In my August 27 article of this year, “Disruption Report #30: Dollar Tree Is the Inflation Canary in the Coal Mine,” I wrote:
Watch Dollar Tree and learn just how bad the concerns are about inflation. Dollar Tree, famous for selling everything for a dollar, is feeling the sting of the ocean freight tie-ups and inflation.
Dollar Tree is the most vulnerable of any retailer to cost increases. When you are selling everything in your store for $1, you need to find products that you can actually sell for $1. With the increase in freight rates and inflation in general, it will be hard, if not impossible, for the retailer to find sufficient products that can sustain such a low price point.
It only took three months for Dollar Tree to make a paradigm-breaking announcement: Everything in the store will now retail for $1.25. The company stated that “This decision is permanent and is not a reaction to short-term or transitory market conditions.”
As I have written before, prices will not go back down. They will eventually level off, but the increases are permanent. Dollar Tree’s announcement certainly makes that clear.