“Consumers want value, particularly in this cost-of-living crisis, but they don’t want to buy crap.
“It’s not just cheapness. Kmart have really carved out that sweet spot. You’ve got really strong brand trust as well with consumers, whereas the Reject Shop really struggles around inconsistent quality. Not that I go there much, but it’s very hit-and-miss.”
The first Reject Shop was established in 1981 in Melbourne’s South Yarra by founders Ron Hall and John Shuster. The company listed in 2004 with an intention to stay out of clothing and “stay below the radar of the Big Ws and Kmarts”. The discount retailer posted $852.7 million in revenue in fiscal 2024 before delisting from the ASX in late July following Dollarama’s takeover.
A Dollarama store in Montreal, Canada, where the discount giant is based.Credit: Bloomberg
Dollarama was founded in 1910 by Lebanese immigrant Salim Rassy, the great-grandfather of current chief executive Neil Rossy, who took the reins from his father, Larry, in 2016. With more than 1600 stores in Canada, Dollarama is the country’s largest and most dominant discount retailer, with a market share of 50 per cent. Its takeover of the Reject Shop is part of global expansion plans; Dollarama has a majority stake in Latin American discount chain Dollarcity, which has 658 stores across five countries.
Although Kmart’s Anko is wildly popular in Australia, its rollout in Target stores faced initial backlash from customers, and it has struggled to gain a firm foothold overseas.
Dollarama, which is listed on the Toronto Stock Exchange, is highly profitable, raking in revenue of $CAD6.4 billion ($7.1 billion) and a 14 per cent increase in earnings to $2.1 billion in the 2025 financial year. It has lifted sales and increased margins to an impressive 33.1 per cent at a time when retailers around the world are facing cost pressure and patchy sales.
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Rigby pointed out that the Reject Shop’s store size tended to be much smaller than Kmart’s, it stocked fewer categories, and the Australian chain had been losing its competitive edge in categories such as pantry goods to the likes of Aldi.
“The offer of the Reject Shop is quite narrow, in my opinion,” he said. “Dollarama do quite well I believe in pantry goods … if anyone can make it work, it will be Dollarama.”
While Dollarama is replacing Reject Shop products with its own and expanding store footprint, new stores will still open as the Reject Shop. Rebranding is set to begin in 2027 at the earliest.
Rigby described the rollout as both aggressive and too slow. “If it’s called Dollarama in NSW or in one [shopping] centre, and it’s called Reject Shop in the other, it has that real risk of brand confusion,” he said.
“I suspect it’s probably more of a capital investment thing, that they don’t want to drop a whole heap of money.”
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