Yahoo Finance The 10 Dollar Tree? How Much Stores Could Hike Prices in the Near Future
Dollar Tree, which also owns Family Dollar, is known for pricing its items at around $1, but inflation and other pressures may cause the dollar store to abandon its original pricing model.
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Earlier this year, Dollar Tree announced plans to increase the minimum from $1.25 to $1.50 and the maximum from $5 to $7. “This year, across 3,000 stores, we expect to expand our multi-price assortment by over 300 items at price points ranging from $1.50 to $7,” Dollar Tree CEO Rick Dreiling said during the company’s fourth quarter earnings call in March.
The base price was originally increased to $1.25 in 2021 for the first time in decades.
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Increasing Pricing Means Broader Product Selection
According to Dreiling, this decision was made in order to add new products to store shelves. Over time, Dreiling said the the company will fully integrate multi-price merchandise in more of its stores.
Some have noted that this could be the death of the dollar store. In April, California-based 99 Cents Only announced it would be closing all 371 locations, KTLA reported. The company blamed economic factors, including rising levels of shrink, inflation and shifting consumer demands. The retailer sold items for 99 cents or less for years. Over time, it was mostly 99 cents, but some items did cost more.
Dollar Tree also announced that it would close nearly 1,000 stores. Bigger retailers offering discounted prices, such as JC Penney, Sears and others, are also disappearing.
Are We Facing a Retail Apocalypse?
It’s been dubbed the “retail apocalypse.” KTLA consumer reporter David Lazarus said discount stores reflect a different time and a different economy, and once prices start going up, the competitive advantage disappears.
Now, retailers like Target and Walmart are cutting prices to fill the void, according to KTLA. Target reduced prices on 1,500 “frequently shopped items,” and other retailers like Five Below price almost all of its items between one dollar and five dollars.
According to Lazarus, we could see additional price hikes, but dollar stores could also return to their original pricing model.
“Expensive leases and labor costs only add to the challenges. As inflation — and prices — start to come down, this could change. For the moment, it’s a rough time to be a bargain merchant,” he concluded.
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