The company — one of America’s last remaining real dollar stores — said Tuesday it will raise prices from $1 to $1.25 for most of its products in the first quarter. The first of 2022. This change is indicative of the pressures that low-cost retailers are facing. prices during periods of high inflation.
The company said selling things for $1 has hampered Dollar Tree and forced it to stop selling some of its “customer favorites”. The price increase will give Dollar Tree more flexibility to reintroduce those items, expand its selection, and bring new products and sizes to its stores.
Dollar Tree also said the price increase would help the company increase profit margins by “minimizing increases in historically high commodity costs,” including transportation and distribution costs, as well as wage increases.
“This is the right time to break free from the constraints of the $1 price tag,” CEO Michael Witynski said in a statement.
The end of dollar stores
Dollar Tree mainly carries seasonal items, toys, stationery, home decor, kitchenware and party supplies.
Dollar Tree has been selling products at $1 for 35 years and is the last of the big dollar stores that are actually dollar stores. (The company became known as “Just $1.00” in the late 20th century, before changing its name to Dollar Tree in 1993.)
Dollar Tree has begun moving away from offering just $1 merchandise in recent years, in part in response to Wall Street’s bullish pressure. Dollar Tree has lagged behind Dollar General and other discount chains.
In 2019, an activist investor bought shares of the company and fueled the bullish streak. The team ended the fight after Dollar Tree announced that it plans to experiment with different rates.
Although Dollar Tree says its decision to permanently raise prices is not a response to short-term inflation, one analyst remains unconvinced.
“Deployment speed, along with [the] Sticky investor, Mantle Ridge, clearly suggests the opposite,” Kelly Bania, an analyst at BMO Capital Markets, said in a note to clients Tuesday.
