Dollar Tree Raising Prices

Alpha8472
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Dollar Tree Raising Prices

Post by Alpha8472 » May 31st, 2019, 9:08 am

They are raising prices due to the increased tariffs. Will the higher prices turn off their customers?

If the prices go up, it would no longer be a good deal. Most of the stuff there is very low quality to begin with.

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Re: Dollar Tree Raising Prices

Post by Super S » May 31st, 2019, 9:33 am

It will all depend on how much higher. But the dollar store format is in many ways today's version of a 5 & 10 cent store. A lot of independent dollar type stores have already faded away. Dollar Tree is a chain that is inconsistent with store design and layout so it will be interesting to see how this plays out.

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Re: Dollar Tree Raising Prices

Post by storewanderer » May 31st, 2019, 6:18 pm

Dollar Tree already tried a format with flexible pricing called Deals$ and that format largely failed. It was pretty terrible.

Dollar Tree also has another format with thousands of stores already with flexible pricing called Family Dollar. It is closing hundreds of stores and converting hundreds of others to the Dollar Tree brand. I won't necessarily say Family Dollar failed but it seems to be failing.

History does not bode well for this idea.

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Re: Dollar Tree Raising Prices

Post by cjd » May 31st, 2019, 9:59 pm

Heard on the news yesterday that Family Dollar is going to start offering more grocery items as well as alcoholic items. Family Dollar has only built one new store here and closed an existing one. Dollar General on the other hand closed one older store, kept another but has built 5 new stores in the area in last few years.

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Re: Dollar Tree Raising Prices

Post by J-Man » June 1st, 2019, 9:57 am

The 99 Cents Only chain started offering many items at higher prices several years ago, and they've added more and more lately. I've seen prices from $1.99 all the way up to $29.99 there recently.

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Re: Dollar Tree Raising Prices

Post by storewanderer » June 1st, 2019, 11:02 am

J-Man wrote:
June 1st, 2019, 9:57 am
The 99 Cents Only chain started offering many items at higher prices several years ago, and they've added more and more lately. I've seen prices from $1.99 all the way up to $29.99 there recently.
99 Cents Only has gone back and forth on adding items at higher price points. The current effort seems to be doing better than other efforts. But a few months ago here one of the locations ran a huge promotion where most of those items (in non food categories) were 50% off in an effort to reduce inventory since it wasn't moving. So I am not sure if they just over supplied that particular location or it was all of the locations or what. I have taken a hard look at the current lot of items in 99 Cents Only that is over $1 and the price points on the items are actually very good. These are great deals. 99 Cents Only has always been a place that has a lot of really, really good deals on closeout, short dates, etc. They are a smaller chain and as such can be more opportunistic in their buying since they don't have as many stores to spread merchandise over.

Dollar Tree used to have more "really hot deals" but as they have grown that has changed and they have more and more of a consistent merchandise mix due to the size of their chain. So it has more evolved into a place that is more about getting what you pay for. They really are not that great of a deal at all outside of the greeting card category and a few oddballs like glasses or vases, but you get what you pay for there. Lousy quality, smaller sizes, odd brands. You don't see items that other stores want $4 for selling for $1 at Dollar Tree (you see that all the time at 99 Cents Only). Some Dollar Tree locations will be more receptive to higher price points than others but given the many locations they have, low staffing levels, and historical "one size fits all" approach they have applied to their stores, I don't have much confidence in this effort.

Maybe once they fully address the Family Dollar issue (close more stores), they can just merge with Dollar General and be done with it.

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Re: Dollar Tree Raising Prices

Post by Alpha8472 » June 1st, 2019, 7:32 pm

Dollar Tree said the new prices are 2 to 5 dollars.

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Re: Dollar Tree Raising Prices

Post by storewanderer » June 1st, 2019, 11:37 pm

Alpha8472 wrote:
June 1st, 2019, 7:32 pm
Dollar Tree said the new prices are 2 to 5 dollars.
Lots of issues with adding these items into their stores. Theft is one of the biggest ones I see. This is a response to shareholders who are angry. They are up against a wall with costs rising and they can't keep cutting product sizes and product quality forever. I guess.

But Dollar Tree has been very successful as a single price point retailer. They have not been successful operating formats with multiple price points (Deal$, Family Dollar).

https://www.dollartreeinfo.com/news-rel ... eal-stores

In 2006 they were already talking about doing this and failed. From the above article:
Furthermore, the Deals acquisition includes a number of "combo" stores that offer an expanded assortment of merchandise including items selling for more than $1. All Deal$ stores will continue to operate under the Deal$ banner and they will provide an opportunity to leverage the Dollar Tree infrastructure in the development of a multi priced business without disrupting the single price point model in Dollar Tree Stores."

Then they bought Family Dollar and that is failing too.

I just don't have much confidence in this.

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Re: Dollar Tree Raising Prices

Post by Brian Lutz » June 3rd, 2019, 8:15 am

Daiso Japan seems to do OK with multiple price points (most items are $1.50 in US Daiso stores, but some items go as high as $10-12) but they have an overall store count of well under 100 locations in the US. The one annoying thing about it is that any time you purchase an item that costs more than $1.50 the cashier will inform you of the price of the item, almost as though they are somehow obligated to do so. Daiso also seems to run very different stores than Dollar Tree does. They seem to have some very small stores (for example, the International District and Westlake Center stores in Seattle are both under 2500sf) but generally the stores are clean and organized unlike the disaster that is your average Dollar Tree store.

If Dollar Tree can start bringing in some better merchandise I could see them doing OK with raising some prices. If they start raising prices on the cheap disposable junk they're selling now they're in trouble. Food is one area that could benefit from this, since they could bring in better products and source domestically for a lot of it.

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Re: Dollar Tree Raising Prices

Post by storewanderer » June 3rd, 2019, 7:21 pm

Daiso is a little different. They don't try to sell everyday and consumable foods heavily but instead have a higher number of household items or trinket type items.

At the same time it feels like they may be in higher rent locations than Dollar Tree, likely offset by the smaller store size they have.

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