By José A. Barrera – Revistaeyn.com
Dollarcity, the discount store chain born in El Salvador, is preparing its arrival in the Mexican market in 2026.
The company, founded in 2009 by Marco Andrés Baldocci Kriete, has -at the end of the first quarter of 2024- 547 stores in operationwhich are distributed in El Salvador, Guatemala, Colombia and Peru.
The arrival to the competitive Mexican market arises from an agreement between the founders of Dollarcity and its Canadian partners from Dollarama, a company with which it has had a relationship since 2013 when they reached an agreement with the Salvadoran company to “share their commercial experience and provide supply services “.
The relationship has only grown in recent years and especially since the Canadian retailer announced – in July 2019 – an agreement to take control of Dollarcity, by securing 50.1% of the shares.
Dollarama increases its stake in Dollarcity
Five years after said announcement, Dollarama reported that it reached a new agreement to acquire an additional 10% of Dollarcity shares to reach a participation of 60.1%.
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“Dollarama Inc. announced today (06/12/24) that it has acquired an additional 10% equity interest in Latin American value retailer Dollarcity in exchange for the issuance of 6,060,478 Dollarama common shares,” the firm announced this week in a statement signed in Montreal.
The source highlights that as a result of the operation “Dollarama now owns a 60.1% stake” and that it has the option to purchase an additional 9.89% stake, which it hopes to execute “any time before December 31.” December 2027″.
The association has been key to the expansion of the brand, which has tripled its number of stores since 2019 and which now, with greater participation, opens the doors to a desirable market.
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“With its strong leadership team, Dollarcity is well positioned to continue generating profitable growth, both from its current markets of operation and our next entry market,” noted Neill Ross, president and CEO of Dollarama.
The executive described Mexico as “a large and dynamic market with untapped potential.” in the value retail space”, where they hope to grow “guided by the same careful and disciplined approach as with our successful entries in Colombia in 2017 and in Peru in 2021”.
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The statement also highlights that Dollarama has the right to acquire an additional 9.89% shareholding in Dollarcity and a corresponding 4.945% shareholding in the Mexican company at any time no later than December 31, 2027.
Dollarama and the founding shareholders of Dollarcity agreed on the governance terms of the expansion in Mexico, where they will indirectly have a shareholding of 80.05% and 19.95%. Dollarcity intends to pilot its first store in Mexico in 2026.
The source adds that apart from the purchase option, “no substantial changes have been made to the terms of the shareholders’ agreement, the supply agreement and the services agreement entered into between the parties.”
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It adds that the governance terms that will apply to Mexico and its future operations, including with respect to certain specific strategic and operational decisions that will be subject to the approval of all shareholders, will be substantially similar to those applicable to the business currently operated by Dollarcity.
The “US$1 all store” phenomenon
Dollarcity has generated a sales phenomenon in the markets where it operates, thanks to a varied offer that quickly adjusts to specific holidays and celebrations, the company has managed to connect mainly with a young consumer and break down the barrier of associating low prices and bad quality.
At the moment Dollarcity has a portfolio of varied products in categories such as party accessories, costumes, hygiene, decoration, kitchen, hardware, stationery, toys and office supplies, convenience, among others.
The company’s latest report shows that the chain will exceed its initial goal of opening 850 stores by 2029 and is preparing to exceed 1,000 by 2031.
“Following an updated assessment of the market potential of Dollarcity stores in its current operating markets, consisting of Colombia, Guatemala, El Salvador and Peru, Dollarcity management believes it can profitably grow its store network in these four markets to approximately 1,050 stores by 2031, up from its previous long-term target of 850 stores by 2029. The increase in store target reflects anticipated growth primarily in Peru and Colombia,” the report says.
How many stores does Dollarcity have?
At the end of the first quarter of 2024 (as of March 31), Dollarcity had 547 stores in operation.
The chain reported that it “opened 15 net new stores, compared to eight net new stores in the same period in 2022.”
He added that as of March 31, 2024, it had 547 stores distributed as follows: 324 in Colombia, 99 in Guatemala, 72 in El Salvador and 52 in Peru.
“Like Dollarama in Canada, Dollarcity’s value proposition is resonating with consumers in Latin America. Dollarcity’s long-term goal increase to 1,050 stores by 2031 across its four current countries of operation “speaks to the untapped growth potential in these markets and, more broadly, the relevance of our retail model across geographies and demographics,” Rossy said.
