For years, the Dollar Tree discount store has been a lifesaver for low- and middle-income families looking for affordable products.
The chain was able to maintain its $1 bid for miscellaneous supplies such as school supplies, cleaning supplies, groceries, kitchenware and cosmetics, and even seasonal decorations and gadgets, but eventually inflation suffered from those bids. Dollar Tree announced Tuesday that it will break its promise of $1 products.
Stores like Dollar Tree, whose main attraction is to offer a variety of products at affordable prices, have grown at an accelerating rate since the 2008 economic crisis, catering to consumers eagerly looking for offers and discounts in the midst of unemployment and financial instability.
But these types of stores have also been affected by inflation, which has led to higher costs for imported materials and manpower.
Once it became popular with inventory that wouldn’t cost customers more than $1, the company announced Tuesday that it will begin “adding new price points above $1 in all Dollar Tree Plus stores. It will also start testing points. Additional price points over $1 in stores Dollar Tree selected”.
In the same press release, the company said it will begin selling products priced at $1.25, $1.50, and other slightly above-a-dollar prices in some of its stores.
The company did not reveal which products will see an increase in prices or stores in the United States.
It’s all in the name of providing customers with “a variety of products when they come to shop,” said Michael Wittinsky, president and CEO.
“We believe that testing additional price points above $1 for Dollar Tree products will, over time, allow us to expand our product assortment, introduce new products, and better meet the everyday needs of our customers,” he said.
In the same statement, Witynski reported that 500 Dollar Tree Plus stores are expected to open by the end of fiscal year 2021 and are planning to add another 1,500 in fiscal year 2022. Another 5,000 stores are in plans for fiscal year 2024.
The company also has a so-called combo store, which offers a variety of multi-price products to Dollar Tree shoppers. The company currently operates 105 joint stores and expects to add 400 joint stores in fiscal year 2022. It is expected to add several thousand more after that, the president said in the statement.
“We are a ‘Test and Learn’ organization, which is what we are doing with this new initiative,” Witynski said. “Our brand promise is that customers get great value for what they spend in the Dollar Tree. We will continue to vigorously protect that promise.”
A few price increases are sure to give the chain some flexibility and possibly more variety on its shelves. However, annual inflation in the US was 4.2% in July, the highest rate in three decades. And this week, in his appearance before Congress, Federal Reserve Chairman Jerome Powell said the price increases stem from supply chain disruptions and the rising cost of the workforce.
And that affects companies of all kinds, perhaps especially the company that has kept their prices at the dollar for decades.
The company has already begun testing higher prices at several hundred of its 8,000 locations in a section of the Dollar Tree Plus store with items that can cost as much as $5. Items that can cost between $1.25 and $1.50 will soon find themselves in the mix in some places amid the typical $1 assortment.
JP Morgan analysts highlighted previous conversations with Dollar Tree executives in which a significant increase in sales at stores serving the Plus division was mentioned. And if no one else is cheering for the dollar tree’s soaring price, Wall Street is.
Dollar Tree Inc. shares rose. by 13% in the opening campaign on Wednesday.
With Dollar Tree breaking the $1 ceiling, Witynski said the company will stay true to its promise to offer affordable products.
While there are a variety of dollar stores across the continent, Dollar Tree is a Fortune 200 company that operates 15,865 stores in 48 states and five Canadian provinces. The company operates under the Dollar Tree, Family Dollar, and Dollar Tree Canada brands.
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