Dollar Tree’s new customers spell bad news for all of us | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Dollar Tree is known for its low prices, although, of course, most items at Dollar Tree no longer actually cost $1.

In fact, most items at Dollar Tree are now $1.25, with the store also adding even more expensive offerings in recent years. Some of the things for sale now cost $3 or $5, which is a significant increase compared to its prior flat $1 rate.

Although Dollar Tree has raised its prices and angered some customers in the process, it’s still been doing fairly well. The company reported strong first-quarter results, with net sales up year-over-year as more people came into the stores and spent more per ticket.

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Dollar Tree opened a total of 148 new stores, according to its first quarter earnings report. The company also saw its gross profit increase by 11.7% to $1.6 billion and its gross margin expand 20 basis points to 35.6%.

While Dollar Tree is doing well, there are some troubling red flags in the company’s earnings report that could point to trouble in the economy as a whole.

In fact, here’s why Dollar Tree’s growth with one particular customer base could actually be bad news for Americans overall as we move into the second half of 2025.

Dollar Tree is seeing more high-income shoppers.

Image source&colon; China News Service/VCG via Getty Images

Dollar Tree is seeing more sales from a surprising source

When you think of Dollar Tree customers, most people don’t necessarily think of the country’s highest earners crowding the discount store’s aisles in search of low-cost food, beauty, or household items.

Recent data suggests that’s exactly what’s happening, however.

In fact, PYMNTS Intelligence data has demonstrated that while households earning $100K or more each year still spend a lot of money at Walmart, Target, and other big-box stores, people within this demographic group are also making more purchases at both Dollar Tree and similar stores like Dollar General.

PYMNTS Intelligence data also indicates around one in every four Dollar Tree transactions involved shoppers with household incomes exceeding $100K — and the same percentage of transactions at Dollar General also came from this group.

This rise in wealthy shoppers is a phenomenon Dollar Tree CEO Michael Creedon noted during a recent conference call with analysts, citing a “meaningful traffic increase from customers with household incomes of more than $100,000.”

Dollar General CEO Todd Vasos also called out this trend, indicating that “while our core customer remains financially constrained, we have seen increased trade-in activity from both middle- and higher-income customers.”

Why is this bad news for the economy as a whole?

Although it might be nice to believe that the country’s top earners simply decided that Dollar Tree’s deals were too good to pass up, the more likely explanation for their new-found frugality is that people in households with incomes above $100K are facing financial struggles that have forced them to seek out cheaper places to shop.

This explanation is supported by additional data from PYMNTS that found around half of consumers with incomes of $100K or more are living paycheck to paycheck right now.

Years of record-high inflation during the Covid pandemic, combined with continued high interest rates and ongoing economic uncertainty in light of tariff-related volatility, have likely impacted higher-income households along with lower-income ones.

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If the cumulative effect of these financial hits is causing the country’s highest earners to visit Dollar Stores in ever-increasing numbers, what does this mean for the 80% or so of households that make far less than $100K?

It’s certainly not a good sign of the economic stability of the country as a whole.