Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa Bay news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Charlotte news in your inbox

Catch up on the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Aïda Amer/Axios

As rural America gets left behind by the rise of coastal superstar cities and the chasm between the richest and the rest widens, one entity is heavily profiting from the blight: the dollar store.

Why it matters: Economic signs point to a coming recession, and U.S. discount stores, which have boomed even in the strong recent economy, will only grow more — becoming the sole retail option for an increasing share of Americans.

The big picture: The face of retail is changing. The rise of dollar stores goes hand in hand with the decline of American malls, says Yaromir Steiner, a mall pioneer in Columbus, Ohio.

  • In the early 1960s, the bottom 90% of American households by income had the same wealth as the top 1% — 33% of the total. Today the bottom 90% has dropped to only 20% of the wealth, while the top 1% has raised its share to 40%, according to a paper by Edward Wolff, an economics professor at New York University.
  • As the wealthy get wealthier and the middle class erodes, the retail industry is witnessing the simultaneous rise of cheap chains like Dollar General and luxury brands like Louis Vuitton.
  • Stores that target middle-income Americans, like J.C. Penney and Macy's, have been rapidly losing customers. And dollar stores are picking them up.
"This is a climate in which the dollar stores have been able to multiply like a virus."
— Stacy Mitchell of the Institute for Local Self-Reliance

Today, there are more than 30,000 dollar stores in the U.S., up from around 18,000 a decade ago, according to the Institute for Local Self-Reliance.

  • That's more locations than the combined number of Walmart, Kroger, Costco, Home Depot, CVS and Walgreens — the country's six biggest brick-and-mortar retailers, reports Forbes.
  • And the big dollar chains — Dollar General and Dollar Tree, which also owns Family Dollar — say they are adding about 1,000 more locations each year.
  • The expected coming recession could mean even greater expansion: "During the last recession, [dollar stores] experienced tremendous growth and success in the market as they displaced other low-price competitors, such as Walmart, and successfully took share from them," says Herb Kleinberger, a retail professor at NYU.

Investors love the dollar chains because, even among budget retailers, their stock prices are rising.

  • Over the last five years, Dollar General's share price has soared about 66%. Dollar Tree has surged 50%.
  • Dollar General CEO Todd Vasos told WSJ: "The economy is continuing to create more of our core customer" — struggling Americans.

Dollar joints have set up in places lacking grocery stores, from rural Kansas to inner-city Chicago, where even Walmart isn't around. They sell more than high-end stores, too — dollar stores had sold about $24 billion worth of groceries as of the third quarter of the year, while Whole Foods had rung up $15 billion.

  • Among victims: Smaller retailers that are unable to compete with the dollar stores' rock-bottom prices. When they are forced out of business, local residents are left with just one choice for shopping.

The stakes: Those who rely on dollar stores for food are exposed to overwhelmingly unhealthy diets, with choices that rarely go beyond processed and packaged snacks. At a Dollar Tree in Alexandria, Virginia on Tuesday afternoon, I saw that the shelves were stocked with Cheese Nips and Fudge Stripes, and that sodas were the only items in the refrigerators.

  • Still, there's one irrefutable reason to go discount, Shirley Jones, a shopper at the Dollar Tree, tells me: "Save money."
  • Kristen Henderson, who was shopping for snacks and dish soap, says she knows certain products are 88 cents at Walmart and a dollar at the Dollar Tree, but that she goes here anyway because "Walmart isn't convenient to get to from where I am."
  • "If you live in Whole Foods-land — not the dollar store world — it's an invisible reality that they're supplying a lot of the groceries," Mitchell says.

Go deeper: The future of malls could look more like towns

Go deeper

Mike Allen, author of AM
51 mins ago - Economy & Business

America on borrowed time

Illustration: Aïda Amer/Axios

Economic recovery will not be linear as the world continues to grapple with the uncertainty of the pandemic.

Why it matters: Despite being propped up by an extraordinary amount of fiscal stimulus and support from central banks, the state of the global economy remains fragile.

Scoop: Gina Haspel threatened to resign over plan to install Kash Patel as CIA deputy

CIA Director Gina Haspel. Photo: Win McNamee/Getty Images

CIA Director Gina Haspel threatened to resign in early December after President Trump cooked up a hasty plan to install loyalist Kash Patel, a former aide to Rep. Devin Nunes (R-Calif.), as her deputy, according to three senior administration officials with direct knowledge of the matter.

Why it matters: The revelation stunned national security officials and almost blew up the leadership of the world's most powerful spy agency. Only a series of coincidences — and last minute interventions from Vice President Mike Pence and White House counsel Pat Cipollone — stopped it.

Updated 13 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Health: Coronavirus deaths reach 4,000 per day as hospitals remain in crisis mode — CDC warns highly transmissible coronavirus variant could become dominant in U.S. in March.
  2. Politics: Biden says, "We will manage the hell out of" vaccine distribution — Biden taps ex-FDA chief to lead Operation Warp Speed amid rollout of COVID plan — Widow of GOP congressman-elect who died of COVID-19 will run to fill his seat.
  3. Vaccine: Battling Black mistrust of the vaccines"Pharmacy deserts" could become vaccine deserts — Instacart to give $25 to shoppers who get vaccine.
  4. Economy: Unemployment filings explode againFed chair: No interest rate hike coming any time soon —  Inflation rose more than expected in December.
  5. World: WHO team arrives in China to investigate pandemic origins.