Rapid inflation in the US economy reached Dollar Tree, the discount store chain known for its “Everything’s $ 1” slogan, which announced on Tuesday that it would raise prices for most goods to $ 1.25.
The U.S. retailer plans to raise prices in more than 2,000 stores in December and complete the $ 1.25 deployment in all of its nearly 8,000 stores by the end of its first fiscal quarter next year. Dollar Tree sells a wide variety of household items, from paper plates to toothbrushes to Christmas decorations.
Supply chain bottlenecks have pushed up the cost of manufacturing and shipping goods in the US. Many retailers have passed on the higher costs to customers and pressure consumer prices rose 6.2 percent in October, their fastest annual pace in three decades.
Listed in New York, Dollar Tree quoted “historically high commodity cost increases, including freight and distribution costs, as well as higher operating costs, such as wage increases,” while announcing price increases.
“For 35 years, Dollar Tree has managed this through inflationary periods to uphold the all-for-one-dollar philosophy that distinguished Dollar Tree,” the company said. “However, this is the appropriate time to move away from the $ 1.00 price point constraints to continue to offer extreme value to customers,” it added.
Dollar stores originated across the U.S. in response to demand from budget-conscious buyers, even as other brick-and-mortar chains shift their focus to e-commerce. Dollar Tree, which includes its separate Family Dollar chain, operates more than 15,900 total locations, competing with competitors, including Dollar General, which sells goods at a variety of price points in more than 17,000 locations.
Dollar Tree said the move to $ 1.25 would allow stores to carry a wider range of goods, noting that some popular items had to be discontinued in the past because they could no longer be sold for $ 1.
The price change comes after a test phase introduced in September, which has since been introduced to another 200 stores.
When Dollar Tree polled buyers, 77 percent said they were aware of the price increase almost immediately, according to the company. But 91 percent of those surveyed indicated that they would continue to shop at Dollar Tree with the same frequency or more.
“Guided by Dollar Tree’s same founding principles, we will be relentless in our commitment to providing our customers with the best value possible,” said Michael Witynski, Dollar Tree CEO.
Dollar Tree’s third-quarter financial results showed year-on-year net sales grew 3.9 percent year-on-year in the three months to end-October, while profits fell as freight costs were higher than expected.
The company’s shares rose 6.2 percent to $ 140.84 by noon in New York.
The price increase “is permanent and is not a response to short-term or transient market conditions,” Dollar Tree said. The company noted that it believes many of the current cargo challenges are temporary.