Dollar Tree is an American multi-price-point discount variety store chain. The company operates 15,115 stores in the 48 contiguous U.S. states. It also has 24 distribution centers. The stores offer items ranging from groceries to party supplies. In fact, more than half of the country’s population lives within a mile of a Dollar Tree. It is a Fortune 500 company. Its products can be found in many supermarkets.
50 new stores planned for rural areas
The chain has announced plans to expand its concept store to rural areas in order to appeal to customers in smaller towns. The combination format will feature both Dollar Tree and Family Dollar banners and will target towns of three to four thousand people. The company said it plans to add more than 50 of these stores by 2020. This new store format has the appeal of both chains and analysts say it will help the company reach its goal of 3,000 stores.
Family Dollar Tree are merging their businesses to create a new brand called Dollartree Plus. The chain aims to create a combination store that combines the advantages of both brands under one roof. It currently operates 105 combo stores and sees room for up to 3,000 more in rural markets. The company also plans to build about 85% of new Family Dollar locations in fiscal 2022. It also amended its updated freight outlook after the first quarter due to rising spot market rates. Now, the company expects regular ocean carriers to fulfill only sixty to sixty percent of their commitments.
120 stores already open
The dollar store chain is opening combo stores. One of these stores opened in 2019 and two will open in early 2020. The new stores will feature a Dollar Tree and a Family Dollar store. They are aimed at small towns and rural communities, where customers can get items for as low as one dollar. According to UBS analysts, these stores will likely eke out some positive same-store sales, so the stock is a buy.
In a recent interview with R5 Capital, a company that owns Dollar Tree said it has opened 115 Dollartree Plus stores. The plan is to have 500 Dollartree Plus stores by the end of 2021, then 1,500 by fiscal 2022 and 5,000 stores by 2024. The store will be expanding to a total of five hundred locations. As of today, it has 120 stores open.
Plans to expand to 500 stores by fiscal year’s end
The chain has ambitious expansion plans. It has already opened 105 stores worldwide and expects to add at least 400 more by the end of fiscal year 2022. The company has also stated that it has the capacity to open 3,000 new stores over the next several years. However, a larger number of new locations would not be surprising. However, the company has said that it will focus on growing its brand and offering more products.
To continue to expand its stores, Dollar Tree plans to expand its product line. It is testing new price points above $1 in some stores. It plans to increase the price point in some stores before expanding to a wider range. The company is attempting to stay ahead of rising inflation, which hit a 30-year high last July. However, the Fed’s rate-setting committee expects inflation to remain stable through the end of fiscal 2022 and cool down in 2022.
Cost of products sold at Dollar Tree
The cost of certain items at Dollar Tree stores is set to rise by about $1 next year. Inflation is contributing to the increase, and Dollar Tree is responding by raising prices. The chain has been testing higher prices at its dollar-plus stores, and is hoping to raise prices in all of its locations by the end of 2022. The company attributes the increase to supply chain issues, increased freight costs, and inflationary pressures.
While these factors may seem minor, they can have a large impact on retail profitability. The annual inflation rate climbed to 4.2% in July. Adding to that the cost of shipping can take as much as $1.60 out of every dollar a store makes. The company is hoping that the increased prices will help it regain some of its profits. The company is already introducing this new pricing initiative in nearly 200 legacy locations.
Comparison to Dollar General
When comparing stores like Dollar General and a Dollar Tree Plus, it’s important to remember that both offer similar products and services at deeply discounted prices. Like a Dollar General, Dollar Tree also offers items for pets, personal care products, household goods, beauty products, and automobile items. Both brands and locations sell candy and other items, but Dollar General carries more brand-name products. For a quick midweek run, Dollar General seems like the perfect place to pick up some essentials.
While there are similarities between Dollar General and a Dollar Store, the former offers higher pay. Dollar General’s minimum wage is higher than the latter’s, but it’s still lower than other retail stores in the same geographic area. For example, Dollar Tree stores have higher prices than Dollar General, but not as low as a Dollar General location. In most cases, the difference in prices is 20 to 40 percent.
