Dive Brief:
- Dollar Tree, Inc. shoppers can expect to see items priced as high as $7 as the retailer expands its “multi-price assortment,” CEO Rick Dreiling said during a Wednesday earnings call.
- The discount retailer is adding 300 items priced between $1.50 and $7 to 3,000 stores as it aims to offer a wider variety of food and snacks, beverages, pet care, personal care and more.
- Dollar Tree has been increasing prices on select items since 2019 in an effort to bolster its assortment while still appealing to its price-conscious consumer base.
Dive Insight:
Dollar Tree is raising price points as its stores are bringing in more high-income shoppers. Last year, the discount retailer added 3.4 million new customers, mostly from households earning more than $125,000 per year, Dreiling said during Wednesday’s call.
Over time, Dollar Tree will integrate its multi-price merchandise into more stores so shoppers can find “$5 bags of dog food next to our traditional $1.25 pet treats and toys, and our $3 bags of candy will be found in the candy aisle,” according to Dreiling.
Dreiling noted that even as it increases the upper range of its price points, most goods will still be priced at the entry level amount.
“[W]hat we’ve seen is that when a customer has a multi-price item in [their] basket, their basket, many times, is as much as two-times the average basket [size],” CFO Jeff Davis said.
Dollar Tree began piloting products above its namesake price in 2019. Three years later, the selection of $1.25-priced goods had expanded across 2,500 stores and four distribution centers. Dollar Tree credited this “breaking the dollar” strategy with improving comp sales as well as growing its product selection.
Last summer, Dollar Tree rolled out a strategy that priced goods in categories like frozen foods, bread and general merchandise at $3, $4 and $5. Frozen and refrigerated goods that span those price points are now in 6,500 stores. At the end of 2023, center store goods in that price range were available in around 5,000 stores, and the retailer plans to add those goods to 2,000 stores this year, Dreiling said.
