Despite the economic recession, discount stores have performed remarkably well.
The profit gains generated by those “dollar stores” as some are called, have been standouts in an otherwise sluggish retail sector.
In Canada, many of those outlets are called “Dollarama Stores.” They were owned by a Canadian who, unfortunately, sold out to a U.S. group. The counterparts south of the border also racked up big sales and profit gains.
Those dollar-discount stores sell everything, such as candies, many household products, linens, towels, cleaning products, toys and simple tools.
Contrary to popular belief, not every item costs only a dollar, but in Dollarama Stores 80 per cent of the articles sell for a dollar or less. All those items are generic, and they are far less expensive than they would be in a drug or hardware store.
The discount stores achieve low prices by buying in bulk, keeping costs low, and avoiding advertising, particularly on radio or television. Instead, some send out circulars every month throughout local communities.
Those dollar-discount stores are changing, in line with shifts in the economy. For several years they primarily concentrated on rural areas, but now, with a recession for many months across the nation, they are becoming common in our smaller cities, and, in a few exceptions, in larger ones too.
Many years ago “5 and 10” stores, usually a Woolworth’s by name, dotted our landscape, in previous decades they attracted many customers, and children were avid patrons because of the wide assortment of small cars and trucks, games, and other playthings.
Then, as we became more affluent the “5 and 10” chain no longer was popular.
The public was willing to spend more lavishly, and those discount stores, notably Woolworth’s, could not survive. The public then opted for better grade merchandise.
It should be noted that reflecting its importance, Woolworth’s was one component of the Dow Jones Industrial Index. Later Woolworth’s and similar discounters closed.
As a background, historically, retail sales have shown a direct relationship to changes in incomes. To capitalize on the expanding market in previous decades, retailing organizations enlarged the scope of their operations. Mass merchandising units were being developed, and discounters gave up their usual inexpensive line by offering higher-quality goods. That left a vacuum now being filled by dollar-discount stores that nowadays are able to capture a share of retail sales again.
Clearly, as the recession persists, discount stores will continue to thrive. “Thrift is in,” as saving has become fashionable, reminiscent of other times in a recession-ridden economy.
Whether or not this trend will continue into the next decade cannot be determined, but for now, certainly, it is a paramount factor in retailing.