‘I can spend it on other groceries’: Canadians turn to Dollarama amid rising costs

Kamil Karamali explains Rising living costs are pushing more families toward discount stores like Dollarama, highlighting growing financial strain this holiday

On a blustery, freezing Saturday afternoon, the parking lot at a Dollarama store in the east end of Scarborough, Toronto, was nearly full — bustling with people coming and going from the Canadian budget retailer.

“The value, it’s all about the value,” said shopper Lina Ricci, who says she has started buying goods more frequently at Dollarama over the past year. “I think I saved at least $15 … it does go a long way. I can spend it on my other groceries, like my meats.”

Dollarama released its earnings for the third quarter of the fiscal year this week, reporting a profit of $321.7 million — a 16.6-per cent increase from the $275.8 million in the same quarter last year.

The budget retail giant also saw sales increase 22 per cent, from $1.56 billion in the third quarter last year to a forecast $1.91 billion this year.

• Dollarama reports $321.7M Q3 profit, up from $275.8M a year ago

“It shows that consumers are suffering. It shows that consumers with modest incomes are hurting,” said Ian Lee, an associate professor at Carleton University’s Sprott School of Business. “They’re looking for ways to economize. And so people are shifting from, say, Walmart or Costco, and Loblaws and Sobeys, to the dollar stores because prices are lower for consumables.”

“When one sector or one component of retail jumps like that, it’s because some other sectors are losing sales,” Lee added. “So people are switching from, let’s say Loblaws or Metro or Sobeys, to the dollar stores -- or they’re downshifting from the Walmart and Costco to dollar stores, and they’re doing it to achieve lower prices.”

Economists say a combination of factors over the past five years has pushed consumers toward more budget-friendly stores.

Inflation and interest rates surged after the pandemic -- while rapidly rising housing prices and rents have outpaced income growth. Some foods have seen a decrease in production, due to factors like climate change and supply chain issues, making their prices climb at grocery stores, while stagnant wages haven’t kept up with inflation for basic necessities.

The U.S.-Canada trade war, which saw both countries impose tariffs on goods, added to the economic strain.

“People were not sure where the economy was going in the third quarter,” said Colin Mang, an economist at McMaster University, in an interview with CTV News. “We actually did see household spending drop by 0.1 per cent. That’s the first time household spending overall has fallen since 2021.”

Dollarama said part of its profit surge is due to sales from 401 stores in Australia, as well as growth in the total number of Canadian stores over the past 12 months (from 1,601 on Oct. 27, 2024, to 1,684 on Nov. 2, 2025.)

But economists say it also has to do with the cheap manufacturing of goods imported from overseas.

“Much of the stuff imported comes from East Asia, where manufacturing costs are much lower than here in North America,” Mang added. “That leads to some very, very low prices. It’s a very competitive retail space, and what we’ve actually seen over the past couple of years, up until just the past couple of months, is that prices for these kinds of household goods have actually been decelerating. We’ve seen prices fall in 2023 and 2024 for a lot of these household goods, partly because supply has increased.”

That means the ‘buy Canadian’ movement, which gained momentum after the United States imposed tariffs on Canadian exports, appears to be less of a priority for families struggling to make ends meet.

“I think it’s putting people in a very difficult position because they do want to buy Canadian, first of all, but it’s difficult in many different products to find something that’s made in Canada, and secondly, if you do, it will likely be more expensive,” said former TD Bank chief economist Don Drummong in an interview with CTV News on Saturday. “So you want to do that, but you have difficulty finding it and then you’ve only got so much money at the end of the day.”