Dollar Tree exec reveals huge 2025 plans with 300 NEW stores and major shake-up to 2,000 locations
A DOLLAR Tree executive has outlined the discount retailer's major expansion plans for 2025.
The ongoing strategy includes an emphasis on a new pricing model, with thousands of old and new stores transitioning toward Dollar Tree's 3.0 model.
As inflation and increasing economic pressure hit the retail industry, Dollar Tree is responding by reworking its pricing strategy.
The discount chain is slowly transitioning to higher price points to increase its profitability, said CEO Michael Creedon at the company's 2024 fourth-quarter earnings call.
Dollar Tree, originally named "Only $1.00," began by selling items priced at $1.
However, in 2021, the company raised the price point to $1.25 to combat inflation.
Read More on Dollar Tree
The discount chain has since introduced three pricing models, offering a range of price points.
Creedon explained that Dollar Tree 3.0 locations are new or converted stores offering the chain's expanded multi-price assortment throughout the store, with products ranging from $1.25 to $7.
The chain also operates 2.0 stores, with a smaller multi-price assortment concentrated in a single aisle that Dollar Tree refers to as "the valley."
The executive also detailed the third pricing model, Dollar Tree 1.0, where over 95% of the items for sale are priced at $1.25.
Most read in Money
The first two models are generally more profitable for Dollar Tree because they permit the chain to charge higher prices, offer a wider selection of products with better margins, and offset inflation.
The company ended the 2024 fiscal year with roughly 2,900 3.0-format stores, including around 2,600 conversions and 300 new locations, Creedon said.
Dollar Tree plans to ramp up its number of stores under the priciest store model, aiming to operate a total of 5,200 3.0 locations by the end of 2025.
That number includes converting 2,000 stores and opening 300 new stores under the model, according to Creedon.
PRICE EVOLUTION
Dollar Tree announced its multi-price strategy, offering items up to $7, roughly one year ago during its fourth-quarter earnings call last March.
"This past year, our organization made meaningful progress in the ongoing transformation of our core business, which includes building a foundation for sustainable growth," said former Dollar Tree CEO Rick Dreiling.
"We are especially excited about the next phase of our multi-price expansion strategy. Dollar Tree [is] continuously working on new ways to deliver value while expanding our assortment across a wider range of price points," he said.
While the discount chain has continued to offer shoppers products at the entry-level price point of $1.25, it introduced more premium items up to $7.
Dollar Tree launched an expanded assortment across multiple product categories, such as food, snacks, pet care, and personal care.
Dollar Tree pricing
Despite the name of the store, Dollar Tree recently added items that cost more than $1 to its inventory.
Most items at the store cost no more than $1.25, but items in the Dollar Tree Plus section cost up to $5.
Dollar Tree introduced Plus aisles to 100 locations in 2019 as part of an effort to diversify its products.
By 2022, Dollar Tree had added the items to over 1,500 locations.
"We believe testing additional price points above $1 for Dollar Tree products will enable us over time to expand our assortments, introduce new products and meet more of our customers’ everyday needs," president and CEO Michael Witynski said in a statement.
"Our brand promise is that customers get great value for what they spend at Dollar Tree. We will continue to be fiercely protective of that promise, regardless of the price point."
At the time, the chain announced its plan to roll out the multi-price assortment to around 3,000 locations last year, with more than 300 items at prices ranging from $1.50 to $7.
"This is the next exciting chapter of the Dollar Tree value story: new items, more choices, and more savings," said Dreiling.
The change followed Dollar Tree's move to launch $3, $4, and $5 frozen and refrigerated items at over 6,500 locations.
By the end of 2023, the discount chain had also rolled out $3 and $5 center store merchandise in around 5,000 Dollar Tree stores.
As the discount retailer works on transitioning its operational model toward more 3.0 stores, Dollar Tree has other notable changes underway.
Read More on The US Sun
For example, the company is set to sell its Family Dollar subsidiary for $1 billion after bosses announced 1,000 store closures.
Plus, shoppers have reported that select items in some stores are now priced at $1.50 instead of $1.25 - and fans are "praying" that the chain skips a beloved section.