The $10 tree? How much stores might increase their prices in the near future

Dollar Tree, which also owns Family Dollar, is known for pricing its items at around $1, but inflation and other pressures could cause the dollar store to abandon its original pricing model.

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Earlier this year, Dollar Tree announced plans to raise the minimum from $1.25 to $1.50 and the maximum from $5 to $7. “This year, in 3,000 stores, we plan to expand our multi-price assortment of more than 300 items at prices ranging from $1.50 to $7,” Rick Dreiling, CEO of Dollar Tree, said during the company's fourth-quarter earnings call in March.

The base price was initially increased to $1.25 in 2021 for the first time in decades.

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Increasing prices mean wider product selection

According to Dreiling, this decision was made in order to add new products to store shelves. Over time, Dreiling said the company will fully integrate multi-price merchandise into more of its stores.

Some have pointed out that this could mean the death of the dollar store. In April, California-based 99 Cents Only announced it was closing all 371 of its locations, KTLA reported. The company blamed economic factors, including increasing shrink levels, inflation and changing consumer demands. The retailer has sold items for 99 cents or less for years. Over time, it was mostly 99 cents, but some items cost more.

Dollar Tree also announced the closure of nearly 1,000 stores. Major retailers offering discount prices, such as JC Penney, Sears and others, are also disappearing.

Are we facing a retail apocalypse?

This has been dubbed the “retail apocalypse.” KTLA consumer reporter David Lazarus said discount stores reflect a different time and economy, and as soon as prices start to rise, the competitive advantage disappears.

Now, retailers like Target and Walmart are cutting prices to fill the void, according to KTLA. Aim for discounted prices on 1,500 “frequently purchased items,” and other retailers like Five Below price almost all of its items between a dollar and five dollars.

According to Lazarus, we could see additional price hikes, but dollar stores could also return to their original pricing model.

“Expensive leases and labor costs only add to the challenges. As inflation – and prices – begin to fall, that could change. At the moment it’s a tough time to be a bargain merchant,” he concluded.

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