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USA: Dollar Tree Eyes Private Label Growth

Discount Retail Chain Dollar Tree (NASDAQ listed: DLTR) plans to debut hundreds of private brand products in 2023, many of which will be developed in its new Virginia test kitchen.

Growth of its private label assortment remains a focus this year for Dollar Tree at both its Dollar Tree and Family Dollar flagged stores as the discount retailer continues to see strong demand for store brands from its shoppers.

During a recent investor conference call to discuss fourth quarter and full year results, Rick Dreiling, Dollar Tree’s chairman/CEO, said the retailer is replacing its control brands with private brands and will be introducing hundreds of national brand-equivalent products in the back half of this year.

“These will include new labels and redefined labels, many of which are being developed in our new test kitchen in Chesapeake, Virginia,” he said. Dreiling did not offer specifics on the categories that will be included in the new product development efforts.

More broadly, Dreiling said Dollar Tree continues to expand the number of cooler doors at stores with plans to add 16,000 doors this year to accommodate additional frozen and refrigerated items. The goal, he said, is to have 30 doors per store.

Additionally, the retailer is also building off the success of the US$3 and US$5 plus merchandise that was added to more than 1,800 Dollar Tree locations in 2022. Plans call for products at these price points to be added to an additional 1,800 Dollar Tree stores in 2023.

The company has also been aggressively expanding its $3, $4 and $5 frozen and refrigerated products across Dollar Tree stores, going from nothing to 3,500 locations in 2022. This consists of three cooler doors, one at each price point with a selection of proteins, pizza, ice cream, and more.

“What we are seeing with Dollar Tree plus and multiple price frozen is that when the customer purchased at least one of these items, the basket size is more than double the basket with no multi-priced items,” Dreiling said. “We are experiencing a more consistent and predictable slide chain. Stores were set well in advance for Valentine's Day, and we had terrific sell-through. The stores are now well prepared for the Easter season.”

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