Dollar Tree’s $1.25 price strategy is actually working out quite well for the company, he said.
Dollar Tree’s low prices are helping to draw new customers to their stores. “It’s more about price points,” said Farkas. “We’re providing value. Our cost doesn’t have to be as high as other stores.”
The strategy is working out quite well, he added. Dollar Tree’s new dollar-off price has drawn $100 million in new customers from other retailers, including Wal-Mart and Target.
Dollar Tree’s success comes as the discount retailer is trying to regain its footing. The company posted a loss of $636 million in its last fiscal year, compared to a profit of $1.7 billion in 2011, a 40% drop.
But Dollar Tree seems determined to stay competitive in a volatile market. It recently acquired rival grocery chain Family Dollar stores.