Dollar Stores: Solution or Problem in Food Access Disparities?

By Matt Paysour

If you have driven about one mile in an underserved community, either rural or urban, probability dictates that you encountered at least one Dollar General, Dollar Tree, or Family Dollar. This is hardly an accident.

This millennium has seen increasing concentration of market share in the grocery sector, confined primarily to a few national food retailers such as Walmart and Kroger. Meanwhile, these national retailers have largely ignored or abandoned economically disadvantaged urban communities (often communities of color) and rural communities, making access to affordable, nutritious food a barrier to millions of Americans. Moreover, as national corporations have gained footholds within a wide geographic reach, locally-based grocers and food retailers have been devastated, losing some of their customer base and in many cases, their entire business. The loss of these locally-owned food retailers coupled with the absence of supermarkets has created a gap. Food and basic household items become less accessible close to home, aggravating the low-access status of many communities identified by the USDA as “food deserts.” This gap has been widening in many underserved communities, carving a niche for discount retailers.

Thus began the decade of the dollar store.

The low food access niche has been the target demographic of the dollar store. Dollar General and Dollar Tree alone have opened more than 10,000 stores since 2010, with Dollar General storefronts opening at a staggering rate of three new stores a day. Dollar stores typically land in low-income census tracts with limited food access, benefiting from low competition due to the absence of local grocers and national supermarket chains. In fact, over two-thirds of all new stores opened in food deserts since 2011 were dollar stores. A former Dollar General executive has described the strategy in simplest terms: “we went where they ain’t.”

For those local grocers that survived the proliferation of Walmarts and supermarkets in the early 2000s, this decades’ dollar store invasion was the straw that broke the camel’s back. A new report published in 2018 by the Institute for Local Self-Reliance (ILSR) indicates that local grocers can expect to lose about 30 percent of sales when a dollar store opens in the community. Grocery stores operate on thin profit margins—around 1 to 3 percent—which can make that 30 percent loss a fatal one for a small food retailer. For many underserved communities, the only remaining nearby retailer then becomes the Dollar General.

The result? Dollar stores have begun to command a substantial proportion of the food sold in low-income urban and rural communities, in total feeding more people annually than Whole Foods and displacing local grocers in the process. And this has been at great detriment to the health of the communities in which they reside, which continue to face worsening prevalence of obesity and obesity-related chronic disease.

On the surface, a dollar store offering low-cost food where access is limited seems like it may not be damaging to community health. Dollar General will point to how its stores are expanding, and some locations are in the process of retrofitting to support fresh produce sales. However, even with rapid investment expected in fresh produce throughout 2019, fewer than 2,000 of Dollar General’s nearly 15,000 stores will offer fresh produce. Otherwise, most dollar stores are well-known for stocking vast shelves of sugar-sweetened beverages and snacks of low nutritional value. Dollar stores also tend to undercut prices of nearby competitors by offering smaller product sizes. In other words, customers pay more per ounce at dollar stores than at grocery stores, and often for foods identified as significant contributors to poor health outcomes.

What good is a new food retailer when it offers little in the way of affordable, nutritious, and fresh foods? And is it worth the cost of eliminating the remaining local, independent grocers that tend to offer a wider selection of fresh produce, meats, and dairy? Emerging research suggests that a new food retailer, supermarket or dollar store, is not enough to improve availability of healthy foods in communities with low food access, nor is it enough to shift buying behaviors toward healthier food options. It matters just as much what a store sells as whether there is a store at all. Planting a dollar store “where they ain’t” will rarely be the full solution to the burden of poor health on communities with low food access.

Food systems and food environments are complex. However, within this complex system, it seems that dollar stores tend to do more harm than good in vulnerable communities. The last decade has seen dollar stores entering vulnerable communities in large numbers, driving out smaller, independent grocers and preventing full-service grocers from entering. Without concerted effort to expand selections of affordable fresh produce, meat, and dairy, the dollar store will not soon look like a sustainable answer to low food access.

In fact, it’s beginning to look more like a symptom.

 

Peer-reviewed by Yiqing Wang

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