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Dollar Tree Raises Price Point from $1 to $1.25

The Dollar Tree will increase the cost of most items from $1 to $1.25 by next year. The Chesapeake-based retail chain managed to maintain the everything-for-one-dollar philosophy that distinguished its retail store for more than three decades.

However, the company announced in September that it believes this is the appropriate time to shift away from the limitations of the $1 price point in order to continue offering value to customers. According to a press release, Dollar Tree’s decision is permanent and is not a reaction to short-term or transitory market conditions.

The new $1.25 price point will pertain to the majority of Dollar Tree’s assortment. The company hopes the pricing approach enables them to reintroduce many customer favorites and key traffic-driving products that were previously discontinued due to the limitations of the $1 price point.

“Lifting the one-dollar constraint represents a monumental step for our organization and we are enthusiastic about the opportunity to meaningfully improve our shoppers’ experience and unlock value for our stakeholders,” said Michael Witynski, Dollar Tree president and chief executive officer. “Guided by Dollar Tree’s same founding principles, we will be relentless in our commitment to offer our customers the best value possible.”

The company anticipates the new price point will enable Dollar Tree to return to its historical gross margin range by mitigating historically-high merchandise cost increases, including freight and distribution costs, as well as higher operating costs, such as wage increases. The retailer has already started testing higher-priced merchandise in 200 legacy stores.

Dollar Tree plans to roll out the new price point across the chain in more than 2,000 additional legacy Dollar Tree stores in December and complete the rollout to all stores by the end of the first fiscal quarter of 2022.

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