For more than 30 years, working class families have taken comfort in being able to visit a place that sells common household items for the simplest price imaginable: $1. Shoppers at Dollar Tree admire the chain's commitment to their "Everything's a Dollar!" slogan, sticking to that convenient price despite the rapidly evolving world that is our economy.
Yet, there is a chance all of that could change.
Jeffrey Smith, CEO of Starboard Value (a hedge fund that owns a 1.7% stake in Dollar Tree), wrote the store chain's president & CEO Gary Philbin a letter urging the company to raise its prices. The suggestion comes from the understanding that the value of the dollar is not what it used to be.
"Dollar Tree has kept its prices at $1 since its founding thirty years ago, despite the fact that $1 in 1986 is worth approximately $2.30 today, due to inflation," Starboard's letter read. "However, the value that Dollar Tree has offered its customers has deteriorated because of the need to fit everything into a $1 price point."
As one could imagine, public response to the suggestion had some shoppers experiencing a sinking feeling in their wallets.
However, keeping in mind that upping prices would be a drastic breach in tradition, Starboard's letter continued to explain that, "by introducing a few additional low price points, while keeping the majority of products priced at $1.00, [Starboard believes] that Dollar Tree could dramatically improve its product assortment and offer far more value to its customers."
While Dollar Tree's prices may remain lower than Walmart or Target even if they were forced to abandon the exclusively $1 model, what would that mean for the company's name? It sounds like a cruel bait-and-switch to walk into a place called "Dollar Tree" only to gasp at the sight of $2 coat hangers. Upon deeper observation, what could this eventually lead to? Will Five Below, one day, have to change its name to Twenty Below? Or would Save-A-Lot have to rebrand itself, promising customers to Save-A-Decent-Amount?
What do you think? Would Dollar Tree be making a huge mistake not to adapt to changing times in the economy, or is your reliance on $1 steaks a comfortable existence you are not ready to let go of? Let us know in the comments below!