Some shoppers have started derisively calling the chain “$1.25 Tree” and say it should change its name.
The criticism highlights the risks that Dollar Tree — the last of the big dollar store chains to actually sell nearly everything for a dollar — took when it abandoned its $1 brand identity.
“This is the worst time to increase the price, when everything else is so much,” she said.
We won’t know for certain whether customers are turning their backs on Dollar Tree’s new prices until it reports its quarterly results in the coming weeks. But there are signs the move may be alienating some shoppers.
Dollar Tree added the $1.25 prices to more than 2,000 stores in December (it has around 8,700 US stores), and Coresight said in a report that its “decline in shopper numbers appears to coincide with its price hike.” The firm cautioned against an “overreliance on a single week’s data point,” but said the latest figures “may reflect a shopper exodus on the back” of the price change.
“We have had a very positive response from the overwhelming majority of our customers around the $1.25 price point and the extreme value and broader product selection it has enabled, especially in these inflationary times,” a Dollar Tree spokesperson said in an email. “We look forward to providing more details on this initiative during our next earnings call.”
‘Our niche’
“Ditch the dollar, I believed, and we’d surrender our niche,” he wrote.
As recently as August, Dollar Tree chief executive Michael Witynski said the company was committed to $1. “This dollar price point is going to be more important than ever,” he said on an analyst call.
Selling everything for $1 was also easy on Dollar Tree store operations. Workers didn’t have to constantly spend time changing price displays in aisles or tags on shelves, and it was simple for customers on tight budgets to keep track as they shopped.
Some merchandise also suffered as a result of the $1 strategy. The chain had to discontinue several “customer favorites,” the company said in November, particularly in packaged and frozen foods. Raising prices will give Dollar Tree flexibility to reintroduce those items, expand its selection and bring in new products to draw customers, according to the company.
Dollar Tree had started selling items at $1.25 and $1.50 at some stores and said it got positive positive customer feedback on the test, leading the company to announce in November that it will move to $1.25 at all of its stores.
“We all, in the Dollar Tree community, hoped it wouldn’t happen,” she said, adding that $1 was a price “you could count on.”
“There was no doing math in your head or anything like that,” she said. “You know you could go to the Dollar Tree with $10 and walk out with 10 items.”
Although Dollar Tree has put up new signs at stores that say it will offer new items and “more thrills” at $1.25, she has yet to see the change.
“It’s like they’re promising you something more for 25 cents. But it’s not. It’s all the same quality and types of products.”
