Nov 23, 2021 - Economy & Business

Most things at The Dollar Tree will now cost $1.25

Photo of a person walking in the parking lot outside a Dollar Tree store

A Dollar Tree store in Bowie, Maryland. Photo: Jim Watson/AFP via Getty Images

Dollar Tree will raise prices from $1 to $1.25 on most of its products by the end of April, the company announced Tuesday.

Why it matters: Dollar Tree, which has sold products at $1 for 35 years, was among the last of the major U.S. dollar store chains to retain its $1 price. The change is a reflection of the pressure on low-cost retailers amid rising inflation, CNN notes.

  • For decades, Dollar Tree looked to cheaply sourced goods — and rock-bottom costs to get them to stores — to deliver the $1 price tag some communities have come to rely on, Axios' Courtenay Brown writes.

Details: Keeping prices at $1 forced Dollar Tree to stop selling some customer favorites, the company said.

  • The $1.25 price point will enable Dollar Tree to "return to its historical gross margin range by mitigating historically-high merchandise cost increases, including freight and distribution costs, as well as higher operating costs, such as wage increases."
  • The company said that 91% of shoppers surveyed during the initial testing phase indicated they would shop at Dollar Tree with the same or increased frequency.
  • The decision is permanent and not a "reaction to short-term or transitory market conditions."

What they're saying: "Lifting the one-dollar constraint represents a monumental step for our organization and we are enthusiastic about the opportunity to meaningfully improve our shoppers’ experience and unlock value for our stakeholders," President and CEO Michael Witynski said in a statement.

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