The Real Reason Some Things At Dollar Tree Cost More Than A Dollar
The Dollar Tree corporation owns more than 15,000 stores in 48 states and five Canadian provinces, according to the company. Throughout Dollar Tree's history, price-conscious consumers have praised it for offering a wide variety of items such as party supplies, kitchen accessories, food, toiletries, and even automotive supplies for a mere dollar.
But in 2019, Dollar Tree began testing Dollar Tree Plus! merchandise, according to ConvenienceStore News. The initial test proved successful, inspiring an additional rollout to 100 stores (via Yahoo! Finance). The more expensive items (which are not price changes to existing stock, but rather, they're new to the store) are promoted as "More Choices, More Sizes, and More Savings."
Why tweak the business model now? Company CEO Gary Philbin said in a statement, "We have always been a 'test-and-learn' organization that is committed to evaluating all opportunities to deliver great value for our customers while driving long-term value creation." The question remains why Dollar Tree is raising prices at its dollar-only store when it purchased Family Dollar in 2015 for $8.5 billion, according to Inc.
Why Dollar Tree is raising prices now
Dollar Tree battled it out against Dollar General to purchase Family Dollar back in 2015, and now the Family Dollar brand is struggling due to competition, out-of-stock items, and international transportation costs, according to Yahoo! Finance. However, Dollar Tree has no plans to sell the company, committing itself to fix the problem by revamping stores and opening new locations of Family Dollar.
But, spending all of this money on Family Dollar is creating a need to raise funds elsewhere. Analysts estimate that by starting with a $1.25 price point on Dollar TreePlus! items and eventually reaching $2.25 in five years, the company's same-store sales could increase significantly, resulting in operating profits of $3.5 billion for Dollar Tree in 2024 versus $1.6 billion in 2019. Whether or not they go through with the price hikes at a store near you, they'll always have tricks to make you spend more money.