Blaine Griffin knows that messing with the dollar store industry is a risky proposition.
“I understand people have concerns and criticisms because they feel this is a free market and a capitalist society,” Griffin, a member of the Cleveland City Council, tells The Progressive. “But we feel that there is a price of doing business in the city of Cleveland.” While the city doesn’t want to be “overbearing,” he says, it does want to hold bad operators accountable.
By some measures, Cleveland, Ohio, is the second-poorest city in America, behind only Detroit, Michigan. Nearly 54 percent of children there live in poverty. A report conducted by the Institute on Metropolitan Opportunity at the University of Minnesota Law School in April 2019 found that Cleveland’s neighborhoods are experiencing economic decline and the city’s low-income population is growing despite losing 10 percent of its overall population since 2000.
These conditions have opened up Cleveland’s neighborhoods to the proliferation of dollar stores—more than thirty-five in all. On the surface, this may seem like an innocuous development. Dollar stores offer what are billed as low prices—many items really do cost a buck—on common goods, from snacks to school supplies.
But critics say dollar stores contribute to declines in economic and public health as they displace full-service grocery stores, eliminate jobs, and undercut competition from other retailers and small businesses.
Across the United States, economically distressed communities are pushing back against high concentrations of dollar stores and their negative impacts.
“It’s kind of like a corporate bodega on steroids,” says Charles Bromley, co-director of Shaker Square Alliance, a community group that has opposed the development of new dollar stores in Cleveland.
“Their whole strategy is to go to a neighborhood that has a lot of poor people who don’t have access to transportation and can only walk to and from the dollar store,” Bromley says. “The big stores, the chains, are pulling out of these neighborhoods.”
Bromley’s group began to protest dollar stores in response to complaints about overflowing trash at a dollar store in Cleveland’s Buckeye-Shaker neighborhood. Community groups like Shaker Square Alliance were successful in their effort to open a full-service grocery store, Simon’s Supermarket, in the neighborhood in October 2018. But Bromley says the store is struggling—despite receiving $1 million in subsidies to open—due to competition from the high volume of local dollar stores.
The Cleveland City Council is currently weighing an ordinance proposed by Griffin to impose a temporary moratorium on dollar stores. The measure will likely come to a vote sometime over the next few months.
“We want to try to provide a more equitable model to provide healthy options for the citizens of Cleveland,” Griffin says. “We feel there are certain brands of dollar stores that don’t bring added value to our community.” He cites recent zoning law changes in Birmingham, Alabama, as an example of what he wants the Cleveland City Council to achieve.
In July 2019, the city of Birmingham passed a law to limit the number of dollar stores. Its goal was to increase fresh food availability in a city where 69 percent of the population lives in a “food desert.”
A food desert, as defined by the United States Department of Agriculture, is an area in which at least a third of the population lives more than a mile from a supermarket or large grocery store, or ten miles for rural communities.
The rapid expansion of dollar stores across the United States has contributed to the problem of food deserts. Research conducted by Ashanté Reese, an assistant professor of anthropology at Spelman College, has demonstrated that food access reflects historical patterns of racial segregation, as supermarket availability is much lower in predominantly black and low-income neighborhoods.
“The dollar chains are targeting both small towns and low-income urban neighborhoods, especially black neighborhoods.”
“The dollar stores make the argument they’re expanding food access, but what they’re really expanding is access to unhealthy foods like candy, chips, and soda,” says Julia McCarthy, a senior policy associate at the Center for Science in the Public Interest. “The healthy food options at dollar stores are really limited. Fewer than 3 percent of Dollar General stores offer these.”
Birmingham’s law limits concentration of dollar stores to a one-mile radius, and provides incentives for grocery stores, farmers’ markets, and community gardens.
“Our ordinance has mobilized a lot of people,” says Yuval Yossefy, data management specialist with the city’s department of innovation and economic opportunity. “We’ve received some really interesting ideas, everything from grocery co-ops, expanding urban agriculture and community gardening, all sorts of interesting projects that the residents themselves are pushing. This has given us a way to communicate to residents that this is a priority.”
In urban neighborhoods, high saturations of dollar stores deter grocery stores and other businesses from entering the market. Dollar stores tend to employ fewer employees than independent grocery stores and typically offer no fresh produce, and just a small selection of processed foods.
And, in fact, products in dollar stores have also been shown to actually be more expensive than in grocery and other retail stores, as the products are packaged in smaller quantities in order to be sold for a dollar and appear cheaper. For instance, The Guardian reported that a two-pound bag of flour can be found in dollar stores for $1, but five-pound bags are often sold for less than $2.50 in larger supermarkets.
Despite all of these drawbacks, in the race to control the proliferation of dollar stores, the dollar stores are winning.
Dollar General plans to open 975 retail locations in the United States in 2019, making it by far the top retail company for domestic expansion. Dollar Tree has 350 planned openings in 2019.
From 2011 to the end of 2018, Dollar General and Dollar Tree locations increased from around 20,000 retail locations to nearly 30,000. There are more dollar store retail locations than the combined total of Walmart and McDonald’s locations, and more Americans rely on dollar stores for food than Whole Foods supermarkets.
Dollar General has achieved consistent sales growth for the past twenty-nine years and is currently the largest retail chain in the United States by store count. Around 57 percent of Dollar General’s business comes from households with less than $49,900 in annual income. Chief Executive Officer Todd Vasos told The Wall Street Journal in December 2017 that his company’s primary customer base consists of low-income Americans and that the economic decline in communities across the United States is facilitating Dollar General’s expansion.
“The economy is continuing to create more of our core customer,” Vasos said in that interview. “We are putting stores today [in areas] that perhaps five years ago were just on the cusp of probably not being our demographic and it has now turned to being our demographic.”
Stacy Mitchell, co-director of the Institute for Local Self-Reliance, says half of all U.S. retail store openings in the past six months have been dollar stores.
“They are far from done,” she adds. “Dollar General and Family Dollar report that they have identified locations for another 20,000 outlets combined.”
Mitchell says her group consistently receives inquiries from communities around the United States struggling with dollar stores and their negative economic impacts.
“The dollar chains are targeting both small towns and low-income urban neighborhoods, especially black neighborhoods,” Mitchell says.
In urban areas, Mitchell says, “the dollar chains’ strategy of saturating communities with multiple outlets is making it impossible for new grocers and other local businesses to take root and grow. Basically, they’re locking in poverty.”
And in small rural towns, local grocery supermarkets have reported a 30 percent decline in sales after the introduction of a dollar store to an area.
David Procter, director of the Center for Engagement and Community Development at Kansas State University, helps run a rural grocery initiative started in 2006 to provide resources to sustain independent rural grocery stores.
He explains that, initially, big box retail chains like Walmart were among the most prolific competitors to independent rural grocery stores, but that shifted to dollar stores around five years ago. That’s in part because of how savvy dollar stores have been at, well, making dollars.
“What grocers have told us is the middle-of-the-store items generate the highest percentage of profit, the shelf stable items” of the sort dollar stores sell, Procter says. “Small town grocery stores operate at a small profit margin to begin with. It is an area that dollar stores are strongest [in] and it strikes at the best profit area of grocery stores.”
Procter thinks independent grocers still have some advantages over their dollar store competitors, including greater variety of products, higher quality customer service, civic spaces within stores, and better relationships with local communities. But population decline in the rural Midwest combined with the increasing concentration of food manufacturing and distribution is making it more difficult for independent rural grocery stores to survive.
“It’s getting more and more difficult to find a single entrepreneur who will come into a town and agree to establish a grocery store,” Procter says. “So what we find is more and more communities are banding together to build and run grocery stores.”
Dollar General did not respond to multiple requests for comment on this story. In a recent comment to CNN, Dollar General spokesperson Crystal Ghassemi said, “We are disappointed that a small number of policymakers have chosen to limit our ability to serve their communities. We believe the addition of each new Dollar General store represents positive economic growth for the communities we serve.”
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Sidebar #1: Wanted: Fewer Stores, More Dollars
Across the country, municipalities have imposed and enacted restrictions on dollar stores.
Wyandotte County, Kansas, which includes Kansas City, in 2016 passed an ordinance limiting the number of dollar stores in the region, with a separation requirement of 10,000 feet for any new dollar store retail locations.
In Tulsa, Oklahoma, the city council in April 2018 passed restrictions on dollar stores, requiring new ones to be at least one mile apart from existing retail locations. The changes came after a six-month moratorium on all new dollar stores passed in September 2017. Oklahoma City passed a similar moratorium in May 2019.
In August 2018, Mesquite, Texas, a Dallas suburb with around 140,000 residents, passed new regulations limiting the number of dollar stores. Officials cite the high influx of permit applications and the congestion of dollar stores in certain neighborhoods.
"They were not only going into areas where we thought they might push out competition for a grocery store that serves fresh food, but they were also concentrating themselves," says Mesquite City Manager Cliff Keheley. "We had concerns this type of concentration and the number would deter us from being able to attract a grocery store in some neighborhoods that have lower income and it would be marginal for a grocery store to consider going there."
The regulations limit new dollar store locations to a one-mile distance from existing locations and mandated new dollar stores must devote at least 10 percent of their floorspace to fresh food.
Other communities are looking to follow suit. In Broadview Heights, Ohio, a city near Cleveland, city officials are seeking a temporary moratorium on dollar stores in response to issues of oversaturation similar to those experienced by neighborhoods in Cleveland.
Several small towns in rural Michigan are debating whether to take action in response to a recent influx of dollar stores in the region. And New Orleans, Louisiana, and Fort Worth, are currently considering imposing restrictions to these stores' growth.
Sidebar #2: By the Numbers
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Dollar Store Growth Chart Final
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