Two-dollar Store
David Simmonds

A passel of investors from Manitoba, hope they have hit a bullseye with their latest project. “We figured it out pretty quickly, over a beer at the local curling rink,” said Wilf Germondsey, a Winnipeg insurance broker. “We were shooting the breeze about new ideas for franchises, retail stores, fast food joints and the like.

A new Canadian chain of stores purposed.

“The guy on my left,” Germondsey says, “had just come up with this crazy idea about a specialty restaurant to sell organ meats, you know, liver, kidneys and offal. I thought to myself ‘you know, Wilf, I said, that’s not a bad idea at all. You’d better either top it or shut up.’

“So I asked myself, ‘What do we have in Canada that they don’t have in the States’? The first thing that popped into my head was the toonie. The second thing was that our dollar’s almost in the tank against the US dollar. I said to myself, ‘What about a chain of stores that prices everything at two dollars and sources everything in Canada.’ You know what: it beat out the organ meats idea, although not by a lot.”

With the encouragement of his curling friends, Germondsey set about making his business plan. It all came together much more quickly than he anticipated.

The first thing he learned was that the two-dollar bill is in fact legal tender in the US, although it rarely circulates. The two-dollar coin is uniquely Canadian. As a result, he thought the two-dollar concept held water: it was Canadian, yet for US purposes it wasn’t funny money.

Next, Germondsey took a closer look at the importance of the exchange rate. “With the Canadian dollar so low against the US dollar, our labour costs were going to be high. Thank goodness for low minimum wage laws: Minnesota, for example, a minimum wage of only eight bucks an hour. Offsetting that, so long as we had everything sourced in Canada, our inventory would be cheaper than anyone else; even if other stores get their wares from China.”

What will the inventory look like?

“We’re going with the Canadian theme, of course,” he explained. ‘“We expect our best seller to be this bag full of hockey pucks; for two bucks, of course. The number we put in there will change every week as the exchange rate changes. We’ll also stock a lot of curling brooms and rocks. There’ll be higher end stuff as well. There’s a sofa, loveseat and rocker combo set that sells in Canada for as much as $699: with the exchange rate, we can still sell it here for two bucks and make money, as long as the Canadian dollar keeps going down,” said Germondsey.

One source of inventory, which he confirmed to me with the wink of an eye, provided I promised not to tell anyone, which I won’t, is the massive final inventory clear out sales from a certain US retailer that made a big splash here in Canada with its recent opening and then realized it was years away from breaking even. “We’ll have secret shoppers in about 200 stores, cleaning it all out,” he said. “At least they won’t be able to knock our product quality,” he joked.

“Next, we figured out we had to go big or go home. As luck would have it, there was a dollar store chain selling out its Northern and Midwestern state leases, at a fire sale rate; we picked up a bunch of them all the way from Washington, Idaho, Montana and North Dakota to Illinois, Minnesota and Michigan. All are relatively close to Canada to keep shipping costs low.” This will lure Canadians across the border to the shops by special ‘one toonie at par’ promotions. “If I know Canadian shoppers, they’re stronger on the lure of a bargain than the economics of one,” he joked.

Germondsey experienced his biggest rush when he tried to figure out what to call the store. “It struck me that a ‘bullseye’ is even more precise than a ‘target’: if you hit the bullseye, you’ve always hit the target, but you can miss the bullseye and still hit the target. So ‘Bullseye’’ it was. Our slogan just wrote itself. “Don’t settle for the target - hit the Bullseye’!”

Start up financing was no problem either. “The curling club guys put up half and the other half came from the Manitoba School Crossing Guards Retirement Fund Investment Board,” the largest pension fund in Manitoba. These fellows were just itching for something to invest in. We didn’t even have to audition for Dragons’ Den.”

If the stores don’t catch on, what will Germondsey do? ‘Well, we’ll just pull the plug on everything all of a sudden. “I hear it’s been done before.”

Germondsey can always fall back on his organ meats franchise.

Should the US dollar lose ground to the Canadian dollar, what will Germondsey do? “Yeah and pigs begin to take flying lessons,” he replied. “Well, there’s always that organ meats franchise idea to fall back on.”