Today Dollar Tree issued a press release discussing its finances for the third quarter of the 2021 fiscal year (July through September). The company discussed several things, but the biggest news among them was the announcement of a new $1.25 price point on the “majority” of Dollar Tree’s products. The company says that this will allow it to reintroduce products that had been previously discontinued as well as add new products.
The decision, the company says, is permanent, and “is not a reaction to short-term or transitory market conditions.” The press release notes that the price changes will begin in December and be finished by the end of the first quarter of 2022, which ends March 31st.
You can read the relevant excerpt from the Dollar Tree press release below.
Update on $1.25 Price Point at Dollar Tree Stores
For 35 years, Dollar Tree has managed through inflationary periods to maintain the everything-for-one-dollar philosophy that distinguished Dollar Tree and made it one of the most successful retail concepts for three decades. However, as detailed in its September announcement, the Company believes 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. This decision is permanent and is not a reaction to short-term or transitory market conditions.
The $1.25 price point, which will apply to a majority of Dollar Tree’s assortment, will enhance the Company’s ability to materially expand its offerings, introduce new products and sizes, and provide families with more of their daily essentials. The Company will have greater flexibility to continue providing incredible value that helps customers get the everyday items they need and celebratory and seasonal products Dollar Tree is best known for.
Additionally, this new pricing strategy enables the Company to reintroduce many customer favorites and key traffic-driving products that were previously discontinued due to the constraints of the $1.00 price point.
The new price point will enable Dollar Tree to return to its historical gross margin range by mitigating historically-high merchandise cost increases, including freight and distribution costs, as well as higher operating costs, such as wage increases.
The Company’s leadership team has been planning for the expansion of the initiative since late summer 2021. In September, the Company announced its plan to add additional price points above $1.00 to all Dollar Tree Plus stores and – on a test-and-learn basis – to selected legacy Dollar Tree stores. The Company was very encouraged by the positive customer feedback and store performance during the initial testing phase, and has since introduced the initiative in nearly 200 additional legacy Dollar Tree stores.
The results to date have been overwhelmingly positive. When surveyed, 77% of shoppers indicated they were almost immediately aware of the new price point when visiting the store. Additionally, 91% of those surveyed indicated they would shop Dollar Tree with the same or increased frequency. Many have also indicated they are seeing price increases across the market and that Dollar Tree is still providing the products they need at an undeniable value. As key traffic-driving products are reintroduced, the Company is confident that customers will be extremely pleased with the even greater value they will discover on store shelves.
The Company is focused on aggressively executing its plan to roll out the new price point across the chain with speed, clarity, and focus. The Company plans to introduce the new price point in more than 2,000 additional legacy Dollar Tree stores in December and complete the rollout to all stores by the end of the first fiscal quarter of 2022. Concurrently, the Company’s merchants are working to enhance the offerings to drive traffic, capture market share, and further grow customer loyalty.
“Lifting the one-dollar constraint represents a monumental step for our organization and we are enthusiastic about the opportunity to meaningfully improve our shoppers’ experience and unlock value for our stakeholders,” Witynski added. “Guided by Dollar Tree’s same founding principles, we will be relentless in our commitment to offer our customers the best value possible.”
Source: Dollar Tree
Now, my rebuttal to Dollar Tree: a 25% increase is more than DOUBLE the inflation rate. I will have one more reason not to shop at a business that is take advantage of inflation to increase profits.