- At its annual investor conference last week, Dollar Tree outlined its strategy to offer products that cost up to $5 across thousands of stores.
- The discount retailer noted that “breaking the dollar” — moving its primary price point up from $1 to $1.25 — has helped improve comp sales as well as allowed the company to expand its product selection. Now, the company is moving into $3, $4 and $5 items in categories like frozen foods, bread and general merchandise.
- This uptick in prices has boosted baskets for the company, but comes as consumers continue to feel the effects of record-breaking inflation.
Dollar Tree is pushing well beyond its namesake price point as it looks to boost consumer spending and round out its shopping experience.
The discount retailer began piloting products at $1.25 in 2019 and last year expanded that selection to 2,500 stores and four distribution centers, according to a company presentation. By the end of this year, Dollar Tree’s “multi-price” strategy will be on display across 4,300 stores.
Part of that plan includes pushing into $3, $4 and even $5 merchandise in discretionary as well as food categories.
“From $2.01 to $5 [price points], there’s another huge market that is untapped for us,” Rick McNeely, Dollar Tree’s chief merchandising officer, said during the conference.
When offering consumables for $1.25, Dollar Tree has been limited to “single serve or a novelty offering,” McNeely said. By moving to the $3, $4 and $5 assortment, the discounter is able to stock meal solutions, add protein and offer branded ice cream, creating a more complete shopping experience at Dollar Tree, he added.
In May, Dollar Tree piloted refrigerated items at the $3 price point at 140 store locations and saw significant comp growth. Dollar Tree has also piloted $3 packaged bread and $5 ice cream in hundreds of stores.
Currently, Dollar Tree’s frozen setup in stores participating in its multi-price program consists of seven doors offering products for $1.25 and three doors offering products at $3, $4 and $5. By 2025, the retailer plans to have two doors remaining at $1.25 while eight doors will be stocked with goods marked at $3, $4 and $5.
While the multi-price assortment will continue to grow, McNeely noted that roughly 300 to 400 products will return to costing just $1. He added that Dollar Tree will continue to try and communicate its pricing strategy to customers.
Dollar Tree received backlash from its customers when it initially pushed past the $1 price point, but during the company’s most recent earnings call, CEO Rick Dreiling said that “any backlash on that is behind us.”