I was in there the other day, and they had a package of Advil that was two tablets for a dollar. It's kind of like shipping and handling, you know? If you go into Dollar Tree, you find these packages. SHIH: Well, it really is in some regards because the challenge a store like Dollar Tree has is - how do I get things to you in a dollar? And in many ways, it's the relatively high cost of handling goods, putting them on the shelf. Why isn't this announcement about inflation ultimately? More recent inflation spikes have to do with increases of cost of labor and shipping. A dollar in 1986, which is the year of Dollar Tree's founding, works out to a scooch over 2.50 in today's money. But what that price increase tells you is they're having a hard time selling you things just for a dollar.įOLKENFLIK: Well, I got to say, professor, at first blush, it seems hard to blame. I think, you know, the challenge for them in meeting their customer promise is - you know, what can you sell for a dollar? If you go into a store these days, you find things like party supplies, greeting cards, inexpensive toys, and you find consumables. And now suddenly moving that up to 1.25 - or maybe it wasn't so sudden - that's really quite a change. SHIH: Well, I think, first of all, Dollar Tree is a really interesting retail chain because, you know, they have a unique challenge in meeting their customer promise of offering everything at $1. So what can a price increase like this tell us about the economy more broadly? For that, we rang up Willy Shih, a longtime corporate executive-turned-professor at the Harvard Business School.įOLKENFLIK: As a scholar, as a former corporate executive, what stands out to you about Dollar Tree's announcement? Yet many Americans are concerned about inflation.
The company's CEO said the price hike is permanent, not the result of short-term dynamics like inflation. Dollar Tree now says it will raise prices by 25% from a dollar to a buck 25. Since its founding decades ago, Dollar Tree has kept its prices constant - $1 for just about every item for sale in the store.
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