Dollar Tree Is Raising Prices as High as $5: "This Is Our Future"
A company executive said "the hard part" is already over.
When it comes to bargain shopping, you really can't beat the prices at dollar stores. Dollar Tree, in particular, is known for keeping prices pretty close to the $1 mark—at least, until 2021, when the company announced the new standard price would be $1.25. Now, the discount chain has shared that shoppers will see even higher prices, with some items retailing for as much as $5. Read on to find out why Dollar Tree prices are going up yet again.
READ THIS NEXT: Communities Are Fighting Back Against Dollar General and Dollar Tree—Here's Why.
Executives say "the hard part" is over.
Dollar Tree is expanding its price points to include more items between $3 and $5, with executives revealing further plans for "expanded value assortment" at an annual investor conference on June 21, Winsight Grocery Business reported.
According to Dollar Tree CEO Rick Dreiling, introducing higher price points is a natural move following its last pricing shift.
"The hard part has been done," Dreiling said. "That leap to $1.25 was painful but that is done now, and it's time for us to capitalize on it."
Expect to see higher prices at additional stores.
The idea to introduce multiple price points has been in the works for years. During a March 1 earnings call, executives revealed that the company would be adding more "multiple price point products" to almost 2,000 stores.
This includes Dollar Tree Plus, a line of seasonal items, toys, apparel, and other products sold at a higher price point. The Dollar Tree Plus line is currently available at 2,915 stores, but according to a presentation from the June 21 conference, Dollar Tree has plans to expand the line to 1,350 more stores this year.
In addition, the retailer now has its sights set on pricier groceries. Per the presentation, $3, $4, and $5 frozen food products have already been added to 3,935 stores, with plans to bring these products to 1,600 additional stores this year.
To illustrate the transition to the multi-price point model, Dollar Tree used the example of its frozen products, a majority of which are still $1.25. These items typically occupy seven of the freezers in stores, while just three freezers have $3, $4, and $5 products.
But eventually, there will be eight freezers with the pricier products, and just two with the $1.25 items.
RELATED: For more up-to-date information, sign up for our daily newsletter.
The company tested name-brand bread and ice cream.
Per the recent presentation, Dollar Tree has tested the sale of $3 branded bread and $5 branded ice cream. Following success with customers, both products are being expanded to more stores before the end of 2023.
Speaking about the branded ice cream sales, Richard McNeely, chief merchandising officer for Dollar Tree, said that the tests had "very positive results," Winsight Grocery Business reported.
"It is now on pace to be the most productive frozen door that we have," McNeely added." The same goes for ice, as Dollar Tree's seven-pound bags are now selling for $2.
"We were on the verge of losing the ice program at $1.25," McNeely said of its previous model of selling five-pound bags, which were custom-made. "The vendor didn't want to make the item. They were raising the price, and we had nowhere to go. So, by the way, ice is in the top 50 every week. It's a key item for us, the customer is loving it, and now it's working at $2."
Executives say higher price points are the "future" of Dollar Tree.
Dollar Tree is working with consultants to identify the ideal price assortment for products, which Winsight Grocery Business points out wasn't a concern when stores were selling items strictly for $1 or $1.25.
According to McNeely, Dollar Tree is most "excited" about the food sector, which is a $500 billion market. The company is currently profiting from food items under $2, but McNeely said items within the $2.01 to $5 range are "another huge market that is untapped for us."
He continued," That's where we're going first. And this is our future."
