Dollar Tree plans to raise prices up to $5 proving there’s no such thing as a ‘dollar store’ anymore

• Dollar Tree is adding products that cost well over $1.25 each. 
• The company is testing frozen and chilled foods that cost up to $5 at some stores, executives say.
• Rival Dollar General has been selling products at a variety of price points for years.

Dollar Tree has a plan: Sell more items that cost way more than a dollar.

The chain is testing new products that cost up to $5 each in its grocery sections, executives said at the company’s investor day last week. Early sales results are encouraging, and customers should expect to see more higher-priced products at Dollar Tree’s stores going forward, they said.

Last year, Dollar Tree made the noteworthy decision increased prices on its items to $1.25 from $1, citing inflation. Dollar Tree had stuck to its single price point longer than its main rival, Dollar General, which has sold items at a variety of price points for years.

While Dollar Tree’s price increase disappointed customers, sales continued growing paving the way for higher-priced items, executives said at an investor day event earlier this month.

“This is the gateway to the future,” Chief Merchandising Officer Richard McNeely said at the event. “We now have the platform to expand our assortment and our price points.” McNeely referred to products priced from $2.01 to $5 as a “huge market that is untapped for us.”

Frozen foods are one area where Dollar Tree is experimenting, Chief Merchandising Officer Richard McNeely said at the event. The chain’s previous frozen selection relied on “single-serve novelty” products, such as individually wrapped cheeseburgers and ice cream bars. 

But at some stores, Dollar Tree freezer sections already include ‘meal solutions’ like boxes of fish sticks and Eggo waffles with price points of $3, $4, and $5, McNeely said. Eventually, the company plans to have most of its freezer section filled with higher-priced items, according to a copy of the company’s investor day presentation posted to its website.

In May, Dollar Tree added coolers with juice, coffee creamer, Velveeta, and other refrigerated products to 140 stores. Everything in the coolers retails for $3, according to the presentation. Some stores also contain $3 loaves of bread.

Higher-priced products could also be coming to other parts of Dollar Tree’s store. The presentation highlighted products like Christmas trees, Hot Wheels play sets, and Airpod imitators as examples of what Dollar Tree previously couldn’t sell at its $1.25 price point but could in the future.

The number of Dollar stores in the US has exploded over the last decade.

Dollar Tree has about 16,000 locations, and Dollar General has nearly 20,000. Dollar General recently opened its first store in Mexico. And it is also expanding into new products and services far beyond cheap toys and housewares, from financial services to fresh produce to basic healthcare.

Do you work or shop at a Dollar Tree store or have a story to share? Reach out to Alex Bitter at [email protected] or via the encrypted messaging app Signal at (808) 854-4501.