Dollar Tree announced a "permanent" price increase for all stores across New York.
For 35 years, Dollar Tree has managed through inflationary periods to maintain the everything-for-one-dollar philosophy that distinguished Dollar Tree and made it one of the most successful retail concepts for three decades, officials say.
However, company officials believe now is the right time to increase prices. Most items that cost $1 will now cost $1.25. Dollar Tree, which owns Family Dollar, tested out the higher prices earlier this year.
"The $1.25 price point will enhance the Company’s ability to materially expand its offerings, introduce new products and sizes, and provide families with more of their daily essentials. The Company will have greater flexibility to continue providing incredible value that helps customers get the everyday items they need and celebratory and seasonal products Dollar Tree is best known for," company officials said in its third-quarter earnings report.
Company officials say the move is permanent and is not a reaction to short-term or transitory market conditions. The higher prices will go into effect at all stores by the end of the first quarter of 2022.
"The Company believes this is the appropriate time to shift away from the constraints of the $1.00 price point in order to continue offering extreme value to customers," officials add. "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."
While items will cost more, Family Dollar believes the new pricing strategy enables the company to reintroduce many customer favorites and key traffic-driving products that were previously discontinued due to the constraints of the $1.00 price point.
While testing out the higher price, 77 percent of shoppers said they were aware of the new prices, and 91 percent indicated they would shop at Dollar Tree with the same or increased frequency, according to Dollar Tree.
“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,” Dollar Tree President and Chief Executive Officer Michael 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.”
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