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Project Dollarama

2 threat of substitute products or services the

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2. Threat of substitute products or services The existence of a substitute for the service Dollarama may encourage its customers to switch to alternatives. What we mean by the service Dollarama is currently offering is that Dollarama is a retail store that offers various quality goods at a low price to its customers. Thus, their focus is on providing both low-cost and differentiated products which stimulate their success in this market. Substitutes include other retail stores that may offer products at a slightly higher price but with enhanced quality such as Walmart, Costco and Target. Otherwise, online auction sites may offer a much greater variety of products at a lower cost. As such, the ease of substitution and the number of substitutions available on the market may motivate the clients to switch to another competitor. We can state that Dollarama "We are - the relationship you can count on" - Chiu & Weisserman, LLP
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Chiu & Weisserman LLP needs to properly manage their strategy so as to ensure they don’t lose their current competitive advantage because there is a great number of alternative choices that are made available to the buyers. 3. Intensity of competitive rivalry In North America, many new chains of discounted retail stores have been opened, for example, Dollar Store, Great Canadian and Dollar Tree. When we evaluate the attractiveness of the industry, we look for the competitive advantage through innovation of a firm, the level of advertising expenses and the competition between online and offline players. If we analyze Dollar Store, we will see that it has established over 140 stores across Canada since its inception in 1998. As it has been considerably increasing its market reach across Canada; they are considered a direct competitor to Dollarama. On the other hand, Great Canadian Dollar stores are extending their reach in eastern Canada. Additionally, they are very present in the community by offering both charitable and communal support. At last, Dollar Tree is a growing chain of discounted retail stores in the United States. It operates over 4400 retail stores in 48 states of the US and in Canada. Thus, they are ready to expand their customer base into Canada. Also, Dollar Tree offers a much broader range of products compared to Dollarama, for example frozen foods and dairy items. As such, there is a very high competition in the discounted retail stores industry. However, in such a high competitive environment, Dollarama is still able to open over 150 stores in the past four years only. Also, considering their stock trend, their share price had increased from 25$ to 56.90$ per share in only one year. That represents a growth of 128% in a single year. We can conclude that their shares are in demand in our current market environment. Thus, we can assess that they are very well positioned in today’s competitive environment.
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