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09/29/2021

Dollar Tree Raises $1 Price Point

Discount retailer poised to take next steps in multiprice evolution
Marian Zboraj
Digital Editor
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Dollar Tree Raises $1 Price Point
Dollar Tree will begin testing additional price points above $1 in selected legacy stores.

Dollar Tree Inc. is citing positive customer reaction and the success of its new Combo and Dollar Tree Plus store formats as the reason for adding new price points above $1 across all of its Dollar Tree Plus stores. The discount retailer also said that it will begin testing additional price points above $1 in selected legacy Dollar Tree stores.

“For decades, our customers have enjoyed the ‘thrill of the hunt’ for value at $1 — and we remain committed to that core proposition — but many are telling us that they also want a broader product assortment when they come to shop,” said Michael Witynski, president and CEO. “We believe testing additional price points above $1 for Dollar Tree product will enable us over time to expand our assortments, introduce new products and meet more of our customers’ everyday needs.”

The company’s newest store format, the Combination Store, has brought a multiprice assortment to Dollar Tree shoppers since 2019. Dollar Tree now operates 105 Combo Stores. Back in March, the company said that the Combo Stores were delivering a same-store sales lift of greater than 20% on average. The retailer expects to add 400 Combo Stores in fiscal 2022, with the potential of up to 3,000 over the next several years.

According to Dollar Tree, it's also on track in 2021 to have 500 Dollar Tree Plus stores by fiscal year-end, offering an assortment of products priced at $1, $3 and $5. Another 1,500 stores are planned for fiscal 2022, and at least 5,000 Dollar Tree Plus stores are expected by the end of fiscal 2024.

“We are a ‘test-and-learn’ organization, which is what we are doing with this new initiative. We listen to our customers and believe it will make shopping with us an even better experience,” said Witynski regarding the multiprice plans. “Our merchants have proven that they are among the best in the industry in working with suppliers to create extreme value, and we will continue to deliver the ‘thrill of the hunt’ to our customers.

“Our brand promise is that customers get great value for what they spend at Dollar Tree. We will continue to be fiercely protective of that promise, regardless of the price point, whether it is $1, $1.25 [or] $1.50,” added Witynski.

Being a single-price-point retailer has always been challenging from a sourcing standpoint. According to its Q2 earnings report that recapped performance for the fiscal quarter ending July 31, Dollar Tree fell short of some Wall Street expectations but posted improvements in operating margin and earnings. Consolidated net sales reached $6.34 billion for the quarter, and although enterprise-wide same-store sales dipped 1.2% on a constant-currency basis, they were up 6% compared with the pre-pandemic 2019 second quarter. Sales at the Dollar Tree banner were more or less flat, dipping 0.2% in that same time frame.

Meanwhile, Dollar Tree reported on Sept. 29 that its board of directors increased the company’s share repurchase authorization by $1.05 billion to an aggregate amount of $2.5 billion, including approximately $1.45 billion available for repurchases under the board’s previous repurchase authorization approved on March 2.

Chesapeake, Va.-based Dollar Tree, which operates more than 15,800 stores across 48 states and five Canadian provinces, including stores operating under the Family Dollar banner, is No. 30 on The PG 100, Progressive Grocer’s 2021 list of the top food and consumables retailers in North America

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