February 1, 2022
Dollar Tree is swerving away from their identity of all things being $1 only. The iconic one dollar store is raising their prices to $1.25.
So why did they decide to make this switch? Business isn’t bad at stores, considering the drive of shoppers when they see, “Everything’s a dollar!” plastered on the front of the store. This increase is simply because of the price increase to buy the items for the stores.
To be in business right now is very hard; prices are spiking for store inventory. It has reached annual record highs as it has increased 8.6% from September of 2021. This put a huge damper on their profits and margins.
Since the stores were only selling their products for a dollar, it limited the size and quality of the items they were selling. Even some of the customers’ favorites had to be discontinued because they couldn’t afford to buy the product anymore.
Raising prices will help Dollar Tree in many ways. They will have more flexibility to expand their selection of merchandise. Things that they discontinued will also be able to be brought back in stores, drawing previous customers back in.
Dollar Tree has been struggling since they bought Family Dollar in 2015. Family Dollar’s sales have lagged behind Dollar Tree’s and are now on their third CEO since 2015. There has been lots of pressure from Wall Street.
In 2019, an investor argued that the one dollar strategy would not work out and they should sell Family Dollar. Dollar Tree settled this saying they were planning to raise their prices. Since then, another investor pushed for changes from the CEO. They were open to these critics, so now they’re making a change.
Customers aren’t too surprised or scared of these price increases. Since COVID 19, prices all around the world have increased. These pushed Dollar Tree to make this change so fast since their rivals are doing the same thing. Five Below broke its five dollars and below strategy in 2019, bringing in merchandise more costly than five dollars.
The plan is to roll out these new prices to nearly 8,000 U.S. stores this year. They will place signs around these stores alerting customers of this subtle change. Dollar Tree is preparing staff on how to answer questions from customers asking about the change.
Customers are getting used to change from the past couple of years. Dollar Tree raising its prices is just one more thing to get used to. What are your thoughts on price increases in today’s economy?