Dollar Stores Are Taking Over the Grocery Business, and It’s Bad News for Public Health and Local Economies

A new report shows growth of dollar stores in low-income and rural communities furthers inequity and pushes out local businesses.



Today, there are more dollar stores in the United States than all Walmarts and Starbucks combined. These low-priced “small-box” retailers, like Dollar General, offer little to no fresh food—yet they feed more Americans than either Trader Joe’s or Whole Foods, and are gaining on the country’s largest food retailers.

Detailing the explosion of dollar stores in rural and low-income areas, the Institute for Local Self-Reliance (ILSR) recently released a report that shows how these retailers exacerbate economic and public health disparities. The report makes the case that dollar stores undercut small rural grocers and hurt struggling urban neighborhoods by staving off full-service markets.

ILSR also argues that the proliferation of dollar stores is the latest outgrowth of an increasingly concentrated grocery sector, where the top four chains—Walmart, Kroger, Ahold-Delhaize, and Albertsons—sell 44 percent of all groceries, and Walmart alone commands a quarter of the market. These dominant chain stores have decimated independent retailers and divested from rural and low-income areas, as well as communities of color.

A Dollar General in Morgantown, West Virginia. (Photo credit: <a href="https://www.flickr.com/photos/andrewbain/2937354096">Taber Andrew Bain</a>)

A Dollar General in Morgantown, West Virginia. (Photo credit: Taber Andrew Bain)

“Earlier trends in big box store [growth] are making this opening for dollar stores to enter,” says Marie Donahue, one of the report’s authors. “We’re seeing a widening gap of inequality that’s a result of wealth being extracted from communities and into corporate headquarters… Dollar stores are really concentrating in communities hit hardest by the consequences of economic concentration.”

“Before this report, I had no idea that dollar stores were proliferating in this way,” says Dr. Kristine Madsen, Faculty Director of the Berkeley Food Institute. But, she adds, “it doesn’t surprise me that these incredibly cheap stores may be the only choice for people [who] may be choosing between medicine and rent and food.”

Dollar General did not respond to a request to comment for this article.

Profiting Off Customers in “Food Deserts”

Two companies, Dollar Tree (which acquired Family Dollar in 2015) and Dollar General, have expanded their footprint from just under 20,000 stores in 2010 to nearly 30,000 stores in 2018, with plans to open yet another 20,000 stores in the near future. Dollar General alone opens roughly three stores a day.

Most of these new stores are in urban and rural neighborhoods where residents don’t often have access to fresh fruits and vegetables. In 2015, in fact, Dollar Tree and Dollar General represented two-thirds of all new stores in “food deserts,” defined by the U.S. Department of Agriculture (USDA) as low-income areas where a third or more of residents live far from a full-service grocery store. Dollar General predominantly targets rural areas, though it s beginning to compete with Family Dollar, which is ubiquitous in urban food deserts.

Profiting off these left-behind places is baked into dollar stores’ business plan. In 2016, low-income shoppers represented 21 percent of Dollar General’s customers but 43 percent of their sales. Dollar General executives publicly described households making under $35,000 and reliant on government assistance as their “Best Friends Forever.” When discussing growing rural-urban inequality, Dollar General’s CEO said “the economy is continuing to create more of our core customer,” i.e., more struggling rural families.

Undercutting Independent Grocery Stores

Some, including dollar-store executives themselves, argue that a low-cost retailer seeking to go where no one else will benefits underserved communities. But ILSR argues that dollar stores are not a true solution to hunger or food insecurity. Furthermore, the group says, they do nothing to promote food sovereignty, or people’s right to control the production and distribution of their own food.

Inside a Dollar General store in Eldred, Pennsylvania. (Photo credit: Random Retail)

Inside a Dollar General store in Eldred, Pennsylvania. (Photo credit: Random Retail)

“To the extent that dollar stores are filling, in some ways, a need in communities, I think that is true in the short term,” says Donahue. “But really our research is demonstrating … those foods aren’t as good quality as full-service grocers or independent local stores, which may be able to connect to local farmers and the larger food system.”

Dollar stores sell predominantly shelf-stable and packaged foods. Four-hundred-and-fifty Dollar General locations are experimenting with an expanded refrigerator section to respond to a demand for more fresh fruits and vegetables. But, to date, the fresh and frozen offerings that do exist in these stores consist of processed meats, dairy products, and frozen meals. In other words, customers don’t have the same wide selection as they do in a traditional full-service grocery store.

“Grocery stores have more variety and a higher quantity of healthy foods than do dollar stores,” says Dr. David Procter, director of the Rural Grocery Initiative, a program of Kansas State University’s Center for Engagement and Community Development.

Despite their reputation, dollar stores don’t provide the best deals either. 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.

Dollar store customers do, however, find genuine value in things like greeting cards, pasta, coat hangers, and other everyday home goods. But this very cost-cutting is what makes dollar stores uniquely brutal competitors for smaller independent grocers.

“There’s very little money made on all kinds of segments of the [independent] grocery store, but where [grocers] do make their most money … is in paper goods and dry goods,” explains Procter. “That is really the heart of Dollar General … and it’s cutting into the largest profit area of the grocery store, that’s the real challenge.”

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By sucking away this source of revenue, dollar stores tend to drive out the few independent grocers that remain, especially in rural areas. ILSR’s report found that “it’s typical for sales [at local grocery stores] to drop by about 30 percent after a Dollar General opens.”

Additionally, a survey by the Rural Grocery Initiative found that competition from large chain stores is the single largest challenge facing independent rural grocers. In the ’90s, Walmart was their main challenger; now Dollar General is moving in where even Walmart wouldn’t go, pushing out more local businesses.

The Benefit of—and Fight for—Small, Local Stores

Residents lose more than fresh foods when their local grocery store disappears. They lose jobs, local investment, and a voice in their food choices.

According to federal data, small independent grocers employ nearly twice as many people per store when compared to dollar stores. “When you have a hometown grocer owned by people who are committed to that community, not only are all the decisions made locally, but all of the profits stay in that town,” says Procter. “Some of the money that’s being generated in Dollar General stores is going to their headquarters in Tennessee, and the decisions about whether or not that [store] stays open or what they offer is being made by out-of-state corporate decision makers.”

A Dollar Tree store in Cheshire, Conn. (Photo credit: Mike Mozart)

A Dollar Tree store in Cheshire, Conn. (Photo credit: Mike Mozart)

In addition to undercutting existing stores, the proliferation of dollar stores can shut out new entrants. This is a particular concern in low-income urban areas and communities of color. ILSR’s report features the case of Tulsa, Oklahoma, where there’s a 14-year life expectancy gap between residents in the predominantly Black north Tulsa neighborhood and residents in the predominantly white south Tulsa neighborhood. ILSR found that dollar stores have “concentrated in [Tulsa] census tracts with more African American residents,” and community members are not happy about it.

“I don’t think it’s an accident they proliferate in low socio-economic and African American communities,” Tulsa City Councilor Vanessa Hall-Harper told ILSR. “That proliferation makes it more difficult for the full-service, healthy stores to set up shop and operate successfully.”

However, Tulsa’s story also provides a glimpse of hope into what some communities can do to halt the invasion of dollar stores. Hall-Harper worked to pass zoning ordinances that would limit dollar store development and encourage full-service grocers to set up shop. She rallied residents to protest the opening of a new Dollar General and join city council meetings to show support for a temporary dollar store moratorium. City council passed the moratorium and the zoning changes seven months later. North Tulsa will soon have a new grocery store, operated by Honor Capital, a veteran-owned company that has a food-access mission. Rural communities in Kansas have similarly organized and leveraged city council to halt a proposed Dollar General.

“It’s great to see a community really fight for this ordinance and show up to public meetings and hearings and challenge those traditional systems that would have just approved development for more dollar stores in the area,” says Donahue.

Top photo: Outside a Dollar General in Fort Hancock, Texas. (Photo credit: Thomas Hawk)

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View Comments (31)

  1. Monday, December 17th, 2018
    I would like to share this on Facebook, but there is no "share" option here.
  2. Shad
    Monday, December 17th, 2018
    Hello Civil Eats,
    I am a third generation Vidalia onion farmer who is one of the smaller growers. With your article about the Dollar stores and the other day the article about organic farmer and so few.
    The problem with supplying fresh produce to the general public is that the market is controlled by a few chains that have been allowed to buy out the mom and pop stores.
    The prices paid to the farmer is roughly the same as thirty years ago.
    As the farmers age in this country, they see that it is better to send their kids to college or trade schools.
    As for the organic produce, I have watch organic Vidalia onions go from 38 to 40 dollars per 40 pound cartons to 16 to 24 dollars per carton per carton.
    As soon as the larger Vidalia onion growers step into the ring , they started using the organic Vidalia Onions as a tool to sell their conventional Vidalia onions.
    So when larger companies start into organic produce the price to the grower is roughly the same as conventional produce but more cost to grow.
    We as a country now import over 70 percent of our food when before NAFTA we produced nearly 100 percent.
    Have a great day,
    Shad
  3. Susan
    Monday, December 17th, 2018
    Dollar stores are the exact opposite of what this country needs. Disgusting. County and city planners need to crack down on the crap food they sell.
    • lisas
      Tuesday, December 18th, 2018
      And replace it with what when the people can't afford anything else? Until we take down the capitalists and bourgeoisie that feed off the poor and are invested in keeping them poor and unhealthy not a damned thing is going to change except perhaps more hungry children when what is currently affordable is outlawed per your idea.
  4. lisas
    Tuesday, December 18th, 2018
    So Dr. Madsen of the Berkely Food Institute had no idea of the scope of dollar stores? She's obviously never been a poor with no car and the only store willing to set up in a lower density poor community is a Family Dollar or Dollar General because the corner grocer went goodbye when the landlords raised rent and folks could not afford the increase in prices to cover that...because food and assistance is crap and housing assistance has a years-long waiting list. . And for some, the grocery store or Walmart is too expensive when the choice is either keeping a roof over your family's heads or having fresh fruit and whole grain bread. It reeks of the elitism of those that have and never have had not. It refuses to acknowledge that the capitalist system that creates a permanent weakened underclass to serve their interests. And until the systemic reasons for poverty are overthrown, not a damned thing is going to change.
    • Bruce
      Tuesday, December 25th, 2018
      Why can landlords raise rents? Because of interference with the free-market capitalist system. Nobody, Left or Right, wants any high-density housing or business construction near them. So they pass regulations limiting density against the capitalists who would develop the high density housing and business space that would satisfy demand and bring down rents. The problem is anti-capitalist "NIMBYism" (Not In My Back Yard).
    • Len
      Saturday, January 5th, 2019
      Agreed, this article (I got here from Eater, which published it in full) smacks of ivory tower elitism (I should know, for many years I was one of them). Reading this I sense the undercurrent of "these poor, unfortunate, souls are being duped into shopping at the Dollar or Dollar General, when they could be patronizing their higher-priced local neighborhood grocer who stocks only organic heirloom fresh produce that's CHEAPER, when, of course, you calculate the opportunity costs to the organic farmer of not subsidizing Monsanto/Bayer for the pesticides and the other big, bad, agribusiness interests that have conspired to dupe these poors into making poor (sorry, no pun intended) economic choices for themselves and their families. No. Smaller quantity portions at the Dollar Store? Like it or not, it comes in handy when your home is your car! I don't doubt the good intentions of either the author or the studies cited in article, but they're on "the other side of the tracks" from reality. And yes, I work on that side of the tracks. Without Dollar stores or the like it's even worse for these folks.
  5. Deborah D. Bayne
    Tuesday, December 18th, 2018
    Dollar stores to me are good for buying some of your cleaning supplies. My favorite one is Family Dollar because it does sell name brands like, Tide, Downey and Brawny as well as non brands which if you do not have enough money you can buy a brand that cost less. I would not buy any food from any of them.
  6. Lisa M Delabre
    Wednesday, December 19th, 2018
    What else am I to do, I am disabled and without a car & I avoid at all costs being a burden on others & i will eat unhealthy rather than being a burden, yeah it sucks that they don't have any fresh produce I wish they did.
  7. Wednesday, December 19th, 2018
    There are 2 dollar stores within a half a mile in the high socioeconomic community of Encinitas California. Having been a
    former kindergarten teacher, I relied on those stores to decorate my classroom and for holiday party supplies. Since I don't frequent big box stores these local dollar stores provide a service. Not everyone buys food there!
  8. Denise Barstow
    Wednesday, December 19th, 2018
    Outstanding article. We need more reporting like this, thank you for providing thoughtful and quality content.
  9. Joyce N Stryker
    Thursday, December 20th, 2018
    I find this article very interesting and give an example of a local owned grocery store closing in less than 18 months after Dollar General came to town. That grocery store also was the supply for two neighboring towns that had lost their grocery store. Now we must travel 20 miles at least to get fresh fruit and vegetables. While we can get some foods from Dollar General but usually not the brands we are used to using. Another problem are the senior citizens that don't drive getting their groceries.
  10. Larita Lee
    Friday, December 21st, 2018
    Insightful article backed by research
  11. Darcy Robilliard
    Sunday, December 23rd, 2018
    Yes I aggree that dollar stores are a lot cheaper I myself do shop at Dollar store in my area I know the profits should be locally but the point is nobody can find a grocery store that is affordable anymore.
  12. Bruce
    Tuesday, December 25th, 2018
    If people really want healthy foods, they'll be willing to pay for them, and the dollar stores will sell them or it will be profitable to operate a more traditional grocery that sells them. The problem is people don't care enough to purchase fresh foods.
    • Mark
      Saturday, December 29th, 2018
      If people really want healthy foods, they'll be willing to pay for them? Seriously?
  13. Brenda Flynn
    Wednesday, December 26th, 2018
    Our Dollar General has just added fresh produce.
  14. Charles
    Monday, January 7th, 2019
    So Dollar Stores go into "food desserts," and are accused of taking advantage of the situation. They have refrigerator and freezer sections offering fresher food, but they are accused of not offering enough.

    If folks shopping in these stores wanted a wide range of fresh veggies, you better believe the evil rapacious corporate Dollar Stores would be selling it to them.
  15. Amber Martin
    Monday, January 14th, 2019
    I shop at dollar general for certain things.. But as for fruits an veggies I go to a grocery store! Some things are cheaper an now a days everyone is looking for cheaper.. Not just certain people!!!
  16. Leidy
    Wednesday, January 23rd, 2019
    Has it occurred to anyone that grocery stores are also just losing customers to fresh direct, peapod, and subscription good boxes? I'm also not sure what urban areas get “preyed on” by dollar stores because in NYC urban areas always have these little fruit stands and small markets with fresh produce. Even bodegas tend to carry produce. Are urban areas elsewhere dramatically different that only the dollar tree is available?
  17. Micheal N
    Monday, March 4th, 2019
    Hard to believe anyone "had no idea that dollar stores were proliferating in this way". The massive growth of Dollar Tree in particular has been written about many times, and they are everywhere.
    That said, where I live, dollar stores have sort of seen their peak, and these days, it's Aldi that are sucking away customers from virtually everyone.
  18. Sunday, October 13th, 2019
    The Dollar stores in our area was great! But now there so dirty stacks of boxes everywhere,stuff laying on the floors.We where on 62 in Columbus,Ohio they are both dumps