appeal of dollar stores than just low prices and convenient locations. From the layout of the store to the seasonal product assortment, it’s easy for shoppers to add a few impulse items to their cart — which is a key factor in making dollar chains attractive for CPG brands. Products can be strategically placed in high-traffic areas like checkout counters and endcap displays, making it easy for shoppers to grab extra, unplanned items as they move through the store.
What’s more, seasonal and novelty items rotate regularly into the mix, ensuring that the shopping experience feels fresh and exciting each time a customer visits. So what might start as a quick trip for toilet paper can turn into an unplanned purchase of snacks, kitchen gadgets, or household essentials. This tendency toward impulse buying presents a massive opportunity for CPG brands, especially those offering small, affordable products like crayons, gum, or batteries that can easily be added to a shopper’s cart without a second thought.
What kind of CPG strategies will win shopper consideration and conversion?
Dollar stores provide a unique space for CPG brands to get creative with packaging, product sizes, and pricing. Smaller, value-oriented versions of popular products — think travel-size toiletries, bite-sized snacks, or compact cleaning supplies — can be more appealing to shoppers focused on getting more for their money. It’s not just about offering cheaper prices; it’s about giving these consumers quality products at an unbeatable price. brands that can strike the right balance of affordability and quality have a real opportunity to build lasting connections with dollar store shoppers.
To succeed in this environment, brands must adopt marketing strategies that speak directly to the dollar-store shopper.
Here are two important pieces of a winning strategy:
- Craft messages that focus on value, savings, and convenience. In-store signage and packaging should highlight how customers are getting the same quality for less. Price-sensitive shoppers are likely to respond best to straightforward, no-nonsense communication about what they’re getting and why it’s a great deal.
- Work with retailers to place your products in high-traffic areas. This is where impulse buying is most likely to happen. Strategic placement on endcaps, near checkouts, or in seasonal displays can make a huge difference, especially during key shopping periods like back-to-school or the holidays, when shoppers are even more open to adding a few extra items to the basket.
What does the future hold for dollar chains and the Canadian shopper?
Dollar stores have moved beyond being a passing fad to become a lasting, central force in Canadian retail, with growth that shows no signs of slowing. As Canadians increasingly seek ways to stretch their budgets, the demand for affordable, convenient shopping continues to drive the rise of this channel. We expect dollar stores to capture a growing share of the retail market in the coming years, fueled by this shift toward cost-conscious, convenience-driven shopping.
For CPG brands, this represents a unique opportunity to tap into a large and expanding consumer base — one that is actively looking for value and savings. By focusing on value-driven pricing, strategic product placement, and targeted promotions, brands can connect with this growing shopper segment and unlock significant growth opportunities in the dollar store channel.
Download our Canadian Retail Media Report Card to find key insights on other leading retailers in Canada that will help shape your commerce marketing strategy this upcoming year.
About the Author
Carrie Baker is Senior Manager, Client Leadership on the Henkel Canada account at Mars United Commerce. She has over 10 years of strategic marketing experience, including seven within the shopper marketing space.
