Dollar Tree’s Price Hike Suggests Quality Improvement But Some People Are Still Worried

By: Savvy Dime Staff | Published: Apr 07, 2024

It used to be that you could find anything, from cleaning products to office supplies, for $1 at Dollar Tree. But a continuing price increase by the discount retailer is changing the situation.

Dollar Tree announced that the maximum cap of products at their stores is now $7.00! And shoppers are wondering, “Is it time to worry yet?”

A Steady Increase

Admittedly, Dollar Tree has been steadily raising prices. The 1-dollar price tag went up to $1.25 in 2021.

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Then, the cap was increased again to $5.00 not too long ago in June 2023. And now the cap is set at $7.00.

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Strong Finish in 2023

Interestingly enough, this price hike came at the end of what Chairman and CEO Rick Dreiling called a strong finish to the year.

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“Fourth quarter results [reflects] positive traffic trends, market share gains, and adjusted margin improvement across both segments,” Dreiling’s statement said. The new multi-price rollout at Dollar Tree is part of what he termed as “the early stages of our transformation journey.”

Wealthy Customers Shop There

A reasonable speculation as to why the price hike is happening is because there are more wealthy families now shopping at Dollar Tree.

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These shoppers come from households that earn more than $125,000 annually. But you can’t blame rich people for shopping at discount retailers. Michael Liersch of Wells Fargo told The Wall Street Journal, “These days, it’s about making the most of your money and not getting ripped off.”

A Decisive Closure

That transformation would also include “taking decisive action to improve profitability and unlocking value at Family Dollar.”

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A cardboard sign with red text saying Closed

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Family Dollar, another retail business that Dollar Tree bought in 2014, faces the closure of 600 shops in different locations, including Ohio and Florida. More stores will also be closed due to leases expiring.

A Botched Acquisition

Some have seen Family Dollar’s closure coming with one market analyst calling the Family Dollar buy as a “botched acquisition.”

A view of a Family Dollar Store and its parking lot

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The purchase of Family Dollar was described by GlobalData’s managing director Neil Saunders as to be causing Dollar Tree “nothing but hassle. Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around.”

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Rising Prices Everywhere

The price increase will come to across 3,000 Dollar Tree stores and include more than 300 items. Some items’ base price will also change to $1.50.

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“Over time, you will see us fully integrate multi-price merchandise more into our stores so our shoppers will 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,” Dreiling said.

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Frozen Goods

The higher priced items seem to apply to groceries and food items, particularly frozen ones. But pet foods and personal care items prices will also rise.

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The Dollar Tree press release mentioned $3 and $5 center-store merchandise being available at around 5,000 stores. Frozen and refrigerated items priced at $3, $4, and $5 will be available at more than 6,500 stores.

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Higher Price for Better Quality

Not everyone is worried about Dollar Tree’s price hike. Some shoppers noted that some items are “worth it” even with the bigger price tag.

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A Dollar Tree store in Fort Collins, Colorado, sold gaming keyboards and branded T-shirts for $5. The shopper also “scored” a pair of Ted Lasso socks for a bargain.

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Becoming More Relevant

People may be asking, “Can you even call it a dollar store anymore?” Probably not. But even Dollar Tree’s competitor, Dollar General, doesn’t sell items at a single price anymore.

A person holding a wallet and counting the money inside

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Adding variety to the product range and bringing higher quality to the products may be the more relevant strategy for the future, especially if their target market is changing with higher earners shopping there.

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TikTok Prediction

What’s amazing is that TikTok seems to have predicted the price hike from a mile away. One TikTok user noticed the increasing base price from $1.25 to $1.50 in February.

A hand holding an iPhone with TikTok logo on its screen

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Also in February, another user used a price scanner and discovered that some prices were higher. After talking about it to a manager, the manager confirmed that the price would indeed increase very soon. Many people on the platform lamented and shared these users’ worries over the new pricing.

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Cheap, Cheaper, Cheapest

The question is now whether Dollar Tree can still be the discount retailer with the cheapest prices. An expert said last year that Dollar Tree’s value is bigger than most and that value is what the chain should retain.

A black woman wearing a mask checking the price of a product

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Certainly for “Dollar Tree Foodies” like Rebecca of Dollar Tree Dinners, they hope so. A budget of $10 can feed a single adult for 12 meals, after all. But if the prices continue to rise, Dollar Tree is going to lose its special place in the dollar-store market.

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