Posted By Diya Selva on 12/31/2017 in Business

The New Player in Canada - Miniso. Threat to Dollarama?

The New Player in Canada - Miniso. Threat to Dollarama?

Ever since Miniso entered the Canadian dollar store market 7 months ago, there have been predictions of possible industry disruption by the Japanese/Chinese retailer. Analysts have predicted a negative impact for existing dollar store market players, including Dollar Tree and Dollorama, but especially so on the latter, which happens to have the largest market share in the country.

Miniso is already an international brand with thousands of stores across the world. It’s currently popular in its home country of China, where it boasts up to 1000 stores countrywide. Miniso refers to itself as a lifestyle brand, offering novelty products that are refreshed every 7 days at dollar store prices. The company has launched 6 locations in Canada so far, and plans to expand to over 50 stores by 2018’s end. Some analysts already believe that an industry shakeup is imminent for the dollar store industry in Canada, and that Miniso is going to be the brand that sets the ball in motion.

Experts have given a number of reasons for forecasting Miniso’s meteoric growth in the industry; most highlight its lean operational model, its unique product and store designs and its low price range as its main selling points. The latter stands out more because of the quality of Miniso’s product collection, which has been praised despite being sourced from China. Experts see this ‘low price for trendy products’ strategy as a winner for the brand, seeing as its biggest competitor Dollorama doesn’t boast the same quality of products

Still, there are enough reasons to sweep the disruption talks under the rug for now. Miniso does not present a risk that big for Dollorama, at least not in its present newbie stage. Dollorama CEO Neil Rossy seems to think so too. He recently revealed his opinion to a Canadian publication on the issue, stating, ‘’We consider them a pure China-based, Chinese import dollar store.”, adding, “We will consider them competition as we consider all the other retailers in Canada as competition.”

On all fronts, Dollorama has no reason to worry about Miniso. The company is currently enjoying a run of strong quarterly earnings results, and has seen 40% growth in one year alone. Pitching Miniso against Dolorama in their current stages is in many ways setting up an unfair fight with expectations of a miracle victory. For one, Miniso’s 6 locations and upcoming 50 are no match for Dollorama’s 1135 locations across Canada, considering customer convenience. Dollorama already has a well-developed supply chain network in place, made up of various warehouses and distributors based in Quebec. 

Miniso, on the other hand is still fresh in Canada, and hasn’t yet developed its infrastructure to the required level. It currently has a wider selection of products than Miniso, which is a factor that always draws in customers. Dollorama has weathered competition from brands including Dollar Tree, Dollar Giant and others over the years, and still come out strong. In fact, 2009 saw the company respond by testing and later rolling out a price expansion program that saw products of $2.50, $3.50 and $4 introduced across its stores. Miniso and Dollorama target different customers too, if their products are to be compared. 

Miniso’s typical clientele are individuals looking for ‘trendy, design oriented non-essentials’ as Dollorama’s Rossy puts it, along with the complete Japanese shopping experience. Dollorama appeals more to the average Canadian looking for everyday home supplies.

Experts now believe price and loyalty will be the deciding factor for dollar store customers, and this is brewing a discussion over what would sway the average Canadian. Loyalty would play in favour of Dollorama (and other retailers), while price would definitely work for Miniso. This presents a quandary of sorts; can shoppers be expected to go for much lower prices when choosing between already cheaply priced brands? The result remains to be seen in the coming months as Miniso continues to expand from its BC headquarters.

As for now, Dollorama has no reason to fear Miniso. If there’s any stiff competition to expect next year, it will be between Dollorama and viable competitors such as Dollar Tree, which is planning to expand in Canada too.

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