Is a dollar store still a dollar store if most of its products cost over a dollar? With the rise in inflation, discount chain Dollar Tree announced that it will start raising some prices and offering more items costing $ 1.25 or $ 1.50, as part of a test .
The first Dollar Tree opened in 1986. At the time, it was called Only $ 1. And that 1986 dollar is worth over $ 2 today. John Strong, professor of retail at William and Mary, said the discount chain was faced with “how do I find ways to buy products that I can sell for a dollar.”
Generic brands and small packages work, but only work for a while. By charging over a dollar, Strong said Dollar Tree will be able to stock items with higher profit margins.
John Zhang studies pricing strategy at Wharton. He said dollar store customers are price sensitive. They are also loyal.
“I think Dollar Tree in this particular case just means it’s a cheap store,” he said.
Dollar Tree plans to open 1,500 traditional stores next year and 5,000 Dollar Tree Plus locations over the next several years. Items cost up to $ 5 there. Zhang said the company may have a branding issue.
“It would be really interesting if they later changed their Dollar Tree to Dollars Tree,” he said.
Dollar tree? It doesn’t quite sound the same.