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Richest 100 Canadians
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Canada's 100 wealthiest ranked in 2008
(First appearance on the Rich 100)

Rank

Name

Age

City

Prov

Industries

Companies

Networth

2007 Rank

% Change

72

Larry Rossy

66

Montreal

QC

Retail

Dollarama Group LP

$801,000,000

-

-

Four years ago sold 80% of the business (Dollarama) to Bain Capital for $1 billion.

Rossy remains CEO.

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Dollar man

Larry Rossy has built a retail fortune - One buck at a time.

Sean Silcoff
Canadian Business
Winter 2008/2009


There aren’t many people on the Canadian Business Rich 100 who built their wealth one dollar at a time. Larry Rossy did — selling items for $1 apiece, and nobody does it better than him in Canada. A third-generation merchant, Rossy opened his first Dollarama store in 1992 in a mall in Matane, Que., 350 km northeast of Quebec City. Now, four years after selling 80% of the business to Bain Capital for $1 billion, Dollarama Group LP boasts 536 stores across Canada (the next largest competitor has less than 200), and plans to open hundreds more in the coming years. With annual sales of about $1 billion and an average ticket per customer of less than $7, Dollarama serves more than 2.7 million Canadians a week.

“I have been very fortunate to have a career in a field I truly enjoy,” the 66-year-old Rossy told Canadian Business about his debut on the Rich 100 in a recent e-mail. “For me, it is all about doing what I enjoy — building a successful business with a great team of people. The financial success has been a byproduct of fulfilling the dream of creating a successful retail chain.”

Rossy grew up a die-hard five-and-dime-store aficionado. His grandfather, Salim, arrived in Montreal a century ago from Lebanon and peddled goods out of a knapsack before opening his first general store in 1910. Salim’s eight sons and their children built a Quebec-based empire of Rossy-branded discount retail stores, with different branches of the family controlling their individual groupings of stores. Rossy inherited his father’s branch, and had a modest 44-store chain by the early 1990s.

In 1992, he noticed dollar stores were popping up in Montreal and, despite their junky products, poor presentation and bad lighting, were hugely popular. As a five-and-dime veteran who had watched that category fade after decades of retail dominance, Rossy saw an obvious successor in dollar stores. In fact, he thought he could do even better at the $1 price point than in his existing business. “We said, ‘This is our category. Let’s do it properly,’” he said earlier this year.

Rossy aimed Dollarama first at small-town Quebec, “where the concept would be more appreciated,” says Michel Richard, the retail leasing specialist who arranged the first store deal in Matane. “It was like the Price Club of Quebec.”

Dollarama’s stores were clean, presentable and well-merchandised. Rossy negotiated all leases — and still does — taking any kind of space, as long as it was cheap. Rossy, who remains CEO, was also a key buyer, and is still in charge of seasonal merchandise and silk flowers, among other categories.

He stuck to his $1 price point and, early on, began to source directly from Asia, which would become a key competitive advantage. The stores that shoppers know today aren’t much different than the original outlets, Richard says, except that they are bigger — about 10,000 square feet compared with 3,000 feet originally. “But the quality and assortment, and the high-quality racking was there from the beginning,” he adds.

By the time he sold, Rossy had long since moved on from his last Rossy-bannered stores, and had built Dollarama into a 344-store chain in the Maritimes, Ontario and Quebec. While other dollar-store chains either hadn’t kept pace or faltered through overexpansion, Rossy kept tight control, eschewing franchising for corporate-owned outlets. Plus, he found that the Dollarama concept wasn’t just a bottom feeder. Sure, the stores played well on blue-collar street fronts and in dingy strip malls, but they also thrived in Toronto’s Scarborough Town Centre and Mississauga’s Square One, both destination malls. (The Scarborough store is its top performer.) “At the beginning, for us, we didn’t really understand it,” says Sylvan Adams, president and CEO of Iberville Developments Ltd., a mall developer based in Montreal. “But it was amazing what they could do. The number of transactions they could pop out of some of those stores was phenomenal. Dollarama was creating a lot of foot traffic, and they would become mini-anchors in some smaller centres.”

After Consumers Distributing went out of business in the early 1990s, Iberville gave Dollarama a chance to take over the space at two of its upscale shopping centres in Sherbrooke and Quebec City. They were a hit. “We realized they were basically good for the big malls, too,” says Adams. “They didn’t denigrate the quality of the mall or the image. Whatthey were doing was helping our malls be what they should have been in the first place, like a department store, with a range of offerings that appealed to the entire spectrum of customers.”

While Dollarama is highly leveraged — its net debt as of early August exceeded $415 million — it earns high marks from credit analysts for being one of the top performers in the dollar-store industry in North America. The company has beefed up its management team by bringing on Robert Coallier, formerly of Molson Inc., as chief financial officer, and Stéphane Gonthier as chief operating officer, following his meteoric rise through the ranks at convenience-store dynamo Alimentation Couche-Tard Inc. It has also added debit-card readers to stores and invested millions in IT systems.

“Dollarama is a very good operator in what they do,” says Moody’s credit analyst Darren Kirk in Toronto. “Their margins are much higher than their peers in North America. Their execution really does stand out.” And, he adds, dollar stores should “perform relatively well in this environment.”

Indeed, Rossy’s fundamental approach to retail may indeed play well during economic uncertainty. He believes Dollarama consumers should always feel they’re getting a deal: not only would they gladly pay $1 for an item, but they should feel it would be a bargain even if it cost $1.50, he has said. The company will start charging up to $2 for select offerings in the new year — the result of inflationary pressures and the fact that charging more opens the chain up to more product options, including close-out merchandise from liquidation sales. But while that will add some complexity to the business — pricing guns will be needed for the first time, as well as signage — Rossy is confident customers will not only react positively but buy even more stuff. “The objective is certainly to have [the level of sales] grow,” he said in September.

One of Rossy’s secrets is his penchant for reverse engineering: he will comb the malls, looking for $10 items he believes he can knock off and source from Asia to sell for $1. He then gets his in-house design team to develop sharp, customized packaging to put around the products. Dollarama has 70 house brands, still a novel concept in the dollar-store world.

It helps that the down-to-earth Rossy and his somewhat flashier son Neil — the senior vice-president of merchandising — get excited about what they sell. On a tour of a Montreal store in February 2008, Neil grabbed a Spider-Man–branded poncho and thrust it forward. “It’s a beautiful thing,” he said.

“It’s more than beautiful,” Larry adds. “It’s mind-boggling.”

“On a personal level,” Rossy said in his e-mail, “my life hasn’t changed. I continue to work 60 hours a week and enjoy every minute of it. I don’t dream of doing anything else. I’m not ready for the golf course.”

http://list.canadianbusiness.com/rankings/rich100/2008/retail/dollar-man/article.aspx?id=20081222_10009_10009&page=1

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Larry Rossy

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