Some Canadian retailers have demonstrated remarkable resilience over the past few years of inflation and consumer-facing pressures. Indeed, it's become hard to stick to a budget with increased living costs. And though even the best-in-breed discount retailers have done their best to keep prices relatively low, they haven't been immune to the brutal headwind of inflation.

Now that inflation is mostly under control (at least for now), investors shouldn't give up on the top value-conscious retailers. I believe they could continue thriving as the bargain-hunting mentality of cost-conscious consumers sticks around even as inflation hits that 2% target. Even if inflation falls below 1%, the past few years of inflation have left such an impact on our wallets that I don't think Canadians will be inclined to start splurging again.

The battle of the best Canadian retail stocks

As the Canadian economy attempts to return to growth mode, I'd argue that it's only prudent to keep seeking the best deals. Just because inflation normalizes doesn't mean it's a breakaway for the Canadian economy.

Various pressures could keep economic growth stagnant for some time. And if that's the case, I expect top-tier retailers such as Dollarama (TSX:DOL) and Loblaw (TSX:L) to keep on thriving for years to come.

With considerable valuation premiums on their shares today, investors should be cautious about initiating a position that is too large all at once. Of course, a top-tier business deserves to go for a premium. But which business trades at the more reasonable multiple going into the fourth quarter (Q4) of 2024? Let's find out.

Dollarama

Dollarama is the discount retail play to reach for if you ever expect tough times to be ahead. If we move from inflation to a period of economic sluggishness, DOL stock could continue to perform. Apart from offering Canadians some of the best deals on various necessities, the firm has been more than willing to expand its store footprint.

Clearly, there's been demand for more Dollaramas across the country. Whenever you have high foot traffic and a growing number of stores, I think there's a runway for sustained double-digit growth.

At 36.1 times trailing price to earnings (P/E), shares are a tad pricey, so I would not chase going into earnings. Should the stock dive post-earnings, though, I'd look to be a buyer of such a dip. Dollarama's a great company, it's just run too far (up 50% in a year!), too fast.

Loblaw

Loblaw shares have also been thriving lately, now up 47% in the past year, thanks in part to a few remarkable earnings results. With a new No Name line of grocery stores being tested in the Ontario market, it will be interesting to see how consumers react as the firm looks to double down on saving consumers money.

Indeed, Loblaw's reputation may be mixed with particular consumers, given how pricy some of its goods have gotten in recent years. Either way, the firm looks focused on value, and as Canadians continue to take action to save money, Loblaw's No Name brand and new stores will likely fare incredibly well. Given such a catalyst, I view 26.6 times trailing P/E as too cheap, making L stock a better buy than DOL, at least in my opinion.