On Thursday, September 30, 2021, Dollar Tree, a multi-million dollar company, announced that storewide prices would be raised over a dollar at select locations. According to economic experts, inflation pressure, freight, and labor costs, paired with the Covid-19 pandemic have made it difficult for Dollar Tree to keep their prices down.
"The Dollar Tree banner is more sensitive to freight cost than others in the industry. Our products have lower price points than other retail importers," stated Witynski, President and Chief Executive Officer of Dollar Tree. Dollar Tree’s fixed $1 price point has given them less flexibility than other brands to offset inflation.
According to 4news, “It has not been released which locations will have these price differences, but added there will be $1.25 and $1.50 price points at some stores.” Until this announcement on Thursday, Dollar Tree was the last big branch to keep their merchandise under a dollar. Officials state that the raising of prices will give Dollar Tree more flexibility with the variety of goods they will be able to put on their shelves. However, it does come with the risk of customers being turned off by the new price change. Joseph Feldman, a Senior Research Analyst at Telsey Advisory Group, adds “Dollar Tree should benefit from changes in its pricing strategy, although we worry about the customer reaction, given their high sensitivity to prices.”
Dollar Tree has also rolled out a new “combination store”, which will have elements of Dollar Tree but with a mixture of merchandise, as reported by CNN Business. The company plans to roll out 1,500 traditional stores next year and 5,000 locations of Dollar Tree Plus over the next few years. They will also bring their higher priced items to 3,000 of these new locations.
You can only expect prices to rise as time goes on. Inflation will continue to be a problem for companies who pride themselves on their low prices that target lower income neighborhoods. Dollar tree is a staple in these communities, and is relied on to purchase basic necessities. With the rise in prices it will become a greater burden for those less fortunate. In the next couple months dollar tree will monitor sales, and hopefully readjust their prices to fit their targeted communities.
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