Dollarama CFO Michael Ross is cagey about what products will be sold at Dollarama for $3 beginning in August.

With more than 700 locations in all ten provinces, Dollarama is the undisputed leader in the dollar-store category in Canada. But retailers are notoriously wary of giving competitors any kind of edge.

Ross reluctantly admits soccer balls will be sold for $3. If you want to know more, you’ll have to shop a Dollarama, as legions of Canadians apparently already have.

While retailers across North America are watching their sales flatline or slide, Dollarama stands out as a clear winner.

The democratization of shopping has made Dollarama a popular destination for the rich and the poor, a trend that is boosting sales at luxury retailers and deep discount retailers and leaving general merchandise retailers in the lurch.

There’s even a name for it: Cross-shopping.

At Dollarama, it’s called profit.

Yesterday, the Montreal-based firm announced a rise in first-quarter profit of 40 per cent to $42.6 million.

Ross said there’s easily room for an additional 50 Dollaramas a year for the next five years in Canada. And while it’s tempting to pin the increase in sales on hard economic times, Ross said Dollarama shoppers include families of high and low incomes. There is growing retail research to support his claims.

WWD reported in April that credit card data shows luxury consumers are very comfortable shopping the other end of the price scale. In the U.S., 25 per cent of Nordstrom shoppers also shop at the Dollar Tree, Leon Nicholas, director of retail insights at Kantar Retail, told WWD.

Consumer psychologist Kit Yarrow has described it as “an anticachet around being wealthy.”

In Canada, Dollarama is a destination retailer for seasonal items, party items, kitchenware and stationary, regardless of income, says Ross.

In February 2009 the company began rolling out items priced $1.25-$2. The move boosted traffic and sales. According to the financial results released Wednesday, about 51 per cent of the company’s sales were from items costing more than a dollar, compared with 44 per cent a year before.

Ross says Dollarama has no plans to expand into the U.S., where Dollar Tree Inc. reported record first quarter earnings in March.

Dollar Tree operates about 4,350 stores in the U.S. Dollar Tree Canada operates 99 stores primarily in the west and Ontario after purchasing 86 stores from Vancouver-based Dollar Giant last year. It plans to add about 25 stores in Canada in 2012.

“Dollar Tree is a far larger operation overall, but Dollarama should continue to dominate in Canada for some time. Dollarama has 7.5 times the number of locations in this country, and is still growing, as compared to Dollar Tree. It will take years for Dollar Tree to catch up,” said Ed Strapagiel, executive vice-president of Kubas Primedia.

“There isn’t anything sacred about the $1 price point at a dollar store. The early concept was ‘everything for a dollar,’ but this was an obvious gimmick and has since been abandoned. What a dollar store stands for now is the cheapest practical solution for very basic products. This concept can be maintained even when the price is sometimes $3.”

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Competition from other retailers – Walmart announced this year it would be bulking up on dollar items – doesn’t worry Ross. Dollaramas located near Walmart stores do better business.

“Customers don’t have to walk 100,000 square feet to find those low-priced items. They go into the store and it’s wall-to-wall, but the race track is only 10,000 square feet.”

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