More shoppers feeling inflation pressure look to dollar stores for deals, retail experts say

Everything seems to be getting more expensive. Food, gas and housing prices are on the rise while paycheques are slow to keep pace. The CBC News series Priced Out explains why you're paying more at the register and how Canadians are coping with the high cost of everything.

Christina Drury knows her way around a dollar store.

Visiting multiple stores and monitoring prices is part of the Edmonton nurse's weekly routine.

She loves flagging good deals to other women through a financial literacy group. She tells patients about medical supplies available for cheaper prices. She even decorated her wedding venue with items purchased from Dollar Tree.

Lately, the stores she frequents have been more crowded, with empty shelves, especially in the pet food and home improvement aisles.

"Even in small towns, it's gotten busier," she told CBC News on Tuesday.

As inflation increases many Canadians' expenses, retail and food industry experts say they expect more shoppers to flock to discount stores for bargains on packaged food and household goods.

According to Sylvain Charlebois, the director of the Agri-Food Analytics Lab at Dalhousie University and a visiting professor at the University of South Florida, between 15 and 20 per cent of Canadians were going to dollar stores for groceries regularly before the pandemic. 

"When food inflation becomes an issue, we do believe that dollar stores will get more traffic because people are looking for better deals," he said.

Bailey Parnell, who runs the non-profit #SafeSocial and researches social media's effects on mental health, said do-it-yourself tutorials featuring dollar store items have become trendy on TikTok and Instagram.

More than 27,000 Instagram posts include the hashtag "dollaramafinds" and some Canadian Facebook groups dedicated to dollar store hauls have more than 100,000 members.

Parnell said young people struggling with the high cost of living could be driving the trend, posting about doing more with less as a way to connect with others in the same situation.

"The bulk of the people that make up the active social media trends are largely Gen Z and maybe a bit of Gen Y right now — and this is a generation that has been working longer for less money than ever before," she said.

More stores opening

Dollarama is Canada's biggest dollar store chain, with more than 1,300 stores selling items for $4 or less.

A Dollarama spokesperson told CBC News it has opened between 60 and 70 new stores annually in the past five years and has a goal of 2,000 stores in Canada by 2031.

In a December earnings call, chief executive officer Neil Rossy said he was pleased to see a continued increase in the number of customers visiting stores and that the company was expecting a particularly busy fourth quarter.

Willy Shih, a professor of management practice at Harvard Business School, said dollar stores are able to offer low prices because they have low overhead with small stores and few staff.

Instead of encouraging customers to spend a lot of time in the store, they aim to get customers in and out quickly, including people with not much money to spend.

"It is really targeting a less well-to-do market, and they try to serve that with convenience and everyday necessities," he said. 

That doesn't mean dollar stores are only attracting people with low incomes.

"In one that I went to visit, there was a customer buying greeting cards, and when the customer left the store, they got into a Cadillac Eldorado," Shih said.

Lower prices, smaller packages

Tara Wilkins, a frequent dollar store shopper in west Edmonton, said she often stocks up on kitchen scrubbers and other household items so she can spend more on groceries like good-quality bread. She also turns to dollar stores for affordable art supplies and toys for her dayhome.

Though dollar stores have a lot of great deals, she said they do not offer the best price on everything.

"Some of the items you can just go somewhere else and get for the same price or less," she said.

A travel-sized container of dishwashing liquid might be convenient for camping, she said, but a larger size is likely to be of better value over time.

Lars Perner, an assistant professor of clinical marketing at the University of Southern California, said inflation has put pressure on dollar store companies too, leading them to raise prices above $1 and cut down the size of items they sell. 

"Ninety-nine cents used to buy a lot more than it does today," he said.

Do rising food prices have you experiencing sticker shock at the grocery store? Show us what you've been seeing at your local supermarket and send a photo or video with a brief description to ask@cbc.ca. Be sure to also include your name and location. It may be featured on CBC News Network.