A dollar today doesn’t buy the same items as was the scenario 30-years-ago. This is why an activist investor has asked the Dollar Tree, a popular brand that sells all its items at $1, to increase its prices.
Even with the rising market prices, Dollar Tree continues to sell everything at one dollar while making good profit of the same. According to the activist, this is because this store has watered down the overall value and quality of the product that it sells. Now, given the inflation, it was evident that this move will come through.
Merchandise worth $1 in 1986 will now cost about $2.30. This estimation was provided by Jeffrey Smith, the CEO of Starboard Value Hedge Fund. He commented that it’s high time that the Dollar Tree increases its price.
Starboard Value had recently acquired about 1.7% stake of this bargain retailer. The company now wants to function along with the Dollar Tree to improve its pricing strategy. To this, Dollar Tree replied back in a polite manner. However, the company is most likely going to push away any of the proposed changes.
Additionally, the Dollar Tree flaunts a great customer base given the good quality and not just because of low prices. This is why, the company needs to focus on keeping the quality optimum.