Oct 2, 2019

Cities lead the backlash against dollar stores

Erica Pandey, author of @Work

Illustration: Aïda Amer/Axios

In an effort to revive shuttered main streets and empower mom-and-pop stores, a number of U.S. cities are passing laws to limit the rapid expansion of dollar stores in their neighborhoods.

Why it matters: Around 14 million people live in food deserts, per the USDA. Experts say one contributor to the crisis is the meteoric rise of dollar chains, which are popping up on every street corner, crowding out other retailers and grocers, and very rarely selling fresh food.

"If you saturate a neighborhood with dozens of dollar stores, there’s just no room left in the market for anyone else."
— Stacy Mitchell, co-director at the Institute for Local Self-Reliance

The big picture: There are about 30,000 dollar stores in the U.S. today — more than the total number of Walmarts and McDonald's combined. And Dollar Tree and Dollar General have plans to open 20,000 more.

The problem is more acute in some cities than others, per a report from the Institute for Local Self-Reliance, a nonprofit research and advocacy group that opposes concentrated economic power.

Consider Birmingham, where close to 70% of city residents live in food deserts and the 2 dollar giants have opened more than 40 locations in the last decade. Since 2005, 5 Birmingham supermarkets — undercut by the cheap chains — have closed, and the city has struggled to get new grocers to come to town, the report notes.

  • Now Birmingham has passed a pair of laws: The city is banning new dollar stores from setting up shop within a mile of an existing location and it's financing the opening of new supermarkets.

Northeast Oklahoma City was confronted with the problem of dollar stores after its last grocery store closed in July.

  • The city has now prohibited new dollar stores from opening within a mile of old ones unless the store commits to saving 500 square feet of floor space for fresh produce.

The other side:

  • A Dollar General spokesperson told Axios: "We are disappointed a small number of policymakers have chosen to limit our ability to serve their constituents and communities."
  • "Our stores provide an affordable and convenient fill-in shopping option for our customers in between their weekly or bi-weekly grocery store trips, all while creating more jobs and investing in the communities we serve," a Dollar Tree spokesperson said.

The bottom line: The backlash against dollar stores is here — and spreading. More cities, from small ones like Hutchinson, Kansas, to big metros like Cleveland and Fort Worth, are considering laws to limit the chains.

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