Anisa Khalifa: Dollar stores have become ubiquitous in the American landscape. In many places, you can't drive a mile from a dollar store before you hit the next one.
Stephan Bisaha: You could really make it its own kinda like a road trip game, just counting dollar stores like me and my colleague did this between the Mississippi border and Birmingham. It was just, it's just an absurd amount here that is just literally noticeable.
Anisa Khalifa: That's Stephan Bisaha, the wealth and poverty reporter for the Gulf States Newsroom. He's covered the rapid expansion of dollar stores across the South. They can be convenient, and in many places they're necessary. But some communities and advocates warn that they're spreading too fast. But while the pushback to dollar stores grows, researchers say that we need more data to know their true impact. I'm Anisa Khalifa, and this week on the broad side, how many dollar stores are too many?
Stephan Bisaha: My name is Stephan Bisaha and I'm the wealth and poverty reporter for the Gulf States Newsroom.
Anisa Khalifa: Awesome. Well, thank you so much for joining me today. I'm really interested in talking about this with you.
Stephan Bisaha: Yeah, it's been an obsession of mine for well over a year now. So it's always exciting just to get to talk more about it.
Anisa Khalifa: What was your initial spark for becoming interested in this?
Stephan Bisaha: Okay, so about a year ago, someone reached out to us because they had heard a bunch of dollar stores were like temporarily closing like across the Gulf South.
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Unidentified News Anchor: Now to a developing story. Hundreds of Family Dollar stores are closed across the mid-South as widespread closure comes after the Food and Drug Administration sent out an alert about contaminated products.
Stephan Bisaha: At the time, there is this warehouse for Dollar Tree in Arkansas. And they found, it's a pretty disgusting story like something like a thousand plus dead rats at the place, like more signs of more being alive. Like, all these like hundreds of Family Dollars shut down temporarily to like, get rid of the contaminated products that they had there. So my idea was like, okay, if we're gonna cover this, let's find a town where they essentially, they don't have a grocery store. We know this is the case for a lot of rural towns, no grocery store and the dollar store is like their one kind of source to buy food locally.
So we went through this list of like several hundred stores, and we're looking through, looking on Google Maps. And we can find plenty of places in like Alabama, Mississippi, and Louisiana, where we were looking where there was no grocery store, and there was a Family Dollar when that shut down, but there was always also a Dollar General. And that was so strange to me. I mean, the story went on NPR's Weekend Edition, but it kept on thinking about this. How is it possible that these small towns that can't support a grocery store have two different dollar stores and it's just so common, that was the case?
Anisa Khalifa: So as you continued your reporting on this, what did you find? And can you put that into the broader context of dollar stores in the South and what's unique about them?
Stephan Bisaha: Well, dollar stores have really kind of taken over the South. I mean, we have just put national context first, $35,000 stores if you include just the main ones, Dollar General, Family Dollar, Dollar Tree. 35,000 stores across the country that's more stores than Walmart, Starbucks and McDonald's combined in the United States. So, just a staggering number of stores.
Anisa Khalifa: Wow.
Stephan Bisaha: Yeah. And when we look at the South, it's much more dense here. Like looking at North Carolina in particular, you got around like one and a half stores per 10,000 people. And like what does that really mean? Well it's like, nationally, there's only around one store per 10,000 people, which is still huge. But essentially, like they're just a lot more of these in the south. Like in Mississippi near me, you have something like 50% more per person, then like nationally is when it comes to the dollar stores. There's a ton of them here, they're more common in the South. Part of the reason could just be because Dollar General basically got its start in Tennessee and kind of spread from there. The other part is that they tend to do really well in rural areas where there's just not many other options. I mean, but since then they've kind of spread everywhere.
Anisa Khalifa: Has that growth been like very recent. And then why do you think that they're growing so fast?
Stephan Bisaha: So we go back to like 2008, Dollar General had around 8000 stores and they've been growing for a decent while but like, really, then, that's when we start seeing the number of these stores start to pick up, where you're starting to add around 1000 Dollar Generals a year. One possible explanation of that is the Great Recession, is that a lot of Americans had tighter budgets because of the Great Recession so they're going to dollar stores more often. We saw that during the pandemic, that dollar store sales and people going to them really rose because people's budgets were tighter.
As for what kind of explains the growth, I remember when I was looking at this thinking, well, there's all sorts of weird, interesting explanations such as Dollar General is getting more into healthcare. So they're running like, kind of health clinics in some small rural areas, particularly. Kind of like it's a small CVS. You're seeing a bunch of Dollar Generals get into banking, they sell customer data, like they, and they make that pitch, that they have data on rural customers that no one else has. So it's like, okay, is that part of the explanation? And then when I talked to different analysts about it, that were following Dollar General, dollar stores, they're like, you know, that's all icing on the cake. It really just comes down to, they just run stores as cheaply as possible.
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Stephan Bisaha: What makes a dollar store a dollar store is not everything being priced at dollar, actually. Like Dollar General and Family Dollar, like things are most often more expensive than $1. Dollar Tree was kind of the one of the main brands that was like, alright, everything's $1, they recently raised that to $1.25 is everything. So none of these stores are really dollar stores in the literal sense anymore. But what makes a dollar store a dollar store is cheap. They are very cheap stores.
And when we say that, we mean cheap as in not just prices. But the buildings are very cheap to build, the actual like payroll, they hire as little people as they possibly can to run these stores. So sometimes you see these stores are just like one person inside at a time. And then you also have the products that they sell, because you know, produce runs the risk of spoiling, so they're not going to have items like that. And the benefit of that really is because it's so cheap to operate these stores, they can open them where no one else can. So in rural areas where you have like a lot of stores that have closed down where not many places can afford to open. Well, dollar stores can.
Anisa Khalifa: I wonder, I mean, something like this, that's going into these communities so rapidly, has such a high level of saturation, and then is also running things so cheaply. I'm assuming there are consequences, right? What impact does that have on the communities where they are?
Stephan Bisaha: Well, the biggest concern about this impact is that these dollar stores are pushing out grocery stores. And that just comes down to this idea of like, what you make money on when you're grocery store isn't necessarily the broccoli. You might make some profit on it. But what you're mostly making profit on is that pack of M&Ms, is the gum, is your — those are things that are high profit items that help a grocery store with their very thin margins, like one to 2% margins for staying open. That bag of chips is what helps them to actually be able to afford to do it. Dollar Stores, they're not gonna be stealing your sales of broccoli necessarily, because they're probably not going to have broccoli.
To be fair, Dollar General is expanding the amount of produce that it is offering in its stores, something out of like out of their 19,000 stores right now about 3000 offer produce. We don't really know exactly how much that — it's definitely not like produce like your giant supermarket or even a small grocer where some are offering some produce. But that gets us an idea of when they are competing with these grocery stores and is those high profit items. It's the bag of potato chips. It's the canned goods, the candy in the aisle.
And I remember is talking to like Kansas State University's rural grocery store initiative and they said, when they surveyed and talked to different grocery store owners back in 2021, they said hey, when a dollar store opens up, that can cause like a 20 to 30% drop in sales. There's some other studies have shown that there is a drop, not nearly as dramatic. But again, when you have a one or two percent margin to keep you in the black, having a dollar store coming and taking any sales can be really threatening.
Anisa Khalifa: We'll be right back after this break.
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Unidentified News Anchor: 19 straight minutes of news continues with a neighborhood protesting plans for a Dollar General. So the question is, would you want a dollar store in your neighborhood…
Anisa Khalifa: I noticed in your reporting that there's been a lot of opposition from communities right, of people saying no, we don't want a dollar store in our neighborhood. Why is that?
Stephan Bisaha: Yeah, you got like something around since 2019, like 75 communities that have specifically rejected dollar stores. And look, this is ultimately like small numbers compared to the fact that Dollar General opens around 1000 stores a year. That's three stores a day just for Dollar General. But it is noteworthy and those numbers do seem to be ticking up, the number of communities that are rejecting dollar stores. And they have all sorts of different reasons, concern about grocery stores concern about things like traffic. I went to one small town in Tennessee, where their thing was like, Look, Nashville's growth is encroaching further and further south towards us, we want to keep this as a rural area, and we feel if we let dollar stores come in, that's going to start accelerating that growth that we don't want. And they would be just as unhappy to see, say, a McDonald's or another big brand opening there. But the other big brands aren't opening there, at least not at this point, like the Dollar Generals and these other dollar stores, they're capable of opening up where no one else can. And some people feel like they're losing the rural way of life with that.
Anisa Khalifa: This makes me think a little bit about, you know, in the 1990s, there was a lot of publicity about big box stores and how they were, you know, maybe ruining or emptying out main streets and a lot of towns, especially in smaller towns in the US. Do you see any like parallels, not necessarily between the situations, but how communities have kind of responded and how they organized around this issue?
Stephan Bisaha: I think it is a much more aggressive and organized response. And it's not just a message of shop local, it's a message of like, put this into law, like use the law against these stores. So like, the Institute for Local Self-Reliance, the organization that's kind of on the forefront of fighting against dollar stores, they have this kind of four step playbook for fighting a dollar store.
Number one is slowing the process down. You hear that there's a dollar store coming to your town, that they're looking to open up, maybe get your your local lawmakers, the county or the city council to put a moratorium say okay, we're pausing development of dollar stores, or any kind of stores for now while we look at this issue, because these things can move pretty fast, and then that gives you time for step number two is finding like a legal way to stop them. And it might be some sort of dollar store ordinance, a dollar store ban which many cities have put in. The third step is really coming down to convincing the lawmakers. So you're going to that zoning meeting and convincing lawmakers to vote no, then your classic grassroots is getting a petition signed, flooding the meetings, public comments, that tends to be pretty effective.
And then step four was a really interesting one, because it said, especially, like win or lose, be prepared for the future because the dollar stores will be back. So like I had heard stories of dollar stores coming back like three or four times to try in one community. And again, even they already have one they're like they're often looking to open multiple stores in an area. So again, that last step is also a warning, like just because you won once against a dollar store doesn't mean that they're not going to try again.
Anisa Khalifa: So there's a sense of not wanting to play catch up and trying to get in front of this issue as early as possible.
Stephan Bisaha: Yeah, yeah, that's a thought. the thought is like, the issue is already a problem in many communities, at least when you talk to the advocates about it. And like we have seen cities take initiative, particularly 2019 was around a time where a lot of cities started to step up and say, we don't want any more dollar stores, at least we want to put some restrictions on them. So like Birmingham, Alabama, New Orleans, they passed these laws that said, no new dollar store within a mile of one that already exists. And again, the thinking is in many cases, there's already so many dollar stores that that means no new dollar store can fit, because like you draw that mile circle around all the dollar stores, there's not much left on your map for a new one to open up. You're essentially kind of banning them in general when you create a law like that.
Anisa Khalifa: There are some people who think one size fits all solutions like that are an overreaction. You spoke to Lauren Chenarides, an assistant professor at Arizona State University's Morrison School of agribusiness. Can you tell me what she shared with you about the impact of dollar stores?
Stephan Bisaha: Yeah, so when you see a lot of media coverage about dollar stores, it tends to be pretty negative and taking that line of, they are they are forcing out grocery stores, dollar stores are grocery stores' natural enemy. And Lauren was looking at this at the time was kind of really surprised. She had said like there's not really the empirical data to back that up and she had done her own research into this. And the main thing she had found was that size really matters here.
Lauren Chenarides: The larger the grocery store, the less likely a dollar store is a substitute. When the grocery store looks more similar to a dollar store on these observable characteristics like store size, it's more likely to be a substitute.
Stephan Bisaha: So if you're looking at an urban area, a city, the dollar stores probably aren't much of a threat to your large supermarkets there. But when you start to have like your local mom and pop stores, when you're in more rural areas, that's when we see the effect of these dollar stores start to really grow and threaten the grocery stores. The one big question here really, is what's the right amount of dollar stores? Because as Lauren had said to me, these stores can be helpful. It's not like grocery stores and rural areas were killing it before dollar stores existed. Grocery stores, strictly in rural areas have been struggling for a long time. Like we said, it's a tough business with tight margins.
But again, that question of what are they actually doing to grocery stores, whether or not they're actually forcing them out, it kind of comes down to this question of dosage. So the difference between — and you probably remember this idea of like, the difference between poison and medicine is the dose, it's the amount that you get. So one dollar store in an urban neighborhood is not going to make much of a difference. But then you start to have like a dozen in some cities. Like New Orleans East, they have something like a dozen dollar stores in their neighborhood, New Orleans itself has more than 30 across the actual city.
In a rural area where you have, like just only 2000 people, you have two different dollar stores, that tends to be a lot. In some cases you potentially have three, that can really cause a lot of impact. But then when you talk to again, like Stacy Mitchell with the Institute for Local Self-Reliance, that's this group that like, they advocate for local businesses over big corporations, and they've been the ones that have been really sounding the alarm against dollar stores. Stacy would say like, look, we can't wait.
Stacy Mitchell: And this is a big part of how, you know, the dollar stores are really, you know, a part of the whole problem of food deserts. If we allow the dollar chains to keep multiplying at this pace, we're going to look back in 10 years and be very sorry that we did that.
Stephan Bisaha: If you listen to the very exciting kind of shareholder, like annual report, these kind of call-ins for these different companies like Dollar General, and you hear them talking about like the potential for growth. Dollar General, again, they have 18,000, more than 19,000 stores now. They see room for another 12,000. Family Dollar and Dollar Tree, they see room for like doubling their number of stores we're talking about. And they're probably competing for some of the same stores.
But they all get what they want, we're talking about doubling the number of dollar stores in this country to something like 70,000. And that's not going to happen in the next year or two. But again, we already have more dollar stores and Walmart, McDonald's and Starbucks combined. And we're talking about potentially doubling that. So that's where this big concern comes from, the thought that we already have too many, and the dollar store train's — it's continuing. So waiting for more research is only going to make things worse.
What's worth mentioning, though, with like, we kind of mentioned all these different critics when it comes to dollar stores. A lot of people in rural towns and cities, they really love their dollar stores. Like when I was in New Orleans East, I went to like one — I kind of got this, this driving tour of the city from this business leader talking about the ordinance and how he was happy that it meant like no new dollar stores can open up there. I was just talking to shoppers and one guy had said, oh, he hates the law. He thinks like, like part of the selling point of dollar stores is how many there are is the idea that like it's convenient, there's one that's always within a couple miles of you or even less. The density is kind of the point.
Anisa Khalifa: What do you think are the long term ramifications for this kind of expansion?
Stephan Bisaha: I think, coming back to that idea of what's the right amount of dollar stores. It's going to, as we were saying it's going to vary place by place. But there's a good argument that in some areas, we are already well past that saturation point. And if you're going to add so many more dollar stores, you've got to imagine a lot more communities are going to tip over. Like it is hard to argue with the fact that a grocery store is better than a dollar store for a community. A dollar store is a very poor replacement for a grocery store. In a place that doesn't have a grocery store to begin with, certainly a lot of benefits can come from having a dollar store there.
But that idea of dollar stores forcing out grocery stores? I do think that varies by location. But I think that's only going to become more common as these stores continue to grow. That saturation point, keep on adding stores, it's going to be reached eventually. To act like having a dozen dollar stores in the neighborhood doesn't have an effect — I think we have to acknowledge that they do affect a neighborhood.
Anisa Khalifa: That was Stephan Bisaha, the wealth and poverty reporter for the Gulf States Newsroom. You can find a link to Stephan's extensive dollar store coverage in this week's episode description. This episode was produced by me, Anisa Khalifa, and our editor Jared Walker. Al Wodarski and Sean Roux provided audio engineering support.
The Broadside is a production of North Carolina Public Radio - WUNC. Find us on your favorite podcast app and on wunc.org. If you enjoy the show, leave us a rating, a review or tell a friend to tell a friend. Thanks for listening, and we'll be back next week.