By Stacy Mitchell, Kennedy Smith and Susan Holmberg
Dollar General, Dollar Tree, and Family Dollar are targeting vulnerable communities, opening stores at a breakneck pace in urban and rural areas alike. It’s tempting to assume that these chains simply fill a need in cash-strapped places. But the evidence suggests that dollar stores are not merely byproducts of economic distress; they are a cause of it. Through predatory tactics, the dollar chains are killing off grocery stores and other local businesses, leaving communities with fewer jobs, diminished access to basic goods, and dimmer prospects for overall well-being.
As these losses mount, dollar stores are facing a rising tide of grassroots opposition. Over the last couple of years, scores of cities and towns have blocked the chains from opening new stores. Local action alone is not enough, however. Federal policymakers also need to address the ways in which misguided policies, particularly those governing antitrust and finance, are fueling the destructive proliferation of dollar stores.
Introduction
Last year, nearly half of new stores that opened in the U.S. were chain dollar stores, a degree of momentum with no parallel in the history of the retail industry. At the start of 2022, Dollar General and Dollar Tree, which owns Family Dollar, together operated more than 34,000 stores in the U.S., more than McDonalds, Starbucks, Target, and Walmart combined. In cities, it is common to find dollar stores clustered by the dozen within certain neighborhoods. The two corporations operate more than 100 outlets in metro Atlanta, for example, primarily in the city’s Black neighborhoods on its south and west sides. Dollar stores have likewise overrun much of rural America. In some small towns, they seem to be the only retail left.
Both corporations intend to get much bigger. Over the last four years, Dollar General has added about 3,500 locations— opening more than 100 new stores across New York, nearly 200 in Ohio, and 300 in Texas — bringing its roster to more than 18,000 stores and cementing its status as the largest retailer in the U.S. by number of locations. This year, Dollar General and Dollar Tree together are on track to open 1,700 new stores. And both report that they have identified many more locations; in the coming years, they plan to grow their combined empires to more than 51,000 outlets.
One might assume that the dollar chains are simply filling a need, providing basic retail options in cash-strapped communities. But the evidence shows something else. These stores aren’t merely a byproduct of economic distress; they are a cause of it. As this report shows, in small towns and urban neighborhoods alike, dollar stores drive grocery stores and other retailers out of business, leave more people without access to fresh food, extract wealth from local economies, sow crime and violence, and further erode the prospects of the communities they target.
Dollar General and Dollar Tree (and its subsidiary Family Dollar) single out communities that have been marginalized economically and politically. In urban areas, they blanket Black and Latino neighborhoods, opening multiple outlets near one another. This carpet-bombing strategy undermines existing food stores, especially the independent grocery stores that often serve these communities, and makes it hard for new businesses to take root and grow, effectively locking in neighborhood deprivation. The chains also target rural towns, many already struggling from the effects of corporate consolidation and globalization. They typically locate next door to or across the street from the town’s only grocery store, and often succeed in wiping it out. Dollar stores are dismal substitutes; they stock little fresh produce and sell only a narrow range of processed foods, such as canned soup and soda.
As they expand, Dollar General and Dollar Tree not only profit from economic fragility and structural racism; they deepen both. Grocery stores are important anchors, and not having one sets off a spiral of economic decline. It imposes daily hardships on residents, who must either undertake long trips to buy food or subsist on the dollar store’s meager offerings.
According to some city leaders, this has contributed to poor health and lower life expectancy. It’s a reality largely invisible to people in better-off places, who might be startled to learn the extent to which Americans rely on dollar stores for groceries, or that Dollar General accounts for a much bigger slice of the grocery market than Whole Foods does. Indeed, more than any other landmark, dollar store chains have come to delineate the nation’s stark and widening disparity. They are “markers of a geography of the places that the country has written off,” notes the journalist Alec MacGillis.
With dollar stores continuing to multiply at breakneck pace, communities across the country are grappling with the fallout, and a growing number of citizen groups and local officials are rising to turn them away. Since 2019, at least 75 communities have blocked proposed dollar stores, with more than 50 of those defeats occurring between January 2021 and the end of 2022, according to our tally. At least 54 cities and towns — including Birmingham, Ala.; Fort Worth, Texas; Kansas City, Kan.; and Plainview, Neb. — have gone further. They’ve enacted laws that sharply restrict new dollar stores, typically by barring them from opening within one to two miles of an existing dollar store. At least one town, Stonecrest, Ga., has imposed a total ban on new dollar stores. These laws are often adopted in conjunction with measures designed to support the retention and development of grocery stores.
Yet, as widespread as this backlash has been, it’s not enough on its own. Communities need reinforcements to stop the encroachment of dollar stores. They need action at the federal level, where a negligent approach to antitrust has allowed Dollar General and Dollar Tree to flex their market power unfairly and overrun their less powerful competitors, especially independent grocery stores. We need to invigorate our antitrust laws, especially the long-dormant Robinson-Patman Act, to block dollar chains’ predatory tactics and create fair markets in which independent retailers can thrive. We also need stronger financial protections that put limits on Wall Street’s ability to underwrite those tactics while also making capital available for the development of local grocery stores.
Source: Institute for Local Self-Reliance, ilsr.org, February 28, 2023. Download the full report from the website.