The rapid inflation of the U.S. economy has affected the discount chain Dollar Tree, known for its “everything is $1” slogan. The company announced on Tuesday that it would increase the price of most products to $1.25.
The U.S. retailer plans to increase prices in more than 2,000 stores in December and complete sales of $1.25 in all its nearly 8,000 stores before the end of the first fiscal quarter next year. Dollar Tree sells a wide range of household items, from paper plates to toothbrushes to Christmas decorations.
Supply chain bottlenecks have pushed up manufacturing and transportation costs in the United States.Many retailers have been passing on these higher costs to customers, pushing Consumer price It grew by 6.2% in October, the fastest annual growth rate in three years.
Dollar Tree, which is listed in New York, said when announcing the price increase, “the increase in the cost of goods including freight and distribution costs has reached a record high, and the increase in operating costs such as wage increases.”
The company said: “For 35 years, Dollar Tree has maintained its value of one dollar during an inflationary period.” However, “now is the right time to get rid of the $1.00 price limit in order to continue to provide customers with extreme value,” it added.
Dollar store Although other brick-and-mortar chains have shifted their focus to e-commerce, they have sprung up all over the United States in order to meet the needs of budget-conscious shoppers. Dollar Tree, including its independent Family Dollar chain, operates more than 15,900 locations in total and competes with competitors including Dollar General, which sells goods at various price points in more than 17,000 locations.
Dollar Tree stated that the increase to US$1.25 will enable stores to sell more types of goods, noting that in the past, some popular products had to be discontinued because they could no longer be sold for US$1.
The price change was carried out after the testing phase launched in September and has since been launched in more than 200 stores.
According to the company, when Dollar Tree polled shoppers, 77% said they were almost immediately aware of the price increase. But 91% of respondents said they will continue to shop at Dollar Tree with the same or more frequency.
“Under the guidance of Dollar Tree’s same founding principles, we will relentlessly strive to provide our customers with the best value possible,” said Dollar Tree CEO Michael Witynski.
Dollar Tree’s third-quarter financial results showed that in the three months to the end of October, net sales increased by 3.9% year-on-year, and profits fell due to higher-than-expected freight costs.
The company’s stock price rose 6.2% to $140.84 in New York midday.
Dollar Tree stated that price increases are “permanent and not a response to short-term or temporary market conditions”. The company noted that it believes that most of the current freight challenges are temporary.