Dollar Tree announced last week that it has begun rolling out a price point increase of 25 cents across its stores nationwide.
The $1.25 price point, which will apply to a majority of Dollar Tree’s assortment, will enhance its ability to expand its offerings, introduce new products and sizes, and provide families with more of their daily essentials, according to the retailer. The pricing will also enable Dollar Tree to reintroduce customer favorites and key traffic-driving products that were previously discontinued due to the constraints of the $1 price point, according to the retailer.
The new price point will enable Dollar Tree to return to its historical gross margin range by mitigating historically-high merchandise cost increases, including freight and distribution costs, as well as higher operating costs, such as wage increases, it said.
Dollar Tree’s leadership team has been planning for the expansion of the initiative since late summer 2021. In September, it announced its plan to add additional price points above $1 to all Dollar Tree Plus stores and – on a test-and-learn basis – to selected legacy Dollar Tree stores. The company was encouraged by the positive customer feedback and store performance during the initial testing phase, and has since introduced the initiative in nearly 200 additional legacy Dollar Tree stores.
When surveyed, 77 percent of shoppers indicated they were almost immediately aware of the new price point when visiting the store. Additionally, 91 percent of those surveyed indicated they would shop Dollar Tree with the same or increased frequency. Many have also indicated they are seeing price increases across the market and that Dollar Tree is still providing the products they need at a value.
“We experienced a strong finish to the quarter, as shoppers are increasingly focused on value in this inflationary environment,” said Michael Witynski, President and CEO, in a statement. “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. Accordingly, we have begun rolling out the $1.25 price point at all Dollar Tree stores nationwide. The continuing expansion of our key strategic initiatives, including Dollar Tree Plus, Combo Stores and the H2 format, are all going well and on, or ahead of, plan. I am very proud of our team’s efforts – especially those in our stores and distribution centers – to serve our customers by delivering incredible value on everyday products.”
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