The Reject Shop will change its name after 44 years in a $259 million deal with Canadian rival Dollarama. The takeover, aimed at intensifying competition with chains like Kmart, will see all The Reject Shop locations transition into Dollarama stores by 2027.
Takeover Details
Canadian discount giant Dollarama acquired The Reject Shop earlier this year in a deal valued at $259 million. Dollarama executives confirmed the offer represented a 112% premium at $6.68 per share, and received unanimous support from The Reject Shop’s board and major shareholder Kin Group.
The Reject Shop to be renamed as Dollarama
Announcement and Rebranding
Dollarama CEO Neil Rossy outlined the changes. “We are beginning to selectively introduce Dollarama products across various categories,” Rossy stated during a session with analysts. He also said, “This transition will be gradual, continuing until the end of fiscal 2027. Our objective is to adapt store layouts to provide the convenient and consistent shopping experience we are known for, directly supporting our merchandise strategy. Conversion projects are already in progress, marking a crucial step in preparing for a more extensive rollout in fiscal 2027 over an approximate three-year timeframe.”
Each The Reject Shop store will rebadge to Dollarama after reaching a set operational milestone, known as the “critical ofarama.” Rossy further explained, “Our expectation is that it will take some time before you truly feel like you’re entering a Dollarama store.”.
Dollarama takes over The Reject Shop in a $259 Million deal
Strategy: Rivalling Kmart
The strategy behind the buyout focuses on boosting Dollarama’s presence in Australia. The Reject Shop brings almost 400 stores nationwide, while Dollarama boasts 1,600 outlets globally. Executives have set their sights on expanding the Australian store network to 700 by 2034—surpassing the collective number of Kmart, Target, and Big W branches in the country.
Currently, Kmart and Target operate 449 stores in Australia and New Zealand, with Big W holding 179 outlets. Dollarama aims for a direct challenge in the discount segment.
Consumer Impact and Market Shift
The acquisition is expected to lower prices for consumers, with the integration of Dollarama’s signature pricing model. Dollarama is known for capping product prices at $5 or below in Canada. Rossy did not confirm if Australian pricing will match this but said, “We intend to streamline the pricing structure, which includes reducing the current maximum price points.”
Professor Nitika Garg, a consumer behaviour specialist at UNSW, commented on the shift. Garg observed, “Many households are currently facing financial challenges, making lower-priced options appealing. This will create competition for Kmart in this market segment, as consumers will evaluate their choices while shopping. Given the ongoing cost-of-living concerns, this strategy seems promising.”.
The Reject Shop’s Legacy
The Reject Shop began in Melbourne in 1981 as a store selling discontinued lines and cheap goods. The company floated on the ASX in 2004 and celebrated rapid store growth in the following decade. Despite robust sales, the past decade presented challenges, with the latest annual revenue at $852.7 million. Profits dropped 36% in the latest fiscal to $4.7 million, far below the $16.6 million peak of 2016. Leadership changes continued, with Clinton Cahn stepping in as CEO in 2023.
Transition Timeline
The conversion will roll out in stages through 2027. “The change will not happen instantly, but customers will begin to perceive subtle modifications within stores through a methodical and steady approach,” Rossy said. Signage, store layouts, and merchandising will shift bit by bit, with a full rebrand completed by 2027.
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Board and Stakeholder Response
Shareholders overwhelmingly approved the purchase following a scheme of arrangement. The deal positions Dollarama as a strategic player capable of reshaping Australia’s discount retail market.
Expansion Plans
Dollarama has already begun bringing its product lines and operational standards to The Reject Shop stores. Executives outlined goals to reach 700 stores in the next decade, aiming to become Australia’s largest discount chain.
Industry Outlook
The retail sector expects heightened price competition, wider ranges of imported goods, and a sharpened battle for cost-conscious customers. Industry watchers believe Dollarama’s arrival lifts consumer options as inflation continues to impact household budgets.
Looking Ahead
The Reject Shop’s name change after 44 years marks a new chapter in Australian retail. Dollarama’s $259 million takeover sets the stage for increased competition and price drops. Shoppers can expect gradual rebranding and a suite of Dollarama’s affordable products as the chain grows to rival, and potentially overtake, established players like Kmart.