Dollar Tree, a popular discount retail chain known for its $1 pricing model, is implementing significant changes to its business strategy.
In a recent earnings call, the company announced plans to raise its maximum price point to $7 across 3,000 stores and introduce a wider range of merchandise priced between $1.50 and $7. This move comes as Dollar Tree tries to adapt to the evolving customer preferences and market dynamics.
According to CEO Rick Dreiling, the expanded price range will allow the retailer to offer a broader selection of products on its shelves, including larger pack sizes and new categories. Customers can expect to find items like $5 bags of dog food alongside the traditional $1.25 pet treats and toys, as well as $3 bags of candy in the candy aisle.
The decision to raise prices is driven by the growing presence of higher-income shoppers at Dollar Tree stores. Data from InMarket, a retail analytics firm, shows a 4% average increase in dollar store visits by consumers earning over $100,000 between the second half of 2022 and 2023.
This trend highlights the appeal of discounted prices across various income levels, prompting Dollar Tree to introduce higher-priced offerings to cater to this customer segment.
While expanding its pricing strategy, Dollar Tree also announced plans to streamline its store portfolio by closing approximately 600 Family Dollar locations this year. The company acquired Family Dollar in 2015 but has faced underperformance from some of these stores in recent times.
The specific locations slated for closure have not been disclosed, but reports indicate that some stores have already begun clearance sales to liquidate inventory before shutting down.
