Watch Your Coins, Dollar Tree’s Raising Prices

CBx Vibe:Flip” Russ

By CultureBanx Team

  • Dollar Tree testing pricier products in its “Dollar Tree Plus” collection
  • 40% of Dollar Tree’s products are made in China

Dollar Tree’s  (+3.34%) one dollar promise may be going away as the U.S. tariff war with China continues to play out. The discount chain has been testing pricier products in its “Dollar Tree Plus” collection in an effort to increase sales. Minority communities across the country may be shelling out more money as they battle rising prices from stores catered to low-end consumers, especially when the majority of its products are made in China.

Dollar Tree2.jpg

Why This Matters: After PresidentTrump announced an increase in tariffs on $200 billion of Chinese goods last month, many retailers will pass down the costs to consumers. Since Dollar Tree manufactures about 40% of its products in China, they must find a way to manage costs. The discount retailer began initial testing of its higher priced items in May and noted they would expand to more than 100 urban, suburban, and rural Dollar Tree store locations, according to Business Insider.

The average Dollar Tree shopper comes from a household that earns $40,000 or less per year

The average Dollar Tree shopper comes from a household that earns $40,000 or less per year. In 2017, the U.S. Census Bureau released data showing the median income for an African American household was $39,490, putting them right in Dollar Tree’s consumer sweet spot. It’s not just low income shoppers that frequent these dollar stores, customers with household incomes of more than $70,000 claim they also shop at discount retail chains.

So far this year shares of Dollar Tree are down 6.5%, even after beating analysts earnings expectations. For its fiscal Q1, revenues came in at $5.1 billion, but the company lowered its Q2 and full year guidance as the brunt of the tariff hike is likely to hit them hard.

Situational Awareness: Dollar Tree may want to take a page out of one of their top competitors playbook in an effort to make sure sales continue to rise. Dollar General plans to beef up its health and beauty sections, a space where African Americans spend nearly $54 million a year.

CBx Vibe:Flip” Russ

CONTRIBUTOR

CultureBanx Team

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