How Dollarama Became The Retail Champion Of Knock-Offs
At a time when countless retail outlets are liquidating and closing up shop, Dollarama has steadily become one of Canada’s most successful retailers.
With its green and yellow signage now a staple in neighbourhoods of varying demographics across the country, the dollar store chain is currently valued at an impressive $3-billion.
In cities like Toronto and Vancouver, where sky-high living costs mean pavement-pounders try to save cash anyway they can, a visit to the dollar store for everything from cleaning products to snacks makes perfect sense – it shaves dozens of dollars off your household basics tab.
The key to Dollarama’s success, however, may have more to do with being a copycat than with a consumer desire to save a dollar.
As Meagan Campbell highlights in a MacLeans article, the key to dollar store chain’s success comes from selling cheap knock-offs of more expensive brands – from pencils and liquid soap to toys.
The thing about these knock-offs is that they are pretty much carbon copies of the real deals, with similar looks – right down to the colour of the packaging and its accompanying text.
Of course, there are some differences, but they are so subtle that some customers may not at first glance realize the difference between the knock-off and the brand they’ve known and loved for years.
While they may look similar, however, not all imitations stack up to their brand name counterparts.
A report from Good Housekeeping from a few years back compared four knock-off labels to four of their brand name counterparts and found that the former – brands that included Windex, Lubriderm, Dawn, and Tide – were better than their generic counterparts. Yet, the counterparts still fly off store shelves.
As it turns out, the knock-off game – though not without its occasional lawsuits – is a hugely lucrative one, as Dollarama continues to rake in the cash. That’s all thanks to the higher profit margin that comes with selling products at a fraction of the cost of the real thing.
For the most part, the retailer is getting away with it, thanks, in part, to some of the country’s best lawyers.
That’s not to say that the company hasn’t found itself in hot water before because of its imitation game. Brands like Nike and Umbra have launched lawsuits against the chain.
Such incidences are rare, considering the blatant knock-offs found within the isles of Dollarama at any given time.
How do they get away with it? Apparently, by walking a fine line. According to MacLeans, to prove that the company infringed on a trademark or a patent, it must be shown that a typical “casual customer in a hurry” could accidentally grab an item – whether a chocolate bar or a box of pencils – believing that the item was the name brand version.
Although a supposed “crackdown” on knock-offs in 2015 that meant to update counterfeit laws, Canadian customs officers have been lax compared to our counterparts south of the border.
Regardless of its dodging of the laws, critics claim the packaging is too similar to the name brand and that the company is therefore duping its customers.
While undoubtedly lucrative, knock-offs aren’t the only key to Dollarama’s success.
The company is able to keep prices low – even for name brand items that retail for more elsewhere – because it keeps its overhead costs at a minimum, forgoing advertising, and keeping stores as basic as possible.
Clearly, their strategy is working; there are currently over 1000 Dollarama locations in Canada and a stock market cap of over $13 billion.
Its founders, the Rossy family, are among Canada’s richest people.
As the costs of living show no signs of slowing, it’s reasonable to assume that Canadians won’t stop shopping at Dollarama anytime soon – either for knock-offs or basic staples.
Featured Image: Instagram/@joe_montr
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