Dollar stores used to have a simple mission. Every item was sold for a dollar, which made shopping easier for customers.

That’s no longer the case.

“A dollar in 2025 buys significantly less raw material, energy, and labor than a dollar in 2019,” certified financial counselor Robin Valadares, who closely follows the retail market, told Simply Recipes. “If these stores had stubbornly refused to raise prices, they would have been forced into a practice known as shrink-flation, where the price stays the same, but the product gets smaller.”

Raising prices, she noted, was necessary to continue offering decent quality items.

“Dollar stores chose to ask for a quarter more so they could keep providing full-sized, functional items, like a spatula that doesn’t melt or a roll of paper towels that actually lasts more than a day,” Valadares added. “The price hike was necessary to protect the utility of the product and maintain their viability as a business.”

Dollar Tree has followed that logic by moving to a multi-price format.

Dollar Tree defends higher prices

Dollar Tree CEO Michael Creedon said customers actually like his chain’s new higher prices during the company’s fourth-quarter earnings call.

“We continue to see really strong customer acceptance for multi-price, particularly in that $3 to $5 range where the assortment expansion is driving incremental demand rather than substitution,” he said.

The change has also led to Dollar Tree’s stores becoming more productive.

“With higher sales per square foot and larger basket sizes in those converted stores, the broadened assortment and the increased relevance really both benefit the customer. And then in terms of our associates, it’s fewer things to put on the shelf. And so there’s some nice productivity and our stores love it,” he added.

Offering more price points, however, wasn’t just a cash grab, he noted.

“And I want to be clear, though, that this is not simply about raising prices. This is about us having better items, larger pack sizes, the right pack sizes and categories that just weren’t available to us at a strict dollar or even $1.25 price point. So even at those higher price points, we remain incredibly competitive with a better assortment,” the CEO shared.

Todd Vasos, CEO of Dollar Tree rival Dollar General, noted that economic conditions have impacted his chain’s customers.

“Our customers continue to report that their financial situation has worsened over the last year, as they have been negatively impacted by ongoing inflation. Many of our customers report they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities,” Vasos said during Dollar General’s fourth-quarter 2024 earnings call.

Dollar Tree closes stores

In addition to raising prices, Dollar Tree has also been closing stores and shrinking its distribution network. The chain shared plans to close around 1,000 stores under its Dollar Tree and Family Dollar brands at the end of 2024.

“This dramatic cull is the coup de grâce in the rather botched acquisition of the Family Dollar chain, which has caused Dollar Tree nothing but hassle since it was completed back in 2015,” Neil Saunders, managing director of GlobalData told the Associated Press. “Basically, almost ten years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around.”

Dollar Tree sold Family Dollar to Brigade Capital Management and Macellum Capital Management for just over $1 billion in July, 2025, a loss of $7.5 billion given the chain’s purchase of the brand for $8.5 billion in 2015.

The chain’s drastic 2025 cuts were not its only store closures. It plans to close 75 locations in 2026.

Dollar General has never been a true dollar store.

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Tariffs provide pricing cover

President Donald Trump’s tariffs give Dollar Tree more freedom to raise prices, according to Citi Analysts.

“Dollar Tree may be a ‘dark horse’ beneficiary of widespread tariffs, Citi analysts said while upgrading the discount retailer’s stock, Investopedia reported.

With import taxes slated to affect nearly all U.S. trade partners, Dollar Tree will have cover to raise prices without deterring too many customers, the bank wrote in a research note.

While company data shows customer acceptance, some Reddit users have pushed back on the higher prices.

As one Reddit user said, “I knew the downfall was coming once I saw a price checker scanner in the store. It is almost not worth shopping there anymore.”

Another said, “Their whole gimmick was everything for a dollar…what a waste.”

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