Dollar Tree is about to see a 25% jump in prices.

The company announced Tuesday that it will raise prices from $1 to $1.25 on the majority of its products by the first quarter of 2022. The COVID-19 pandemic and inflation has continued to put pressure on Dollar Tree, one of the only remaining dollar stores, and other low-cost businesses.

Dollar Tree said that the decision is permanent and is “not a reaction to short-term or transitory market conditions.” Instead, the company said they hope the move can allow them to continue offering “extreme value” to customers.

“The $1.25 price point, which will apply to a majority of Dollar Tree’s assortment, will enhance the Company’s ability to materially expand its offerings, introduce new products and sizes, and provide families with more of their daily essentials. The Company will have greater flexibility to continue providing incredible value that helps customers get the everyday items they need and celebratory and seasonal products Dollar Tree is best known for,” Dollar Tree said said.

The store chain added that the new pricing strategy allows for it to reintroduce many “customer favorites” that were discontinued due to the constraints of the $1 price point.

The company also said that the price increase will help increase its profit margins by “mitigating historically-high merchandise cost increases,” which it said includes freight and distribution costs and higher operating costs, such as wage increases.

Dollar Tree’s leadership team has been planning for the new price point since late summer 2021, the company said, and based on their testing phase suggested that 91% of those surveyed indicated they would still shop at Dollar Tree with the same or increased frequency.

More information about the decision can be found online.

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