Dollar Tree, as its name suggests, has long been known for its low prices. However, the store recently increased its price cap to a whopping $7 — up from $5 in 2023.
While $7 might not seem like a lot of money, it’s certainly a high cost for a “dollar store.” In fact, just a few years ago in 2021, Dollar Tree also raised its base price to only $1.25.
The new price increase will affect over 300 items, specifically food, pet, and personal care items. Additionally, the bargain retailer announced that they are preparing to close some 600 Family Dollar locations.
Many consumers shared their disbelief and frustrations on X (previously Twitter), with comments such as “Looks like Dollar Tree is feeling fancy with their new $7 price cap. Time to treat myself to the fanciest thing in the store – maybe a whole pack of gum.”
Another user said, “If they didn’t open so many stores and close in failure they could have kept prices where they were.”
Why Dollar Tree Raised Its Price Cap
CEO Rick Dreiling shared his reasoning for the price increase in an earnings call: “This year, across 3,000 stores, we expect to expand our multi-price assortment by over 300 items at price points ranging from $1.50 to $7,” he said.
“But even as our multi-price assortment expands over time, the vast majority of the items sold in Dollar Tree stores will remain at our entry-level fixed price point.”
Dreiling noted that the company’s “fastest-growing demographic” earns a yearly salary that is “north of $125,000.”
This choice will hopefully help the store offer more products to shoppers rather than take away current ones or make them less affordable.
“Over time, you will also 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 continued.
“This is the next exciting chapter of the Dollar Tree value story: new items, more choices, and more savings.”
According to Dreiling (and despite the backlash seen on X), this has been a successful change for the company.
“The Dollar Tree multi-price point strategy is doing significantly better than we thought it would do,” he said. “The customer acceptance has been off the chart, to be frank.”
However, there have been some challenges for the brand. “Our biggest problem right now is getting enough merchandise into the stores fast enough so the consumer can respond.”