Dollarama SWOT and PESTLE Analysis

Strength

1. Leading Canadian value retail brand: Dollarama is a popular Canadian value retail brand known for its affordable and diverse product range. With a focus on delivering quality at low prices, the company maintains operational efficiency and constantly seeks to enhance customer experience. Dollarama, Canada's leading low-cost value retailer, Dollarama, a leading Canadian value retail brand, operated 1,486 stores across Canada as of January 29, 2023. With sales of $5.053 billion and EBITDA of $1.523 billion in the fiscal year ended January 29, 2023, Dollarama has experienced significant growth. Over the past three fiscal years, they opened 195 net new stores, expanded 47 stores, and relocated 20 stores, resulting in a 17.1% increase in their retail network by adding 2,264,543 square feet since February 3, 2020. Additionally, Dollarcity, operating in El Salvador, Guatemala, Colombia, and Peru, had a total of 440 stores as of December 31, 2022, and generated sales of US$737.5 million ($960.0 million) in its fiscal year ended December 31, 2022.

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Weakness

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Opportunity

1.  Expanding further into unpenetrated Canadian market: Dollarama has experienced significant growth in its store network, with a total of 1,486 stores in Canada as of January 29, 2023. The company aims to expand further within the Canadian market, targeting approximately 2,000 stores by 2031. Key operational advantages contributing to Dollarama's success include its extensive store presence, offering a wide variety of merchandise at compelling value, a multi-price point strategy, efficient store format, strong vendor network, direct sourcing from low-cost foreign vendors, in-house product development expertise, efficient warehousing and distribution operations, technology-driven initiatives, online store offerings, and partnerships with third-party delivery platforms.

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

2. Policies to combat climate change adopted by Canadian government: Canada established its first ever climate action plan in 2016 under the title of “Pan-Canadian Framework on Clean Growth and Climate Change” (PCF). This plan was made after taking into account the provinces, territories and indigenous people and to make the transition easy for them. In 2020, the Government of Canada launched a new plan which strengthened the old PCF plan called the “A Healthy Environment and a Healthy Economy”. This new plan is expected to improve on the existing measures for combating pollution and create more jobs to support the growth of the economy in a healthy way. The parliament passed the Canadian Net Zero Emissions Accountability Act in November 2020 to formalize Canada’s net-zero emissions by 2050 commitment. The Act lays down 5-year milestones and targets that must be achieved by the government and industries to meet the 2050 goal. The cost of environmental compliance for Dollarama is expected to rise with the introduction of these new laws. Moreover, the government has also placed upper limits on emissions, along with higher penalties for failing to comply with the rules.

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