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Dollar Tree is always a reliable place for great finds that cost just one buck or less. Now, however, the discount retailer is rolling out merchandise at higher price points.
Although several other chains call themselves “dollar stores,” Dollar Tree is unique in that it has been the only retailer of its kind in which all items are actually priced at $1 and below. But for the past few weeks, the store has been testing out its Dollar Tree Plus! line, which includes products priced more than a dollar. The multiple price-point merchandise collection is designed to give customers more options, sizes and savings.
Currently, items at higher price points up to $5 appear to include toys such as Play-Doh and Star Wars figures, games, beauty products, dog food, and frying pans, as reported by bargain hunters on Instagram.
“With its ‘Everything’s a Dollar’ model, Dollar Tree has remained one of the most unique, differentiated and defensible brand concepts in all of value retail,” president and CEO Gary Philbin said in a press release about its first-quarter earnings. “However, we have always been a ‘test-and-learn’ organization that is committed to evaluating all opportunities to deliver great value for our customers while driving long-term value creation.”
Because 40% of Dollar Tree’s products are sourced from China, the price hikes may be a response to recently-proposed tariffs.
“We expect that it will be impactful to both our business and especially to consumers in general,” Philbin said during a call with Wall Street analysts, regarding proposed U.S. tariffs on Chinese imports.
If passed, the new tariffs could result in increases of 10% to 25% on goods imported to the United States from China. In addition to the rollout of Dollar Tree Plus!, experts predict that the company may also change its products to compensate.
“The business model is ‘Everything is a Dollar,’ so you would have to work through changes in your assortment and in the supply chain,” KeyBanc analyst Bradley Thomas told CBS News. “For example, a 24-count box of crayons can be reduced to 20 crayons or 18 crayons, so shoppers would pay the same dollar for less value.”
Other companies will likely also be affected by the tariffs, too. Economists at the New York Federal Reserve estimate that the average American family will see additional costs of more than $800 per year on items such as clothes, shoes, and cell phone components if they should go into effect.
Dollar Tree fans are likely to be dismayed at the news, but more options at discounted prices — as compared to other retailers, anyway — may bring in additional customers. Will you check out the new product line?