The Dollar Store Isn't Selling Everything at $1 Anymore; Price Rise Shocks Consumers
The rise of e-commerce sites that offer convenience as well as more options as compared to brick-and-mortar stores, has made it clear for traditional retail chains in the US that they must adapt to change for survival. Dollar Tree, a prominent player in the discount retail sector has recently announced its decision to raise the prices on some items, which is set to have a significant impact for shoppers as well as the stores. This might be a major departure from the store's unique selling point, which is products priced at $1 or less, since customers are shocked about the price cap going up to $7. This bold move was announced at the time of the fourth-quarter earnings call, and a price hike at Dollar Tree is not new, since it was previously elevated from $1 to $1.25 in 2021 and in June 2023 it reached $5. Store's CEO Rick Dreiling issued a statement saying, "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".
Following the announcement of this change, shoppers were curious about the categories that would be affected by the higher price cap. Dreiling cleared the air and mentioned, "This multi-price assortment would impact the prices of food, pet and personal care items. Over time, you will also see us fully integrate multi-price merchandise into our stores. This will assist our shoppers find $5 bags of dog food next to our traditional $1.25 pet treats and toys, and our $3 bags of candy will be found in the candy aisle". As per CNN, Dollar Tree bought Family Dollar for $8.5 billion in July 2014 and is set to make some more revelations.
But this move wasn't the only shock for the shoppers, as the company announced that 400 Family Dollar and Dollar Tree stores will be closed in the next few years, mostly because their leases are expiring. Residents won't be able to access the Family Dollar stores in these cities i.e. Middletown, N.J., Tallahassee, Fla., Peoria, Ill., Lynchburg, Va., East Liverpool, Ohio, Wilmington, N.C., Slocomb, Ala., Humansville, Mo., Willow Springs, Mo., Wichita, Kan., Clearwater, S.C., and Elkins, W. Va. The Wall Street Journal reported that the Dollar Tree store witnessed a 4% increase in its customer visits between the second half of 2022 and 2023. The shoppers who entered the store mostly earned more than $100,000 a year, which made it a popular affordable brand.
The retailer's share price dipped to $126.15 after the announcement Dollar Tree closed its financial year 2024 with 16,774 stores across 48 states and five Canadian provinces. In the fourth quarter, they opened 219 more stores and overall a total of 641 stores in the last year. Furthermore, the store is planning to offer its customers $3 and $5 items in around 5,000 stores and $5 frozen and refrigerated items will be available in over 6,500 stores.
