Dollar Tree Is Now the $1.25 Tree: 'I Was Really Shocked at First'

Skyrocketing inflation sent more Americans to dollar stores to buy the basics over the past year. But the tough economic climate is also forcing those businesses to raise prices in order to stay viable.  

When Iasha Williams made a recent trip to Dollar Tree, she was in for a surprise. 

The Virginia Beach resident said, "I was really shocked at first when I went in for the first time. And it was like, 'Oh my gosh, it went up to 25; I was expecting a dollar.' So I was really thrown off by it."

The Virginia resident now plans to shop at Dollar Tree less often due the increase to $1.25. 

"Actually I went into the store and bought something, and it rang up as a $1.25; I asked them about that," said shopper Lee Dean. 

Dean feels the increase makes sense in light of supply issues and the pandemic, but he also sees the flip side.
 
"I also feel like it's probably a lot for people who are relying on Dollar Tree and dollar stores for a lot of their food and whatever. I mean that's 25 percent higher, so that could probably hurt a lot of people," he said. 

Dollar Tree issued a statement about the increase saying it was the right time to make the move in order "to continue offering extreme value to customers." The company called the decision permanent and said it wasn't a reaction to temporary or short-lived market conditions.
            
CEO Michael Witynski said Dollar Tree's pricing tests showed "broad consumer acceptance" of the price increase.

Virginia Beach resident Ed Ryan said, "It's not going to turn me away from coming in. Like I said, it depends on what you buy; stuff's still a good deal – you just got to be a smart shopper." 

A shopper named Charles said, "I think it's very sensible to do that. I mean every other industry has raised prices – food services, automobile industries – it's part of life in the United States in 2022."

Still, industry tracker Coresight Research found Dollar Tree experienced a "meaningful decline" in shoppers after the price increase during a check around the Christmas holidays. 

As for competitor Dollar General, the discount store says 20-percent of its merchandise goes for a dollar or less.