Dollar Tree Makes Higher Price Point Permanent

Executives at Virginia-based discount retailer Dollar Tree said Tuesday (Nov. 23) that the majority of its merchandise will be sold for more than $1 by the end of April, a shift away from the approach that has been a cornerstone for over three decades.

The decision to raise prices to $1.25, which the retailer said in a statement is permanent and “not a reaction to short-term or transitory market conditions,” follows tests that Dollar Tree did earlier this year on some items in select stores. The company has also begun opening Dollar Tree Plus stores, which have products priced at $1, $3 and $5, and expects to have at least 500 of those locations open by the end of this fiscal year. 

See more: Dollar Tree Adding Higher-Priced Products to Stores

“Our Dollar Tree pricing tests have demonstrated broad consumer acceptance of the new price point and excitement about the additional offerings and extreme value we will be able to provide,” Dollar Tree President and CEO Michael Witynski said in a statement. A survey conducted by Dollar Tree found that 77% of shoppers were almost immediately aware of the new price points when visiting the store but 91% indicated they would still shop at Dollar Tree the same amount or more.

The slightly higher price points will allow Dollar Tree to bring back “many customer favorites and key traffic-driving products” that had to be discontinued when prices were locked at $1, the company said in a news release, and help mitigate higher freight and distribution costs as well as higher operating costs, such as wage increases.

“Lifting the one-dollar constraint represents a monumental step for our organization and we are enthusiastic about the opportunity to meaningfully improve our shoppers’ experience and unlock value for our stakeholders,” Witynski said. “Guided by Dollar Tree’s same founding principles, we will be relentless in our commitment to offer our customers the best value possible.”

In the third quarter, consolidated net sales increased by nearly 4% to $6.4 billion, with same-store sales across all brands up 1.6%. Family Dollar saw a 2.7% increase in same-store sales and Dollar Tree saw a 0.6% rise.