Rapid inflation in the U.S. economy has reached Dollar Tree, the discount chain known for its ‘Everything is $1’ slogan, which said on Tuesday it would raise prices for most goods to $1.25 $.
The U.S. retailer plans to raise prices at more than 2,000 stores in December and complete the $1.25 rollout across all of its nearly 8,000 stores by the end of its fiscal first quarter. next year. Dollar Tree sells a wide variety of household items, from paper plates to toothbrushes to Christmas decorations.
Supply chain bottlenecks have driven up the cost of manufacturing and shipping goods to the United States. Many retailers passed those higher costs onto customers, pushing consumer prices up 6.2% in October, their fastest annual pace in three decades.
New York-listed Dollar Tree cited “historically high increases in commodity costs, including transportation and distribution costs, as well as higher operating costs, such as wage increases,” as he announced the price increases.
“For 35 years, Dollar Tree has managed through periods of inflation to maintain the everything-for-a-dollar philosophy that set Dollar Tree apart,” the company said. However, “now is an appropriate time to move away from the constraints of the $1.00 price to continue delivering extreme value to customers,” he added.
Dollar stores have sprung up in the United States in response to demand from budget-conscious shoppers, even as other brick-and-mortar chains focus on e-commerce. Dollar Tree, which, including its separate Family Dollar chain, operates more than 15,900 locations in total, competes with rivals including Dollar General, which sells merchandise at various prices at more than 17,000 locations.
Dollar Tree said the move to $1.25 will allow stores to carry a wider range of merchandise, noting that in the past some popular items had to be discontinued because they could no longer be sold for $1.
The price change comes after a test phase introduced in September, which has since been rolled out to an additional 200 stores.
When Dollar Tree surveyed shoppers, 77% said they knew about the price increase almost immediately, according to the company. But 91% of respondents said they would continue to shop at Dollar Tree with the same frequency or more.
“Guided by the same founding principles of Dollar Tree, we will be relentless in our commitment to providing our customers with the best possible value,” said Michael Witynski, CEO of Dollar Tree.
Dollar Tree’s third-quarter financial results showed net sales rose 3.9% year-on-year in the three months to late October, while profits fell as transportation costs came in higher. higher than expected.
Shares of the company rose 6.2% to $140.84 at midday New York.
The price increase “is permanent and is not a reaction to short-term or transient market conditions,” Dollar Tree said. The company said it believes much of the current freight challenges are temporary.