Tue. Feb 20th, 2024

The rising cost of food and an overall hike in prices everywhere is prompting more shoppers to turn to retail chain stores like Dollarama to save money on groceries.

That is certainly the case for the Gencarelli family from London, Ont. who have five children.

“Whatever we can buy here that’s a buck or two cheaper is a buck or two more in my pocket for my kids later on,” said Anastasia Gencarelli.

Her family has been grocery shopping at the Dollarama for the last five years and she said it’s more often becoming their first stop, unless they need frozen items or produce.

It’s a big reason why Dollarama Inc. saw a profit boost this year of 23 per cent from a year earlier, and opened 21 new stores in the first quarter of the year.

“The days of going to a grocery store and getting all of your groceries there, I find, are long gone,” said Mario Gencarelli.

“Like when I was a kid, I remember going with my mom to the grocery store and getting everything there, but now you have to price-match everything.”

He added that he knows some families who do the majority of their grocery shopping at dollar stores because they can’t afford otherwise.

Emile Wamsteker/Bloomberg
Retail stores like Dollarama and the Dollar Tree are offering Canadians cheap food options outside of more traditional grocery stores. (Emile Wamsteker/Bloomberg)

“I think it’s a real phenomenon,” said Mark Cleveland, who is the Dancap private equity chair in consumer behaviour at Western University.

He said that the proportion of household income spent on food continues to increase, adding that the average family spends about $16,000 a year on food — which is $1000 more than the year before.

While big-box retail stores like Costco might offer the best deals on food, it is difficult to not spend a significant amount of money when shopping there, so retail stores like Dollarama step in, he said.

“Not everybody can afford such a huge cost outlay on a single trip. When you walk into a dollar store, you can grab inexpensive food items, you know, single serving meal portions and stuff like that for just a few dollars,” said Cleveland.

Why the lower prices? 

Experts also note that dollar stores don’t have perishables, dairy or any food items that require refrigeration or freezing, which would drive up prices.

Dollarama profits soar as cash-strapped shoppers search for deals

Sales at discount chain Dollarama have jumped by close to 17 per cent as financially strapped Canadians search for bargains amid high inflation. But the bargain store chain hasn’t been immune to inflation either and is facing some stiff competition from rivals.

Carolyn Augustynowicz , also from London, said she’s had to carefully pick the places she buys food from based on the lowest prices she can find — which includes Dollarama to grab snacks for her grandchildren.

“I don’t even know how the seniors and some people that are much less well off than I am are able to afford anything. It’s just, it’s terrible,” said Augustynowicz.

She added that her income is shrinking as she ages and believes that she’ll need to do more shopping outside regular grocery stores unless there is a significant shift in costs.

High cost of living will keep the trend alive

Dollarama is increasing prices, with some items now reaching the $5 mark, but Cleveland said that will allow the store to offer higher quality goods and a wider selection.

This could pull consumers already making purchases at the store further away from shopping at grocery stores, he said.

“Consumers have changed their buying habits. It might be hard to entice them back, I think,” said Cleveland.

He also added that this trend will continue as long as Canadians are experiencing financial pressures that outpace their income.

“Today there’s less of a stigma against shopping at discount stores like Dollarama. It does appeal to a broad swath of Canadians. Maybe not the top income earners, but I think you’ll find the average customer is probably middle class because everybody’s feeling the budget crunch.”

carolyn augustynowicz
Carloyn Augustynowicz shops at places like Dollarama to buy snacks for her grandchildren. She finds prices at the grocery store unreasonable while retail chains offer better deals. (Mike Lacasse/CBC News)

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