👉 Background: The Reject Shop started in Melbourne back in 1981 as a retailer that sold discontinued lines of products and factory rejects. But over the years, it’s sold everything from snacks, to party hats, to health foods and cleaning supplies. From late 2023 to mid 2025, The Reject Shop’s share price plummeted more than 80%.

👉 What happened: In July this year, Canadian retailing behemoth, Dollarama announced its acquisition of The Reject Shop for $259 million - a 112% premium to its previous closing price. And now, Dollarama has announced plans for a full-scale transformation of The Reject Shop, including scrapping its iconic name, which will be replaced by Dollarama branding.

👉 What else: The Dollarama crew plan to double the Australian store count to 700 by 2034, including leveraging Dollarama’s massive supply chain to flood the Australian stores with ultra-cheap products. They’re certainly trying to disrupt the market with price leadership.

‍What's the key learning?

‍💡Price leadership is when a company uses low pricing to reshape an industry, which forces competitors to either follow suit or risk losing market share.

💡In Australia, we’ve seen Aldi do this to Coles and Woolworths over the past two decades. And of course we’ve seen Kmart do this to Big W and ironically, The Reject Shop too. But, now The Reject Shop with its Dollarama-strength is pulling out the Uno Reverse card on Kmart. The danger for incumbents is that they can’t always match those prices without crushing their margins.

💡Although Kmart & Target has 447 stores, this would be squashed by the planned 700 stores by Dollarama. And over time, this can push weaker players out of the market or force major restructures - especially given that Big W is already struggling after its $35 million loss for the last financial year.