Dollar Tree has built its entire reputation on low prices, so when new tariffs on imported goods were announced earlier this year, many shoppers and investors were wondering if its prices would go up.
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As of now, Dollar Tree is doing everything it can to avoid that. The company is navigating the current tariff situation by leaning on strategies it used back in 2018 and 2019, when tariffs were also a major issue. In a recent earnings call, CEO Michael Creedon laid out exactly what they’re doing behind the scenes to keep their shelves stocked without upping costs.
Here are four things Dollar Tree is doing to deal with tariffs.
They’re Negotiating Harder With Suppliers
One of the biggest things Dollar Tree is doing is going back to its suppliers and renegotiating pricing. When tariffs go up, the cost of goods increases too, and instead of just accepting it, the company is pushing back.
By asking suppliers to lower their prices or absorb part of the tariff cost, Dollar Tree is reducing how much those fees impact its bottom line.
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They’re Tweaking Product Designs To Save Money
If Dollar Tree can’t get suppliers to lower prices, they might try to reduce the cost of the product itself by changing materials or using more affordable components.
These kinds of adjustments can make a big difference when you’re selling products for just a few bucks. It also gives the company more flexibility to work within tight margins while still offering items that feel like a good value.
They’re Cutting Products That Aren’t Worth It
Not every item is worth saving. If the cost to import a product gets too high and there’s no way to make it profitable, Dollar Tree is willing to drop it altogether. This might mean fewer options on the shelves in some categories, but it helps the company avoid carrying products that no longer make financial sense.
In the words of their CEO, this is one of the same playbook moves they used during the previous administration.
“Back then, the choices were they could change some of the specs on the product, they could negotiate furiously with our suppliers or they could eliminate the product altogether,” the CEO said.
They’re Switching Where They Source From
Instead of relying heavily on China or other countries with steep tariffs, Dollar Tree is actively looking for alternative suppliers. That could mean moving production to countries with lower tariffs or working with domestic manufacturers when possible.
Changing suppliers isn’t always quick or easy, but it can help the company bring in the same types of products at a lower overall cost. According to their CEO, Dollar Tree has “detailed plans in place” to shift its supply sources for most of its products.
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This article originally appeared on GOBankingRates.com: 4 Things Dollar Tree Is Doing To Navigate Tariffs — Will They Keep Costs Low?
