Assignment #3 (Individual) - SWOT Analysis

for Dollarama

Strengths:

Strong Financial Performance:

Dollarama has reported impressive financial results in 2023, with revenues exceeding $5 billion

and a net income of $801 million. This robust financial performance indicates the company's

stability and profitability.

Expansion and Growth:

Dollarama has successfully expanded its retail network, boasting 1,486 locations in 2023. This

demonstrates the company's ability to execute its growth strategy effectively.

Cost Control:

Maintaining a gross margin of 43.5% highlights Dollarama's effective cost control measures.

This margin indicates that the company can manage its costs efficiently.

Convenient Store Locations:

The fact that approximately 85% of Canadian households live within 10 km of a Dollarama store

is a significant advantage. Convenient access to stores enhances customer accessibility and foot

traffic.

Environmental Sustainability:

Dollarama's commitment to environmental sustainability is commendable. The company's efforts

to reduce GHG emissions, landfill space usage, and water consumption align with modern

environmental goals and resonate with eco-conscious consumers.

Weaknesses:

Customer Satisfaction and Product Recalls:

Customer satisfaction ratings below acceptable standards (3.24 out of 5) indicate room for

improvement in delivering a better shopping experience.

A high number of product recalls (108,616) raises concerns about product quality and safety.

Employee Satisfaction and Diversity:

Low employee satisfaction ratings (3.35 out of 5) suggest potential issues in the workplace that

need attention.

While Dollarama has a diverse workforce, the underrepresentation of visible minorities in

management and the board of directors (10%) can be a weakness in terms of diversity and

inclusion.

Social Media Presence:

Dollarama's lack of presence on social media platforms represents a missed opportunity for

brand promotion and engagement with a broader audience.

Opportunities:

E-commerce Expansion:

Leveraging the growing trend of online shopping, Dollarama can expand its e-commerce

operations. Online sales provide a convenient channel for reaching a wider customer base.

Sustainable Products:

There is a rising demand for eco-friendly and sustainable products. Dollarama can meet this

demand by expanding its range of environmentally responsible products, attracting consumers

with eco-conscious preferences.

Strategic Partnerships:

Exploring partnerships with local or global suppliers can enhance Dollarama's product variety

and quality. Collaborations with popular brands can draw in new customers and boost sales.

International Expansion:

The success of Dollarcity in Latin American markets indicates the potential for international

expansion beyond Canada. This diversification strategy can open up new growth opportunities.

Private Label Expansion:

Dollarama can further expand its private label product lines, which typically offer higher profit

margins and exclusivity. Developing unique and quality private label brands can set Dollarama

apart from competitors.

Threats:

Competition from Large Retailers:

Established giants like Walmart, offering one-stop shopping experiences and competitive

pricing, pose a significant competitive threat. Their vast resources can potentially outmatch

Dollarama.

Online Retail Competition:

The continued growth of e-commerce giants like Amazon poses a threat to traditional brick-and-

mortar retailers like Dollarama. Online competitors offer convenience and a wide range of

products that can divert customers away from physical stores.

Changing Consumer Preferences:

Shifts in consumer preferences towards quality, sustainability, or other factors can impact

Dollarama's sales. Adapting to evolving consumer preferences can be challenging.

Supply Chain Disruptions:

Dollarama's heavy reliance on suppliers, particularly from China, makes it vulnerable to supply

chain disruptions. Events such as trade tensions or global crises can affect product availability

and prices.

Regulatory Changes:

Changes in regulations related to labor, environmental standards, or pricing can affect

Dollarama's operations and costs. Adapting to evolving regulations may require significant

adjustments.

In conclusion, Dollarama has several strengths, but it also faces notable weaknesses and

external threats. Exploring opportunities such as e-commerce expansion, sustainable products,

partnerships, international growth, and private label expansion can help mitigate these threats

and strengthen its position in the competitive retail market. Additionally, addressing weaknesses

like customer and employee satisfaction can contribute to long-term success. Continuous

monitoring of the retail landscape and consumer trends is crucial for Dollarama's strategic

planning and adaptation.

Threat Impact (L, M, H) Probability (L, M, H)

Competition from Large H M

Retailers

Online Retail Competition H H

Changing Consumer M M

Preferences

Supply Chain Disruptions H M

Regulatory Changes M M