It’s been nearly five years since Dollar Tree “broke the buck” and raised the base price for its most inexpensive products to $1.25. Even higher price points followed.
But to celebrate a milestone anniversary this year, Dollar Tree is bringing $1 products back. For a while, at least.
The retailer’s CEO teased the news in a call with investors last week. “As Dollar Tree celebrates its 40th anniversary this year, customers will also see the dollar price point featured in stores as we honor the heritage and foundation of the brand,” Michael Creedon said.
Dollar Tree representatives did not respond to inquiries about when this will happen, for how long, and how many products will be featured at this new lower price.
But even a limited, temporary throwback to the days of “everything’s a dollar” will be a welcome return for shoppers frustrated by rising prices, at Dollar Tree and beyond.
While teasing the new lower $1 prices, Creedon spent much of the rest of the call defending the retailer’s multi-price points. “We are not the same sticker shock you’re getting when you check out at a grocery store or one of these mass merchants. It’s different,” he said. “Even as we expand assortment and choice above the entry price point, rigorous benchmarking of pricing and assortment against competitors has enabled us to maintain our position as a value leader.”
One of the reasons Dollar Tree moved beyond $1 prices in the first place, was because there were products it simply couldn’t afford to sell for a dollar anymore, and it was forced to stop offering them altogether. “Our customers wanted those brands,” Creedon said. Popular food items like Rice-A-Roni, Spam and Frank’s Hot Sauce, “we couldn’t provide them at the dollar or the $1.25,” he explained. “At $1.50, we were able to bring that back.”
And once Dollar Tree broke the buck, it obliterated it with even higher-priced items that it was never able to offer before. “This is not simply about raising prices,” Creedon said back in March. “This is about us having better items, larger pack sizes, the right pack sizes and categories that just weren’t available to us at a strict dollar or even $1.25 price point.” And even though these prices might be higher than Dollar Tree shoppers were used to, “we remain incredibly competitive,” he said. “Our value proposition is significantly better than anyone we see in terms of mass or grocery or other alternatives.”
There are some drawbacks to this approach, however. In his 2017 book “One Buck at a Time: An Insider’s Account of how Dollar Tree Remade American Retail,” Dollar Tree co-founder Macron Brock explained the “magic” of the one-dollar price point. “When a customer walked into our store, she could shut off her brain. She didn’t have to think, didn’t have to calculate how much she was spending. All she had to do was count… it made the transaction as easy as spending money can be.”
And one of Dollar Tree’s main competitors is fond of reminding it just how attractive the one-dollar price point can be, especially in the current environment.
Dollar General has an “extensive offering of more than 2,000 items at or below the $1 price point,” that retailer’s CEO Todd Vasos said last March. Dollar General quit offering everything for a dollar long before Dollar Tree did. But lately, it’s been more aggressive about incorporating more $1 products into its mix. “These items are clearly resonating with the customer,” Vasos said. Some of these $1 items are among the retailer’s biggest sellers, “reinforcing the value our customers continue to place on this important price point.”
So whether Dollar Tree’s decision to reintroduce $1 prices is just part of an anniversary commemoration, or a response to some competitive needling, the end result is the same – Dollar Tree shoppers will soon get more of what they want for “just a dollar,” just like they used to.
Either way, Dollar Tree’s prices are still pretty good, Creedon insists. “85% of what we sell is $2 or less,” he said. The average price of all products is $1.51. “In this environment, our powerful combination of value, convenience and discovery continues to resonate with customers across all income levels.”
And at a time when every dollar counts, a 40th anniversary return to $1 prices – even if it’s only for a selection of products for a limited time – is still something to celebrate.
Image source: Dollar Tree
