Great Canadian Dollar Store

Great Canadian Dollar Store was established in 1993 by founders Bud and Vivian Walker. Their vision was a network of bright, clean, friendly dollar stores – a place where you would want to take your mother or your grandchildren. Together with their family and energetic representatives across Canada, they succeeded in building a successful network of franchised stores.Great Canadian Dollar Stores sell a variety of products at really (really) good prices. We’ve carved out a market niche pricing most products between $1. 00 and $3. 00 and providing customers with Extreme Value®. Great Canadian Dollar Stores offer these great prices in bright, clean, tidy stores with a focus on customer service. Organizational Strengths and weaknesses Strengths –          In the highly contested retailing arena, many players compete for the lead.One would think that retail giants like Wal-Mart or Costco would dominate the market. However, in the past few years, it’s Dollar Stores like Great Canadian Dollar Store or Dollarama that have taken the advantage, with share gains significantly higher than the ones provided by other retailers (Supermarkets, Drugstores, Discounters, etc. ). The concept is one of the most differentiated within retail today, in my view.Dollar stores price their products 20% below supermarkets and drugstores, yet offer equal or better convenience –          The above mentioned strengths derive, amongst other factors, from the sector’s solid business proposal: low operation costs and prices for public, convenient locations, small-box format stores for a more comfortable shopping experience and a targeted customer base. All these elements compose an appealing scenario for investors, as growth opportunities continue to exist and arise. Weaknesses –          Dollar Stores? sales appear to be correlated to fuel prices.Increasing fuel prices imply not only greater operational costs, but also reduced personal disposable incomes amongst customers. The inability of Dollar Stores to transfer growing costs to prices (in order to remain competitive) implies that these oil expense increases would certainly diminish the profit margins. –           Apart from the obvious limits that financial obligations impose to free cash flow within the firm, additional restrictions derive from their loan agreements (i. e. proscription to sell assets, issue disqualified stock, acquire new debt, between many others), thus reducing even further the enterprise’s action margin.Opportunities and Threats Opportunities –            Growth potential in this industry is far from reaching its limit (currently, Dollar Stores only control about a 4% of total market share for groceries and other domestic supplies). Expert calculations reveal that over 15,000 Dollar Stores can still be introduced successfully in the market. The growth of disposable personal income over the past few years has provided, and is expected to continue to offer, another source of progress for the sector. Threats          The incursion of Wal-Mart and other retail giants into the small-box format retailing, along with aggressive expansion strategies implemented by other Dollar Store chains (principally, Great Canadian Dollar Store and Dollarama), generate fierce competition over the market. Store overlapping, although not substantial, is not negligible: overlapping (within a 3 mile radius) with other Dollar Stores reaches figures as high as 55%. The numbers when compared to supermarkets are somewhat lower, but still over 40%.


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