Dollar Tree has confirmed that its pricing is changing from "everything for $1" to "most things for $1.25." The company says the price hike is permanent and not a reaction to "short-term or transitory market conditions," MarketWatch reports, though analysts say inflation has clearly put pressure on the company. Dollar Tree, once known as "Only $1.00," had held prices at $1 since its founding in 1986, making it "one of America's last remaining true dollar stores," reports CNN. The company says it plans to bring in the $1.25 baseline price point at around 2,000 of its US stores in December, with the other 5,900 to follow early next year.
CEO Michael Witynski said Tuesday that keeping prices at $1 had forced the chain to stop selling some "customer favorites" that could now return. He said "lifting the one-dollar constraint represents a monumental step for our organization" and surveys had shown that 91% of customers would not shop at Dollar Tree less frequently if prices went up to $1.25. In September, the company said it planned to "break the buck" and experiment with higher prices. CNN reports that it accelerated plans to raise prices after hedge fund Mantle Ridge built a stake in the company and started pushing for changes.
Neil Saunders, an analyst at GlobalData Retail, says Dollar Tree customers are likely to accept the higher prices, since many other retailers are also struggling with inflation and supply chain issues, NBC reports. "It's not helpful, but it's not disastrous," says Saunders, who doesn't expect the company to change its name. "The 'One Dollar and a Quarter Tree store' doesn't have the same ring to it," he says. The company's stock rose 9% Tuesday. (More Dollar Tree stories.)
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