Dollar Store Backlash

Darn those stores for offering products people want at competitive prices.

New York (CNN Business)As dollar stores sweep across America, they are facing growing scrutiny from opponents who argue that discount chains stifle local competition and limit poor communities’ access to healthy food.

Dollar stores have never been more popular. Yet a wave of cities and towns have passed laws curbing the expansion of Dollar General (DG) and Dollar Tree (DLTR), which bought Family Dollar in 2015. The companies are the two largest dollar store operators in the country, combining for more than 30,000 stores throughout the United States, up from under 20,000 a decade ago. By comparison, Walmart(WMT), America’s largest retailer, has 4,700 US stores.
Advocates of tighter controls on dollar stores say the big chains intentionally cluster multiple stores in low-income areas. That strategy discourages supermarkets from opening and it threatens existing mom-and-pop grocers, critics say.
“The business model for these stores is built on saturation,” said Julia McCarthy, senior policy associate at the nonprofit Center for Science in the Public Interest and a critic of dollar stores. “When you have so many dollar stores in one neighborhood, there’s no incentive for a full-service grocery store to come in.”
Opponents also express concerns that dollar stores don’t offer fresh produce. Dollar General and its dollar store rivals mostly sell snacks, drinks, canned foods and vegetables, household supplies and personal care products at rock-bottom prices.
However, Dollar General and Dollar Tree argue that they benefit communities by offering shoppers convenient places to grab food and essentials at low prices.
“In rural places without existing grocery stores, having a Dollar General might be viewed as an asset,” said Christopher Merrett, director of the Illinois Institute for Rural Affairs at Western Illinois University. Dollar stores bring in new sales and property tax revenue for cities, create jobs and expand shopping options for customers, he added.