Commonly thought to be a byproduct of economic distress, a new report suggest that dollar stores are a cause of it.
Grocery chains in the United States are facing an unexpected competitor – the humble dollar store. In recent years, there has been a surge in the number of dollar stores being built around the country. Dollar General is opening stores at a rate of three per day, and there are now more dollar stores in the U.S. than Walmart and McDonalds locations combined.
At first glance this may seem like a good thing. Dollar stores tend to open in impoverished neighborhoods where people are struggling to make ends meet, usually food deserts with already-limited access to fresh food. But as a new report from the Institute for Local Self-Reliance has found, "There's growing evidence that these stores are not merely a byproduct of economic distress. They're a cause of it." There are a few reasons for this.One of the first things that happens when a dollar store arrives in town is loss of business for other local shops. It is typical for sales to drop by 30 percent after a Dollar General opens. While established businesses may struggle to hang on for several years, it's very difficult to compete and many end up closing. The presence of dollar stores also acts as a deterrent to grocery chains looking to open new locations.
Next comes a decline in employment, which worsens the economic situation. In its writeup of the ILSR report, Civil Eats explains:
"Dollar chains rely on a lean labor model. Dollar General and Dollar Tree stores have a staff of eight or nine people on average, according to their annual reports. Small independent grocery stores employ an average of 14 people, according to federal data."
Then there is the loss of access to fresh, nutritious food. Dollar stores do not stock fruits and vegetables because they are not true grocers (although Civil Eats says some locations are experimenting with it). Their grocery offerings are slim at best, focused mainly on canned goods, cereals, candy, and frozen convenience foods, and they certainly are not in a position to source produce from local farmers.
Another sneaky disadvantage to shopping at dollar stores is that they're not as cheap as you might think:
"They often sell products in smaller quantities to keep a low price tag and draw in cash-strapped buyers. But when comparing per-ounce prices to a traditional grocery store, dollar store customers tend to pay more. Reporting by The Guardian found that the prorated cost of dollar store milk cartons comes to $8 per gallon, for example."
The ILSR reports ends on a hopeful note, describing the successful efforts of one city councillor, Vanessa Hall-Harper, in Tulsa, Oklahoma, who managed to block further development of dollar stores in the poorer and predominantly African-American northern part of the city with a "dispersal" ordinance. It prohibits dollar stores from opening within one mile of another and helps full-service grocers by reducing the number of required parking spaces by half. From the report:
"[It is] intended to foster 'greater diversity in retail options and convenient access to fresh meats, fruits and vegetables.'"
While some cities are cracking down on big box/chain retailers, Tulsa's ordinance was the first to target dollar stores; and it has since sparked interest in other parts of the country, with New Orleans and Mesquite, TX, passing similar motions.
No doubt some readers will view a criticism of dollar stores as an attack on low-income households, but that's not what it is. Rather, it's time to demand something better for people who desperately need and deserve it. Dollar stores may project an image of convenience and frugality, but in reality they put people at an even greater disadvantage, both in terms of money and health, while restricting future access to fresh groceries.
It's time we took a stand against the proliferation of these bottom-dollar dealers that Civil Eats likens to "an invasive species advancing on a compromised ecosystem." The ILSR includes advice for people wanting to slow or block the development of dollar stores in their own communities, so do read the full report if this issue resonates with you.