Dollar Tree is reportedly planning to bump prices on certain products as high as $5, particularly in the food and beverage space, as it looks for opportunities to carry a wider range of products, according to a presentation at its annual investor conference seen by Winsight Grocery Business. The move follows its earlier effort to shift from a $1 to a $1.25 price point, which set the stage for further price increases.
“The hard part has been done,” said Rick Dreiling, CEO of Dollar Tree during the conference. “That leap to $1.25 was painful but that is done now, and it’s time for us to capitalize on it.”
The move to a wider range of price points will allow the off-price retailer to stock a wider range of goods, including national brands, proteins and larger pack sizes. Company research found that its customers are already buying these products elsewhere, and offering them at Dollar Tree could bring those dollars back.
Dollar Tree already has run a pilot selling name-brand bread for $3 and plans to expand the test to 400 stores by the end of 2023. The program already has resulted in “high double digit comp sales” on the product, and as bread sales expand the retailer will offer more brands and price points on a region-by-region basis.
Dollar Tree also began selling a national brand of ice cream at $5 per carton in 1,400 stores in May with “very positive initial results,” according to Chief Merchandising Officer Richard McNeely. The company will expand this offering to 2,800 stores by the end of 2023, and the retailer also has started selling seven-pound bags of ice for $2 per bag.
“We were on the verge of losing the ice program at $1.25 [for a five-pound bag],” said McNeely during the conference. “It was custom made. The vendor didn’t want to make the item. They were raising the price, and we had nowhere to go. So, by the way, ice is in the top 50 every week. It’s a key item for us, the customer is loving it and now it’s working at $2.”
The move to higher price points isn’t completely new to Dollar Tree, which has been selling pricier items at dedicated Dollar Tree Plus stores for several years. The company’s goal is to expand higher pricing to 5,000 legacy Dollar Tree stores by 2024, and it expects to reach 4,300 by the end of 2023.
Despite this move, Dollar Tree will still keep its “opening price point” a core part of its assortment, and in fact it is looking at 300 to 400 higher-priced items that can be rolled back to $1. The retailer will utilize data and analytics consultants to help it determine the best prices for its assortment.