Rapid inflation in the U.S. economy has come to Dollar Tree, the discount store chain known for its “Everything is a Dollar” slogan, which announced Tuesday it will raise the price of most goods by $1, 25 dollars.
The US retailer plans to raise prices at more than 2,000 stores in December and complete the rollout of $1.25 to all of its nearly 8,000 stores by the end of the first fiscal quarter of next year. Dollar Tree sells a wide variety of household items, from paper plates to toothbrushes to Christmas decorations.
Congestion of the supply chain has pushed up the cost of manufacturing and transporting goods in the US. Many retailers have passed those higher costs on to customers, boosting consumer price grew 6.2% in October, the fastest annual rate in three decades.
New York-listed Dollar Tree cited “historically high increases in commodity costs, including transportation and distribution costs, as well as higher operating costs, such as wage increases,” when it announces a price increase.
“For 35 years, Dollar Tree has weathered inflationary periods maintaining the all-for-one philosophy that has made Dollar Tree different,” the company said. However, “this is the right time to break free from the constraints of the $1.00 price tag to continue to provide extreme value to customers,” it added.
Dollar store has sprung up across the United States to meet demand from budget-conscious shoppers even as other brick-and-mortar chains shift their focus to e-commerce. Dollar Tree, including the Family Dollar chain that operates more than 15,900 locations total, competes with competitors including Dollar General, which sells merchandise at a variety of prices at more than 17,000 locations.
Dollar Tree says the move to $1.25 will allow stores to stock a wider range of merchandise, noting that in the past, some popular items had to be discontinued because they were no longer available for sale. 1 dollar more.
The price change comes after a beta phase introduced in September, which has since been rolled out to another 200 stores.
According to the company, when Dollar Tree polled shoppers, 77% said they were almost immediately aware of the price increase. But 91% of those surveyed said they would continue to shop at Dollar Tree with the same frequency or more.
“Guided by the founding principles of Dollar Tree, we will continue to remain committed to providing our customers with the best value possible,” said Michael Witynski, chief executive officer of Dollar Tree.
Dollar Tree’s third-quarter financial results showed net sales rose 3.9% year-on-year in the three months to the end of October, while profits fell due to higher-than-anticipated transportation costs.
Shares of the company rose 6.2% to $140.84 at midday in New York.
The price increase “is permanent and is not a response to short-term or transient market conditions,” Dollar Tree said. The company notes that it believes many of its current freight challenges are temporary.