Dollar Tree Growth Strategy: Why The Retailer Is Focusing On Canada?

Dollar Tree Inc. (DLTR) has a new strategy in mind as it reportedly looks to grow outside the U.S. by opening more stores in Canada.

According to Reuters, Dollar Tree is looking to quadruple its store locations in the country as it fights the market leader, Dollarama. Dollar Tree has 226 stores in Canada and said it plans to open another 1,000 in the region over time.

While Dollar Tree leads its competitors in the U.S., it fights will the competition from Walmart and Aldi, and has seen stagnate revenue growth over the last three quarters, the news outlet said. Dollar Tree has almost 14,500 stores in the U.S.

Dollar Tree’s biggest competitor, Dollarama, owns 1,095 stores in Canada and reportedly plans to open another 1,700 locations over the next decade. The rival holds an 18 percent share of the estimated $10.47 billion discount retail market in the country with Dollar Tree holding 2.2 percent, according to the news outlet. Dollar Tree has a reported 28.1 market share in the U.S.

While Dollar Tree looks to embark on a new growth strategy, it told Reuters that revenue from the Canadian stores is not material. Dollar Tree opened its doors in Canada in 2010 by acquiring Dollar Giant, which had 86 locations at the time.

Dollar Tree may have an uphill battle in Canada as it looks to set up an efficient supply chain that can manage the vastness of the region. Company spokesman Randy Guiler told Reuters,” I don’t know that they become bigger factors or challenges by adding more stores. We’ve done that in the U.S. and we can do that in Canada as well.”

Shares of Dollar Tree stock were down 0.68 percent as of 3:42 p.m. ET on Monday.