The Truth About Dollar Tree's Rising Prices

As far as dollar stores go, Dollar Tree is pretty darn successful. The chain sells all sorts of items, from toys to toiletries and food. In fact, by selling products at such low prices, Dollar Tree actually tricks you into spending more money.

However, if you frequent Dollar Tree (or really any dollar store, for that matter), you might have noticed that the store seems to be losing its dollar store status. Items that once cost only a dollar now might cost $1.25 or more (via MarketWatch). Other items might cost as much as $10. This price increase, although paving the way for better quality and range, has led many to believe that Dollar Tree might not survive 2022.

Regardless of Dollar Tree's original reasons for the price hike, prices are now also being affected by inflation and the current state of the U.S. economy. What does all this mean for the dollar store? 

Inflation reduces how much the dollar can buy, explains Investopedia, therefore decreasing an individual's "purchasing power." With many Americans pinching pennies right now, people are shopping more purposefully.

According to The Motley Fool, shopping "intentionally" has led many Americans to buy only what they need. In turn, dollar stores like Dollar Tree are struggling to meet quarterly goals, as they thrive on impulse buys. Part of what makes Dollar Tree so successful is the treasure hunt feeling it invokes, but right now most people are avoiding spending money on things they don't really need.

On the other hand, because prices are rising everywhere, Dollar Tree and other dollar stores might in fact be a suitable alternative to shopping at larger stores. Though Dollar Tree may have gotten a bit more expensive, its products are still priced lower than, say, Walmart or Target. This could very well bring in customers who previously shopped elsewhere.