Dollar Tree Raising Prices

[storewanderer]

This probably won't be their last trip to the rodeo for changing prices. They're likely chasing inflation on some items and searching for higher margins on others. The question is where they reach a point where they have more competition from other stores (and other kinds of stores) and where the value of what they sell gets lost. They also may need to spend more on promotions as the items get more expensive esp. if they get into items that have more of a "season" and need periodic clearances. They probably won't lose the occasional shoppers who go there because it's quick and easy and there isn't much else around that's worth the effort, but they really need to know their regular customers to figure out how far they can take this.

Looking at the Dollar Tree locations many are near a grocery store, or a Wal Mart, or something else selling many consumables. These stores sometimes but usually do not operate on islands (like a lot of Dollar Generals and Family Dollars do). Dollar Tree is basically a redundant store, understaffed often with only one checkout and a long slow line due to a terrible POS system (self checkouts would sure help this store out), and the only reason you go there for consumables is to get a better deal. If it isn't a better deal, there is no reason to go there. Just buy the items at the grocery store or wherever else you were already going to stop.

There is a real simplicity to the operation of Dollar Tree because almost every item is a single price point (or some items may be a 2 for $1 price point). There is no price change activity required by staff, there are no arguments with regard to prices scanning wrong/misplaced items, and theft is typically not much of a concern due to the low value of the items. Items are shipped to the store based on allocation from the system, the stores don't do any ordering or anything along those lines (unless a customer wants a quantity of items then the store can special order). They can keep all of this simplicity as long as they keep a single price point. But the issue as Bagels is pointing out is many items are not competitive anymore at 1.25. So what do you do? Do you have some items $1 and some items $1.25? Do you start running sales/promotions putting some items back at $1 for a limited time? All of this screws up the simple operation.

[ninersdd]

This probably won't be their last trip to the rodeo for changing prices. They're likely chasing inflation on some items and searching for higher margins on others. The question is where they reach a point where they have more competition from other stores (and other kinds of stores) and where the value of what they sell gets lost. They also may need to spend more on promotions as the items get more expensive esp. if they get into items that have more of a "season" and need periodic clearances. They probably won't lose the occasional shoppers who go there because it's quick and easy and there isn't much else around that's worth the effort, but they really need to know their regular customers to figure out how far they can take this.

Looking at the Dollar Tree locations many are near a grocery store, or a Wal Mart, or something else selling many consumables. These stores sometimes but usually do not operate on islands (like a lot of Dollar Generals and Family Dollars do). Dollar Tree is basically a redundant store, understaffed often with only one checkout and a long slow line due to a terrible POS system (self checkouts would sure help this store out), and the only reason you go there for consumables is to get a better deal. If it isn't a better deal, there is no reason to go there. Just buy the items at the grocery store or wherever else you were already going to stop.

There is a real simplicity to the operation of Dollar Tree because almost every item is a single price point (or some items may be a 2 for $1 price point). There is no price change activity required by staff, there are no arguments with regard to prices scanning wrong/misplaced items, and theft is typically not much of a concern due to the low value of the items. Items are shipped to the store based on allocation from the system, the stores don't do any ordering or anything along those lines (unless a customer wants a quantity of items then the store can special order). They can keep all of this simplicity as long as they keep a single price point. But the issue as Bagels is pointing out is many items are not competitive anymore at 1.25. So what do you do? Do you have some items $1 and some items $1.25? Do you start running sales/promotions putting some items back at $1 for a limited time? All of this screws up the simple operation.

Reminds me how I went to the Wal Mart in Rancho Cordova once, and a place called Dollar World opened last year, basically an imitation of a Dollar tree,

[Bagels]

This probably won't be their last trip to the rodeo for changing prices. They're likely chasing inflation on some items and searching for higher margins on others. The question is where they reach a point where they have more competition from other stores (and other kinds of stores) and where the value of what they sell gets lost. They also may need to spend more on promotions as the items get more expensive esp. if they get into items that have more of a "season" and need periodic clearances. They probably won't lose the occasional shoppers who go there because it's quick and easy and there isn't much else around that's worth the effort, but they really need to know their regular customers to figure out how far they can take this.

I guess it depends on what draws people into their stores. Is it the general merchandise? Those ceramic plates seem like a bargain at $1/$1.25, but are so cheap, they'll chip if a fork hits them "just right" or easily crack in the dishwasher. The manual can openers look rock solid but quickly fall apart. The scissors look much more pricy than those sold elsewhere, but quickly break in your hand, etc. (My point is the GM is largely junk.)

Judging by the self space, the "hottest" sellers appear to be things like toothpaste, hand soap, paper products, etc. At $1.25, these items are no longer competitive. Same with much of the food.

I thought Dollar Tree's original intention was to mimic the 99, or Viva Bargain Outlet, and offer additional products (including many that were previously discontinued) at different pricing points. But I guess that would be labor intensive, and too Family Dollar like.

I love Dollar Stores, and we spend a lot of money on impulse purchases. But unless the competition is going to raise prices on everything, there's virtually nothing that will get me into the door. We'll see if others decide to.

[storewanderer]

I guess it depends on what draws people into their stores. Is it the general merchandise? Those ceramic plates seem like a bargain at $1/$1.25, but are so cheap, they'll chip if a fork hits them "just right" or easily crack in the dishwasher. The manual can openers look rock solid but quickly fall apart. The scissors look much more pricy than those sold elsewhere, but quickly break in your hand, etc. (My point is the GM is largely junk.)

Judging by the self space, the "hottest" sellers appear to be things like toothpaste, hand soap, paper products, etc. At $1.25, these items are no longer competitive. Same with much of the food.

I thought Dollar Tree's original intention was to mimic the 99, or Viva Bargain Outlet, and offer additional products (including many that were previously discontinued) at different pricing points. But I guess that would be labor intensive, and too Family Dollar like.

I love Dollar Stores, and we spend a lot of money on impulse purchases. But unless the competition is going to raise prices on everything, there's virtually nothing that will get me into the door. We'll see if others decide to.

Dollar Tree does get some clearance items in I guess. I found some 80ct boxes of those Giant Eagle Facial Tissues last night. I wanted to buy a few though not a great deal at $1, always nice to have some distant items on hand. When I went to pay they had one register open and 8 people in line so I gave up and just left. I left the kleenex on the drug/HBA aisle which was about 15% stocked at best. Most of the store was about like that, though the craft and card area was very full and they had some Valentine's stuff out already. I hope I helped them get some impulse buy from someone who goes looking for cold/allergy medicine (not sure they had any of that though).

While leaving Dollar Tree I noticed they had a ton of now hiring signs up. I took a look at the signs. Multiple said "now hiring part time positions." Nothing about the wage was posted. Given the upcoming price increase you would think they could get more competitive on labor and get the store staffed up to improve conditions given the higher price that is coming.

[storewanderer]

Appears Dollar Tree in Reno area is now $1.25. I will be curious to see if the 3 $1.10 stores down in Douglas County, NV also made this increase.

Glad I stocked up on vases a few weeks ago. One of the few really good deals at $1.

[storewanderer]

Another Dollar Tree in Reno at 3334 S. McCarran has an interior with "Everything's $1.00" painted all over the walls, and aisle hangers that say "ONE PRICE $1" and none of this has been removed. This store also still has very faded green carpet on the floor and the checkstands are counter type (not belts like typical Dollar Tree). Store feels more like an independent dollar store. Looks like to do the price increase at this store they will need to do an interior wall repaint and bring in new aisle hangers.

[Alpha8472]

There is probably no labor available to repaint and change the hangers. They might as well tape paper signs on the walls and hangers saying $1.25.

Is carpet still present in many stores? I have only seen carpet at CVS in the past 10 or so years.

[Brian Lutz]

The Dollar Tree here in town had carpet, but some time in the last year removed it (it was in very rough shape) and replaced it with what appears to be some sort of linoleum tile.

[Bagels]

It looks like 99 Cents Only has quietly hiked many of its prices to $1.29 and $1.49. Many of its
1.49 products are 1.25 at Dollar Tree, so I guess that blows my theory that they’ll try to lure Dollar Tree consumers.

99’s pricing has become a joke lately. Softsoap sold a value pack at Walmart (I never saw it anywhere else) for $3.99. It included a 16 oz pump bottle and 32 oz refill (also sold separate for 2.99). Well, these must not have sold well and made their way into the dollar stores. The refills are $1.25 at DT… and $3.49 (higher than Walmart) at 99. At least Pepsi 2 liters are a buck…

[storewanderer]

The store I referred to above was remodeled in the past few days. They repainted the interior, installed current wall fixtures (which look like 90's Rite Aid fixtures), and removed all references to the $1. There are no aisle hangers at all now. The store definitely looks a bit spiffed up.

I also finally went into Family Dollar. They still have many endcaps of Dollar Tree "Dollar Spot" items and are still $1. I find it curious they are not increasing the prices in Family Dollar above $1 if they are so excited to be doing the price increase they claim the customers are asking for and claim the customers are saying will not reduce their trip frequency.