Supply chain has been a headache for Dollar Tree over the past year. Freight costs, shipment delays, and constraints on its pricing (due to its $1 promise, which the company is backing away from with new pricing and assortment initiatives) have made for a combined hit to the retailer’s profits.
The company plans to spend more to improve its supply chain as it increases the use of data analytics and automation to get more goods more efficiently and quickly to its more than 16,000 Dollar Tree and Family Dollar stores, as well as to about 590 more outlets it plans to open this year.
The supply-chain upgrades are also coming as Dollar Tree resets its consumer pricing strategy, with plans to roll out items listed at $3 and $5 to more stores after lifting its pricing cap for many goods by a quarter last year to $1.25.
Dollar Tree appears to have made progress on its import supply chain since last year, as merchandise inventories of $4.8 billion rose 33% in the first quarter from the same period a year earlier.
The executives said the retailer also contracted more space than needed on ocean carriers for 2022 in case its containers get bumped later in the year, and that the company still relies on chartered ships to move some of its cargo.
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