Lauren Moye, FISM NEWS
The end of the era of dollar stores is near as Dollar Tree – long committed to its $1 price point – plans to incorporate products at a higher price. The company announced a plan to sell products up to $1.50 on Tuesday in a move made necessary by rising inflation, labor costs, and supply-chain problems.
“For decades, our customers have enjoyed the ‘thrill-of-the-hunt’ for value at one dollar – and we remain committed to that core proposition – but many are telling us that they also want a broader product assortment when they come to shop,” said CEO Michael Witynski.
With a firm $1 selling price per item, Dollar Tree has been less flexible in how it can overcome rising product costs. Their long-standing commitment to a $1 price point meant eliminating certain products or replacing them with cheaper-quality substitutes. Bleach and cloth towels are examples of old product favorites that will now be able to return to the stores’ shelves under the new pricing strategy with better quality in place.
However, even with the elimination or replacement of products, Dollar Tree is still vulnerable to rising costs. In August, the company showed a reduced yearly profit forecast due to an increase in freight costs.
“Our brand promise is that customers get great value for what they spend at Dollar Tree. We will continue to be fiercely protective of that promise, regardless of the price point, whether it is $1.00, $1.25, $1.50,” Witynski said.
Investors responded positively to the announcement as Dollar Tree stock surged 15% on Wednesday.
Meanwhile, Sen. Chuck Grassley (R-Iowa) saw the move by the store as a further sign of growing inflation:
Dollar Tree raising prices on some items to above $1 How can Pres Biden still claim inflation not happening? Pres Biden: u can’t spend $6 trillion it’s like throwing gasoline on the inflation fires
— ChuckGrassley (@ChuckGrassley) September 30, 2021
Other Twitter users also took the opportunity to criticize Biden’s administration for forcing the popular dollar store to make this change:
Due to Biden-flation…. the Dollar Tree has announced it will now be The $1.25 to $1.50 Tree.
— Juanita Broaddrick (@atensnut) September 29, 2021
Rising inflation has been a challenge to both Democrats and President Joe Biden’s attempts to sell legislation like the Build Back Better Act. While Democrats and their voter-base blame rising prices on the pandemic, Republicans are concerned that inflation will be a long-term problem due to the Democrats spending spree.
A recent Morning Consult-Politico poll found that 59% of voters view Biden’s policies as either “very responsible” or “somewhat responsible” for the recent wave of inflation.
Dollar Tree has already been experimenting with strategies to overcome inflation, including testing “Dollar Tree Plus” in 340 of their existing stores. This specialized section focuses on selling a variety of items that are usually priced between $3 and $5. The company noted that these stores saw a 6% increase in sales lifts. They also plan to extend this model to an additional 500 stores by the end of 2021.
They also plan to expand on the company’s combo store strategy that allows Family Dollar and Dollar Tree branding to be shared.