Dollar Tree will raise prices on more than 7,200 items at its 1,200 stores beginning Monday, acknowledging that price increases have become a necessary tool in maintaining its profit margins.
For three years, the discounter has been raising prices at its namesake chain and smaller namesake Family Dollar stores in order to curb rising food and fuel costs, drop prices on some of its best-selling items and keep a firm grip on margins.
But competition from stores such as Walmart, Aldi and Wegmans has increased and disposable income has fallen. As a result, the company decided to raise prices “on some non-dollar-store products” such as milk, eggs, sugar and bread, according to a statement from the company.
The move “is necessary to protect our profit margins and is not a decision we took lightly,” Dollar Tree CEO Gary Philbin said.
For consumers, however, the higher prices “will not be noticeable,” he said.
It’s a reversal for Dollar Tree, which last year announced plans to speed up its expansion at its namesake chain, hoping to increase the pace of expansion by 25 percent by 2022. The company would eventually like to turn each of its 1,200 locations into a standalone, stand-alone dollar store within an hour.
At that time, the chain was also planning to increase the number of items sold in its namesake stores, but now, it will be focusing on “raising prices only on some non-dollar-store products” instead.
Still, both of those projects will likely be pushed back and Dollar Tree instead will focus on expanding its smaller “Family Dollar” stores, another new strategy, Philbin said.
Family Dollar will also expand the menu at its existing locations to increase revenue and narrow the gap with Wal-Mart in selling cheaper groceries, Philbin said.
“A crucial element of our strategy over the next five years is to bolster our price leadership as we gain momentum with our assortment additions, store remodels and price optimization process,” Philbin said.
The company also operates discount stores such as Dollar Tree Canada, Dollar Giant and Deals.