Dollar Tree raises most prices to $1.25 as inflation sweeps retail sector


Rapid inflation in the US economy has reached Dollar Tree, the discount store chain known for its “Everything’s $1” slogan, which on Tuesday announced it would raise prices for most merchandise to $1.25.

The US retailer plans to raise prices in more than 2,000 stores in December and complete the $1.25 rollout in all of its nearly 8,000 stores by the end of its first fiscal quarter next year. Dollar Tree sells a wide variety of household items, from paper plates to toothbrushes to Christmas decorations.

Supply chain bottlenecks have pushed up the cost of manufacturing and shipping goods in the US. Many retailers have been passing those higher costs to customers, pushing consumer prices up 6.2 per cent in October, their fastest annual pace in three decades.

New York-listed Dollar Tree cited “historically-high merchandise cost increases, including freight and distribution costs, as well as higher operating costs, such as wage increases,” as it announced the price increases.

“For 35 years, Dollar Tree has managed through inflationary periods to maintain the everything-for-one-dollar philosophy that distinguished Dollar Tree,” the company said. However, “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”, it added.

Dollar stores have sprung up across the US in response to demand from budget-conscious shoppers even as other brick-and-mortar chains shift their focus to ecommerce. Dollar Tree, which including its separate Family Dollar chain operates more than 15,900 total locations, competes with rivals including Dollar General, which sells goods at a variety of price points at more than 17,000 locations.

Dollar Tree said the move to $1.25 will allow stores to carry a wider array of merchandise, noting that in the past, some popular items had to be discontinued because they could no longer be sold for $1.

The price change comes after a test phase introduced in September, which has since been introduced to 200 more stores.

When Dollar Tree polled shoppers, 77 per cent said they were almost immediately aware of the price increase, according to the company. But 91 per cent of those surveyed indicated they would continue shopping at Dollar Tree with the same frequency or more.

“Guided by Dollar Tree’s same founding principles, we will be relentless in our commitment to offer our customers the best value possible,” said Michael Witynski, Dollar Tree chief executive.

Dollar Tree’s third-quarter financial results showed that net sales grew 3.9 per cent year on year in the three months to the end of October, while profits fell as freight costs proved higher than anticipated.

The company’s shares rose 6.2 per cent to $140.84 at midday in New York.

The price increase “is permanent and is not a reaction to short-term or transitory market conditions”, Dollar Tree said. The company noted that it believes much of the current freight challenges are temporary.


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