Dollar Tree to offer items up to $5
Dollar Tree shoppers that have become accustomed to price points of $1.25 can expect to see products that cost $3, $4 and $5 in categories like frozen foods, bread and general merchandise.
The discount retailer revealed its plans to offer higher price points at its annual investor conference last week.
Noting that “breaking the dollar”—moving its primary price point up from $1 to $1.25 has helped improve comp sales as well as allowing the company to expand its product selection, Rick McNeely, chief merchandising officer at Dollar Tree, said at the conference that the company's Multi-Price strategy was launched as Dollar Tree Plus. Still, multi-price is now becoming a core part of the strategy.
In discussing Dollar Tree's rationale behind price points above $1.25, McNeely said that customer insights highlighted opportunities to capture more share of the wallet and that Dollar Tree studied customer shopping behaviors to find out where they shopped and what they were buying after shopping at Dollar Tree.
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Data from the millions of transactions tracked by its proprietary data provider revealed that Dollar Tree shoppers were spending over 90% of their wallet outside Dollar Tree, with an average unit retail of $3.93. What's more, after they shopped at Dollar Tree, approximately 90% of purchases made at competitive retailers were priced over $3.
McNeely also presented 2023 status and expansion plans for Dollar Tree PLUS:
• 2,915 stores at the end of Q1
•1,350 additional stores this year
The company's plans for $3, $4 and $5:
Frozen:
• 3,935 stores at the end of Q1
• 1,600 additional stores this year
Multi-Price, 2023 status and expansion plans:
• $1.50 balloons
• 142-store test in Louisiana with no unit decline
• Rest of chain rollout by end of June 2023
Hallmark Greeting Cards
• Changing the mix between 50 cents and $1.00 cards
• Wave 1 started April 2023 with 2,500 stores; all stores complete by January 2024
• 11% initial comp sales lift
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McNeely also highlighted 2023 status and expansion plans for Multi-Price that include:
Pre-Paid Gift Cards
• Piloted two stores in March
• Expanded to 50 stores in Q1
• Roll out to all stores by Sept 2023
Early results are strong:
• 48% transactions include Hallmark greeting cards
• 60% include high-margin party items
Additionally, McNelly provided key tenets for Dollar Tree’s Multi-Price Future:
• Opening price point remains the core of our business;
• Build multi-price assortments that are compelling value propositions and are incremental to our core business;
• Provide additional purchase occasions that matter to our customer;
• Gain expense leverage through higher sales;
• Deliver price clarity at the shelf; and
• Focus on store execution as a success factor.
Multi-Price future expansion plans include targeting additional categories in 2024:
Consumables: Health care & baby; snacks; beverage; seasonal candy; pet; and center store grocery.
Discretionary: Complete Dollar Tree PLUS rollout across remaining categories; larger balloons; household products; and home décor & candles.