Dollarama Inc Analysis - Article Example

Through product inspiration from other high-end stores, the owners of the chain store were never short of ideas. They would then develop new and better items that would be sold for a dollar, or less. Its main product manufacturers were Asian and Chinese who acted as the corporation’s direct sources. Direct sourcing, according to the owners, cut costs that were incurred by importers (Perold, 2). Another problem the chain store faced was the administrative expenses that were incurred per annum. The amount of capital used on labour costs was also variable to sales in most of the chain stores. Commodity prices affected the cost of production of most of the store’s items. Preserving margins was becoming an uphill task with the rise in prices. A rise in input costs also presents a challenge to the one-dollar chain store (Perold, 3).

The solution the owners of the store went for was to adjust some quantities for there to be a counteraction of inflation. So long as the consumer still got value for their money, there was the need to adapt to save the financial situation they were in during that period. As the input costs were on the rise, the chain store needed to source the item somewhere else, which was less expensive. The other alternative was to restructure an existing item in the store and sell it at the same price (Perold, 4). The only difference this might have is that; it might get to attract someone.

In conclusion, the owners admit that it is not an easy task running a store that offers items at less than two dollars. This fixed price point has its limits, but they do manage to get customers and boost their sales. They did see a rise in sales, and this is promising to them as they hope to open at least, 30 or 40 more stores per year (Perold, 4). It may be a dream, but it is possible for the corporation.