Dollar General, Dollar Tree, Family Dollar, and others offer low prices but also raise concern in communities that feel choked by them
Illustration: John Ritter
By Brian Vines
“I’m too poor to buy cheap things” was a refrain I heard a lot in my childhood. But the wisdom of the maxim never stopped my grandmother from spending hours exploring our local dollar store. I would follow her, aisle by aisle, as she searched for dollar store diamonds hidden with the other merchandise.
We were not alone on our treasure hunt. Along for the adventure were serious bargain hunters mixed with casual browsers, kids spending their allowance, and people who couldn’t afford more than a few dollars on food or other essentials. The store was all things to all people, and the price of admission—a buck—was just right.
The no-name dollar stores of my childhood, with kitty litter displayed next to rolls of paper towels, adjacent to recently expired cans of corn, were more mom and pop than corporate outpost. With ever-changing and sometimes oddball inventory, they were a world apart from today’s dollar giants.
Dollar General, Family Dollar, and Dollar Tree are billion-dollar brands taking over the discount/value retail space, as the category is called, and are sweeping the country. About 75 percent of us live within 5 miles of one of Dollar General’s 17,683 stores, the company says. Only about 60 percent of us live that close to a hospital.
Family Dollar and Dollar Tree (the two have the same corporate owner) operate more than 15,000 stores.
Counting just those three brands, dollar stores in this country outnumber Starbucks and McDonald’s combined.
And more are coming. Dollar Tree and Family Dollar plan to open 600 new stores by early 2022, the company says. According to Coresight Research, which tracks retail trends, more than 40 percent of announced store openings in the U.S. this year, as of the end of August, are for dollar stores.
With so many stores, it’s no surprise that a lot of us shop at them: Eighty-eight percent of Americans shop at dollar stores at least sometimes, according to a June 2021 Consumer Reports nationally representative survey (PDF) of 2,280 adults. The most common reasons people said they shopped at dollar stores: They’re inexpensive, and they’re convenient.
But a dollar store on almost every corner also raises concerns. For some people, especially those who have low incomes or live in rural areas, these stores are the only option, or one of the only options, CR’s survey found.
Food access advocates worry that the stores’ skyrocketing growth means businesses with broader offerings—more fruit and vegetables in addition to dollar store mainstays such as candy, soda, and other heavily processed packaged foods—get squeezed out. Some communities are now pressuring the big three dollar stores to better serve the areas they operate in.
What critics and fans can agree on: Dollar stores are changing the way we shop. And given that they appear to be here to stay, it pays to know how to shop there, whether they are your only option, or one of many. Our six-month investigation provides insights that can help you navigate their aisles.
CR reporter Brian Vines is the masked man in the beverage aisle, searching for 100 percent juice options at a Dollar General store near his home in Brooklyn,… Photo: Chris Swenson/Consumer Reports
Are the Savings at Dollar Stores Real?
Dollar stores, of course, play up their low prices. And until recently, just about everything at Dollar Tree really was a dollar or less, something that they could do by selling most items in travel or other smaller-than-usual sizes. While the company announced in late September that it “will be testing price points above $1 in select stores,” low-prices are still a major selling point for the brand. And Dollar General and Family Dollar, which have long sold many items for more than a buck, also still try to keep prices low.
Dollar General spokesperson Crystal Luce says the company aims for neighborhood stores with merchandise curated to make shopping simpler and more affordable. All three chains say their stores are best described as “fill in” shopping options that supplement weekly trips to the grocery store. Dollar General underscores the point, telling CR that pre-COVID-19, the average shopping tab was just $12.
But how good are the savings, really? To investigate, I teamed up with other CR staffers and secret shoppers in eight locations across the country to go to nearby outposts of each of the three leading national dollar store chains, as well as two local supermarkets. We all had the same basic shopping list of common household items.
As a “cherry picker” who shops store to store based on price, I keep a mental spreadsheet of the best deals from week to week. But this exercise was a real eye-opener for me. Even as a third-generation dollar store shopper, I’ve been dubious about these stores being places to save. So I was surprised that all of us CR shoppers found that a dollar store was less expensive, on a unit-cost basis, than supermarkets for our items.
At least, that is, for those items we were able to find. And that is a big caveat. While we all live near a branch of each dollar store chain—the Dollar Tree I go to most often is a 13-minute walk from my Brooklyn, N.Y., home—they weren’t exactly convenient. We had more trouble at dollar stores finding what we needed. For example, many of us found that a dollar store might have only one brand of dish soap, or just single-serving containers of popular breakfast cereals.
From Humble to Huge
Dollar General is now the biggest of the mega dollar store chains, but its beginnings were humble.
During the Great Depression a man named James Luther Turner bought merchandise liquidated from bankrupt general stores and sold it to retailers. According to family lore, one day he bought a massive shipment of women’s underwear dirt cheap. Unable to persuade retailers to buy the underwear, he and his son Cal opened their own store in 1939.
That was the forebear of Dollar General, the store the pair opened in Springfield, Ky., in 1955. In his book “My Father’s Business,” Cal’s son, Cal Turner Jr., says the idea was to sell “good stuff to rich folks,” but because that market turned out to be saturated, they wound up “selling the cheap stuff to the poor folks.” Two years and 29 stores later the company was raking in $5 million annually.
Dollar General, like the other chains, now has shareholders, marketing departments, and Instagram accounts. The dented cans and off-brand products have largely been replaced by the same national brands that fill the shelves of full-service grocery stores.
Yet contemporary dollar chains are a class of their own, not quite grocery, housewares, or hardware store because their inventory in each category is far thinner than you’d find in a store with a more singular focus.
Even from the point of view of size, they occupy their own niche. The typical Walmart Supercenter clocks in at around 178,000 square feet, housing general merchandise, a full-service supermarket, and sometimes a tire and lube service, a vision center, and even a bank. On the other end of the spectrum, 7-Eleven stores—home to the Big Gulp and 2,500 other items—average between 2,500 and 4,000 square feet. Dollar stores are in the middle, with footprints ranging from 6,000 to 10,000 square feet and approximately 7,500 products for sale.
What About Mom and Pop Stores?
Some consumer advocates say the growth of dollar stores reminds them of an earlier retail game changer: the meteoric rise of Walmart. It began as a single store in Rogers, Ark., in 1962. By 1990, it had blanketed the nation’s suburbs and larger towns with stores and proclaimed itself the country’s leading retailer. Independent and family-owned stores nearby couldn’t compete, and many closed.
As a result, people in many places had to travel farther to buy groceries, says Stacy Mitchell, co-director of the Institute for Local Self-Reliance, a research and advocacy organization that champions community businesses. And now, Mitchell believes, dollar stores are threatening the stores that survived the Walmart invasion.
In CR’s recent survey, 7 percent of Americans who shop at dollar stores said the retailers are the only shopping option—or one of the only options—in their community. And that number jumped to 19 percent for people in rural areas who make less than $30,000 a year.
Luce, at Dollar General, takes exception to the idea that its stores push out other businesses, especially grocers. And, she says, many large supermarket chains had chosen not to enter some communities “long before Dollar General’s entrance into the market.”
A Dollar Tree and Family Dollar spokesperson says that the stores actually help fight food insecurity by “helping alleviate the effects of ‘food deserts’ ” and that they “operate side by side with grocery stores and bring economic development to every community we enter.”
Pressing Pause on Dollar Stores
But in what has become a trend, lawmakers in numerous towns and cities across the country are putting the brakes on dollar store expansion, convinced it is more a detriment than a benefit to their communities.
Cyndi Nguyen, who represents East New Orleans on the New Orleans City Council, is one. Her district houses one-third of the city’s 36 chain-run dollar stores. A dollar store shopper herself, she says she thinks “they’re great. But to saturate a community, they kind of went overboard.”
In 2018, Nguyen and two other council members directed the city planning commission to study “small box discount stores,” such as dollar stores. The agency’s report found that dollar stores in New Orleans were prolific, that they tended to cluster, and that only one provided fresh fruit and vegetables.
The report included the account of a shopping center owner who could not find a grocery store operator willing to occupy vacant space. He said that another grocery in the area had closed after a Dollar General opened next to it.
As a result of the report, New Orleans restricted new dollar stores from opening within 2 miles of an existing one in East New Orleans and in the city’s Westbank neighborhood. Elsewhere in the city, new stores can open no closer than a mile from another one.
Luce, at Dollar General, says restricting the stores’ growth is not in the best interest of consumers: “We are disappointed that policymakers considered measures that could limit consumer choice.”
Other cities—including Atlanta; Birmingham, Ala.; Cleveland; Fort Worth, Texas; Oklahoma City; and Mesquite, Texas—have also taken steps to restrict the growth of dollar stores, according to the Institute for Local Self-Reliance.
Seeking Alternatives to Dollar Stores
Some communities are taking different approaches to meet local needs.
In Baldwin, Fla., a town of 1,600 about 20 miles west of Jacksonville, a Family Dollar and an IGA supermarket coexisted for years, just a 3-minute walk from each, says Sean Lynch, the city’s mayor. Then in 2017 the IGA closed, leaving residents with only two options for fresh food, one 10 miles and the other 20 miles away.
The town of Baldwin owned the 10,000-square-foot former IGA space but failed to find a national chain or mom and pop grocer to occupy it, Lynch says. So in July 2019, the city decided to open and operate the Baldwin Market.
“It’s not the kind of business I’d get into to make money,” says Lynch, who adds that the store just breaks even. But, he says, Baldwin’s residents—including its seniors—have a place in town to buy fresh food.
Some other communities are turning to food co-ops. Those member-owned ventures have long attracted mainly health-conscious consumers seeking alternatives to corporate-run supermarkets, but increasingly, the people involved with them are not just wealthy people hungry for kale.
“We’re getting a lot of inquiries from historically disenfranchised communities—many of them communities of color looking for access to healthy food,” says Stuart Reid, executive director of the Food Co-op Initiative, which helps the organizations get started. And because co-ops often source much of their produce from local suppliers, Reid believes they can improve the diets of residents while also transforming local economies.
For their part, dollar stores are also evolving. As of last March, only about 1,300 Dollar General stores nationwide carried fresh produce. But the company plans to add up to 10,000 more “in the coming years,” though it did not provide a date.
The company has also started a program, called “DG Better for You,” in which a registered dietitian creates meal suggestions and recipes for items you can source at the store.
Family Dollar is also offering some fresh produce and frozen meat at select stores in neighborhoods where shoppers have few grocery options.
My neighborhood has plenty of other choices. Though its dollar store has yet to benefit from the changes some chains are making, my grandmother probably still wouldn’t recognize it as a dollar store.
I shop there navigating the boxes of yet-to-be-shelved inventory, seeking out my regular buys—Chex Mix, Texas Toast, hand soap—and keeping an eye out for gems like the 2 pounds of frozen blueberries I recently scored for a buck. So the pleasure of the treasure hunt endures—especially for those, like me, who can choose whether to fill in or fill up there.
Editor’s Note: This article also appeared in the November 2021 issue of Consumer Reports magazine.
Read the original story on ConsumerReports.org.
