Positioning on a price point: Dollar Tree

Aug. 22, 2012 | by Annamaria Turano

Dollar Tree continues to harvest success from its unique positioning built on its value-oriented price point. According to a recent company press release, Dollar Tree recently reported its results for Q2 2012. Consolidated net sales increased 10.5% compared to same quarter year ago. Comparable store sales increased 4.5%, on top of a 4.7% increase for the second quarter 2011. President and CEO Bob Sasser said, "We remain focused on providing great values for our customers and superior returns for our shareholders. Our stores are well-stocked with a terrific, balanced assortment of relevant merchandise for our customers and we are ready for an exciting fall season."

The secret to Dollar Tree's success? Sticking to the fundamental promise in its positioning - everything is just a dollar (or less). In a RetailingToday Insights report on Dollar Tree, "Dollar Tree remains the unrivaled king of the single price point world. Operators such as Dollar General and Family Dollar may have increased their single price point assortments in recent years, but neither can touch the value proposition of Dollar Tree and the unmistakable appeal of shopping at a store where nothing costs more than one dollar. As a result, Dollar Tree is arguably one of, if not the most, uniquely positioned companies in the retail landscape."

Sticking to this positioning actually provides Dollar Tree (and its vendors/suppliers) with a straightforward formula to follow. Given the promise of a $1 retail price point, vendors/suppliers need to siz, package, and price their offerings in a way that provides margin for all involved. The shopping experience is as straightforward as the supplying experience. The dollar price point is king; consumers expect it and would be shocked to see anything but a $1 (or less) price on every item.

This week, Dollar Tree unveiled a new marketing strategy to offer consumers additional value. Starting Sunday, the discount retailer will start accepting coupons at its 4,000-plus U.S. locations. In a recent interview, Timothy Reid, vice president of investor relations stated, "We're rolling it out to all of our stores... It's one more service, if you will, to our customers that hopefully makes us more attractive."

The company continues to branch out; in Q2 2012, the retailer opened 77 stores, expanded or relocated 21 stores, and closed 5 stores.

Topics: Marketing , Specialty Stores

Annamaria Turano / AnnaMaria Turano is a partner of MCAworks, a strategic marketing consulting firm based in Westport, CT. She develops insight-driven customer value propositions and strategic marketing plans for companies such as MasterCard, PepsiCo, Pfizer, Subway and Verizon. She is an Adjunct Professor of Marketing at NYU’s Sterns School of Business, and is co-author of "StopWatch Marketing."
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