Following Dollar Tree’s decision to sell its products for $1.25, Dollar General is launching a new store chain that will charge higher prices.

After testing 30 “Popshelf” storefronts, the retail firm will open 1,000 more in the next four years. CNN Business reported:

Dollar General hopes the new concept will help it attract different customers than its traditional base of rural shoppers making about $40,000 a year. Popshelf stores are targeted for women in suburban areas with an annual household income between $50,000 and $125,000…

Dollar General executives said during an earnings call Thursday that they were accelerating their Popshelf strategy because the initial stores were exceeding expectations and were not taking away sales from its main banner.

Although Dollar General’s 18,000 stores sell mostly food, snacks, cleaning products and home essentials, Popshelf stores are stocked with home furnishings, party items, toys and beauty products for $5 or less. These products are more profitable than food, and the Popshelf concept was born out of Dollar General’s pre-pandemic strategy to add higher-margin goods to its merchandise mix.

The expansion of Dollar General’s new chain occurs weeks after Dollar Tree announced a price hike to $1.25 — ending its longstanding tradition of selling all goods for $1.

“For 35 years, Dollar Tree has managed through inflationary periods to maintain the everything-for-one-dollar philosophy that distinguished Dollar Tree and made it one of the most successful retail concepts for three decades,” said the company. “However, as detailed in its September announcement, the Company believes this is the appropriate time to shift away from the constraints of the $1.00 price point in order to continue offering extreme value to customers. This decision is permanent and is not a reaction to short-term or transitory market conditions.”

“The $1.25 price point, which will apply to a majority of Dollar Tree’s assortment, will enhance the Company’s ability to materially expand its offerings, introduce new products and sizes, and provide families with more of their daily essentials,” the company continued.

Dollar Tree chief executive Michael Witynski said that shoppers — who are “increasingly focused on value in this inflationary environment” — have demonstrated broad acceptance of the new price point, as well as “excitement about the additional offerings and extreme value we will be able to provide.”

As retailers adjust their strategies in response to high inflation, key policymakers — including Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell — have stopped using the word “transitory” to describe rising price levels.

“I am ready to retire the word transitory,” Yellen said at an event sponsored by Reuters. “I can agree that that hasn’t been an apt description of what we are dealing with.”

“So I think the word transitory has different meanings to different people,” Powell told Senate Banking Committee Ranking Member Pat Toomey (R-PA) during a hearing. “To many, it carries a time, a sense of short-lived. We tend to use it to mean that it won’t leave a permanent mark in the form of higher inflation. I think it’s probably a good time to retire that word and try to explain more clearly what we mean.”

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