Dollar Tree Experiences ‘Meaningful Decline’ in Shoppers After Price Hike — Will Strategy Be Revised?
The Dollar-and-a-Quarter Tree apparently is not going over well with certain consumers who are used to whipping out a $1 bill and not a penny more. Many are taking to social media to complain about it, but Dollar Tree executives say there’s really no problem.
In late November, Dollar Tree announced it would begin rolling out a price increase to $1.25 for many of its store items that previously sold for $1. In a press release at the time, Dollar Tree said the decision “is permanent and is not a reaction to short-term or transitory market conditions.”
The price hike was put in place for a few reasons, not least because prices in all sectors of the economy were rising due to inflation, and Dollar Tree still felt a buck-and-a-quarter was a pretty good value.
“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,” CEO Michael Witynski said in a statement.
Well, not all shoppers are happy about it. Dollar Tree saw a “meaningful decline” in shoppers following the price hike, according to a Jan. 11 note from industry tracker Coresight Research.
Meanwhile, angry customers have been venting their frustration on Twitter, Facebook, TikTok and YouTube, CNN reported. Hundreds of thousands of video bloggers have even posted videos of their reactions.
Dollar Tree was the last of the big dollar store chains to sell nearly everything for a dollar. Moving to a higher price point during a period of spiraling inflation does not sit well with some consumers.
“I wish they wouldn’t have done that because most of their shoppers are people who are not getting paid a lot of money,” Leniza Costa, a beauty influencer in Rhode Island, told CNN. “This is the worst time to increase the price, when everything else is so much.”
In December, Dollar Tree added the $1.25 prices to more than 2,000 stores of its 8,700 U.S. stores, CNN noted. Coresight said the retailer’s decline in shoppers “appears to coincide with its price hike.”
But Dollar Tree officials stand by their decision.
“We have had a very positive response from the overwhelming majority of our customers around the $1.25 price point and the extreme value and broader product selection it has enabled, especially in these inflationary times,” a company spokesperson said in an email to CNN. “We look forward to providing more details on this initiative during our next earnings call.”
More From GOBankingRates