The High Price Of A Dollar Store

It really says something that the reason that the retail apocalypse didn't happen over the last three years was because so much commercial real estate went to discount stores like Dollar General, Family Dollar, and Dollar Tree. In fact, one-third of the retail stores opened during the last two years were dollar stores, and while that means thousands of new locations and jobs, some towns and cities are fighting back and sending these retailers packing.

Since 2019, at least 75 communities have voted down proposed dollar stores, while roughly 50 have enacted moratoriums or other broad limits on dollar store development, according to a new report by the Institute for Local Self-Reliance, an organization that is critical of corporate retailers and their impact on communities.

By comparison, from 2015 to 2018, about 25 communities voted down proposed dollar stores while only six enacted moratoriums or ordinances limiting their growth.

Although the number of blocked stores is much smaller than the thousands that Dollar General and similar chains have opened in recent years, the movement against the industry has created an unusual group of allies. On many other issues, they disagree, but they are united in their fight against dollar stores.

Rural, Republican-leaning communities in places like southern Virginia and North Carolina are pushing back against dollar stores. (In 2020, President Donald J. Trump easily carried Morgan, Minn.) And leaders in cities like Toledo, Ohio, and Birmingham, Ala., have also mounted opposition, saying the stores are fueling crime and unhealthy food choices. Across Georgia, 18 cities and towns have restricted dollar store development, according to the think tank’s report.

The stores typically operate with lean staffing, and their employees, by some measures, are paid at the bottom of the retail industry’s scale. According to a survey by the Economic Policy Institute, a liberal think tank, 92 percent of Dollar General workers earn less than $15 an hour, lower than many other companies surveyed, including Burger King, Walmart and Dunkin’. About 20 percent of Dollar General workers earn less than $10 an hour.

At the same time, the company is highly profitable. In December, Dollar General said its quarterly operating profit had increased about 10 percent from a year earlier while net sales had increased 11 percent, to $9.5 billion. Dollar Tree, which also owns the Family Dollar chain, is posting strong results as well. On Wednesday, Dollar Tree said its profit in fiscal year 2022 increased 23 percent to $2.2 billion and net sales rose 7.6 percent to $28.3 billion.

More than one-third of all stores that opened in the United States in 2021 and 2022 were dollar stores. Dollar General alone opened 2,060 locations during those years, far more than any other retailer, according to Coresight Research, and the company now operates 19,000, more than twice as many as Walmart and Target combined.

“As divided as Americans are politically, there’s remarkable agreement that too much of what passes as a legitimate business model is, in fact, fundamentally destructive and unfair,” said Stacy Mitchell, a co-executive director of the Institute for Local Self-Reliance. “Federal policymakers have let big corporations run amok. Cities and towns of all stripes have learned that if you want to protect your community, you have to do it yourself.”

 

Some areas are blocking the stores, some are regulating them heavily, like Dekalb County, Georgia.

When Lorraine Cochran-Johnson was first running for a seat as a county commissioner in DeKalb County, Ga., in 2018, dollar stores were not something she paid attention to. But after a woman at a campaign event warned her about the stores’ impact on Black neighborhoods, she began to do some research online and by simply looking around her district, just east of Atlanta.

The stores were mostly in predominantly Black neighborhoods. She also witnessed, over a two-week span, two brazen thefts at the same dollar store.

She talked with one of the cashiers about the crimes. “She told me, ‘This is business as usual,’” Ms. Cochran-Johnson said. “There was a normalcy to this situation that no one should find normal.”

Ms. Cochran-Johnson, a Democrat, was elected to the commission in 2019. The next year, she persuaded the commission to pass a moratorium on dollar store developments in DeKalb County.

The moratorium ended in December, but the county is putting into effect new requirements for dollar stores, including that they install video surveillance in their stores and parking lots and turn over security camera footage to the police within 72 hours of a crime. A new store cannot be within a mile of an existing store, and 10 percent of a store’s shelf space must be dedicated to “healthy foods,” a category that includes frozen vegetables.

“This is about community and creating the best outcomes,” Ms. Cochran-Johnson said. 

 

So yes, dollar stores are increasingly providing better, healthier options for shoppers, and it's not like huge grocery oligopolies like Kroger and Walmart don't need direct competition. The problem is, both sets of stores have their own problems, and food inflation over the last two years has only made these companies more profit at our direct expense.