As Dollar Stores Proliferate Food Deserts, Some Communities Push Back

This story was originally published on Civil Eats.

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Lorraine Cochran-Johnson, a county commissioner in DeKalb County, Georgia, knows precisely how many “small box” discount stores there are in her 360-mile, suburban county outside Atlanta.

“There are 70 dollar stores, and more than half — 41 — are in my district,” says Cochran-Johnson, who took her oath in 2019. During the 2018 election campaign that swept her into office, a constituent quizzed her about the spread of dollar stores and the lack of healthy food choices in her district, where the residents are more than 80 percent Black.

That conversation stuck with the commissioner, who introduced a resolution to establish a yearlong moratorium on so-called small box discount retailers (SBDRs) in DeKalb County’s seven districts and unincorporated areas in her first week of work. “In part, this moratorium was put in place because of concerns about how SBDRs may be negatively influencing public safety, food availability, and property values in unincorporated DeKalb County,” reads the resolution.

“I am not against the existence of dollar stores — I am a dollar store shopper,” says Cochran-Johnson. “I am against the proliferation of dollar stores in our communities because there is a direct correlation between their presence and food deserts.”

The commissioner points to the fact that Black people in the U.S. face increased rates of several diet-related health disparities, including hypertension, heart disease, and diabetes. DeKalb County, where the population of 758,000 is nearly 55 percent African American, is no different.

If you were to map the dollars store in DeKalb County, Cochran-Johnson says, the areas where they are most prevalent would overlap with maps that show the neighborhoods with the lowest median incomes and the most residents of color. For example, the two mostly white districts in north DeKalb County with the highest median income earners are only home to three such dollar stores.

After the DeKalb County Commission easily approved Johnson-Cochran’s resolution to put a moratorium on new dollar stores in early 2019, it defined a SBDR store as less than 16,000 square feet in size. The county’s ban, which also affects some convenience store operators, has since been extended four times, blocking any new applications or permits for the smaller-than-Walmart discount stores.

Those extensions are tied to another part of the resolution that called for a comprehensive evaluation of the effects of small box retailers on the health, safety, and welfare of county residents and businesses, says Cochran-Johnson. Now, the seven-person Commission will consider “next steps,” to address the potential influence SBDRs have on obesity, food availability, food quality, crime, and land value.

“[Dollar store owners] are very clear on their target audience. So, we have to be very clear on what we will and won’t accept,” says the county commissioner.

DeKalb county is just one of a number of municipalities responding to the rapid spread of dollar stores in this way. Kansas City, Kansas was the first to create such an ordinance in early 2016 and in the years since similar bans and moratoriums have taken root in Tulsa, Oklahoma and Mesquite, Texas, as well as larger cities, such as Cleveland, Fort Worth, Oklahoma City, and New Orleans.

The DeKalb evaluation identified 25 cities that instituted these kinds of policies in 2019 and 2020. And while many are drawing a connection between the stores and neighborhood economics, food access is also at the center of the conversation. Yet, despite this backlash, the companies behind the nation’s small box discounters have aggressive plans to continue expanding despite an array of recent, documented health and safety violations.

Paul J. Richards/AFP via Getty Images

Fighting ‘Food Deserts’ or Helping Create Them?

Three months after DeKalb County’s moratorium went into effect, Cleveland, Ohio adopted a ban on new construction permits for stores that meet the same small-box store criteria as those in DeKalb. After extending the six-month moratorium several times, Cleveland’s city council unanimously passed a more permanent ban on new stores within two miles of an existing discount store in early 2022.

Former City Council President Kevin Kelley says the small box retailers’ proliferation caught Cleveland officials off-guard. The city planning division did a “heat map” to locate the dollar stores, and the results were the same as they were in DeKalb county — “low-income, mostly Black neighborhoods.”

Kelley adds that the impetus for the ban must be viewed against the backdrop of the larger grocery stores exiting low-income communities in recent years, thus leaving large areas without access to groceries. “When [grocery stores] started closing, it really left a big gap and dollar stores were very aggressive about filling this void,” he says.

Cities enacting new policies are tying local regulations to broader public goals such as formula business restrictions that limit chain retailers as well as specifically targeting dollar stores, says a report released in January by the Institute for Local Self-Reliance (ILSR). In addition to the dollar store density requirements, these policies can also include incentives to foster better alternatives.

For example, the Tulsa city council outlined its desire for “greater diversity in retail options and convenient access to fresh meats, fruits and vegetables.” Meanwhile, Kansas City officials said the purpose of that city’s ordinance is to “better regulate the total number and proximity of small box retail stores to assure the best possible opportunity to provide fresh fruits and vegetables to the community.”

Dollar stores stock very few fresh foods if they stock any. And, as the ILSR put it, “this has exacerbated the problem of food deserts and further eroded the economic prospects of vulnerable communities.”

Sriya Shrestha, the researcher behind the DeKalb County study and a professor at California State University Monterey Bay, also points out that dollar stores are specifically targeting those who earn under $40,000 annually or live below the poverty line.

“Women with families who earn under $40,000 per year dominate the dollar store model. They purchase only what they can afford to buy now, in smaller packages that often cost more per unit than they would at big box retailer,” Dr. Shrestha told Talk Poverty recently.

Nadine Gracia, president of Trust for American’s Health (TAH) and the former director of the Office of Minority Health at the U.S. Department of Health and Human Services (HHS), also draws a direct line between dollar stores and food insecurity in poor communities. She said TAH’s annual report on obesity ties the proliferation of dollars stores to “unhealthy foods that lead to unhealthy communities.”

“We found it was important to talk about that connection between having access to healthy and affordable foods and the risk of being overweight and obesity,” Gracia says.

In addition to keeping new dollar stores from being built in close proximity to existing stores, some of the new rules cropping up on cities also outline guidelines for dollar store developers, including requiring them to disclose shelving and floor plans and the types of goods and products the stores will sell.

To encourage the development of stores that sell fresh meat and produce, Tulsa’s policy reduces parking requirements for grocery stores by 50 percent in the district covered by the ordinance. Meanwhile, Kansas City’s policy exempts stores that dedicate at least 15 percent of shelf space to fresh and frozen food or those that contain a prescription pharmacy from the required special use permit process.

Similar research on food access and food insecurity by the Rural Grocery Initiative (RGI) at Kansas State University have reached those same conclusions in smaller communities where Family Dollar or Dollar General are often the only food retailer in town.

Erica Blair, program manager at the Manhattan, Kansas-based initiative that aims to sustain locally owned rural grocery stores and improve access to healthy foods, told Civil Eats smaller communities have even more complex issues to overcome when they lose access to fresh food. From its research, RGI considers independent grocery stores “anchor institutions” because of the multiple benefits they offer rural communities. Local businesses owners also have a stake in helping small towns prosper.

“They have so many economic benefits and provide access to healthy foods are their community’s hubs,” says Blair. “So, it really is an existential issue when those communities lose a grocery store.”

Concentration in the Industry

The dollar store industry has consolidated in recent years, leaving just two large companies: Dollar Tree-Family Dollar and Dollar General.

In 2015, Family Dollar was acquired by former rival Dollar Tree in a deal valued at $8.5 billion. Today, the merged company has nearly 16,000 retail stores and 26 distribution centers across 48 states and five Canadian provinces, operating under the brands of Dollar Tree, Family Dollar, and Dollar Tree Canada.

After closely analyzing the same-store sales and performance and customer feedback, Dollar Tree said in its annual financial report on March 15 that it believes the market can support 10,000 Dollar Tree stores and 15,000 Family Dollar stores across the U.S. Along with the nearly 1,000 Dollar Tree stores in Canada, which would push the company’s total store count to 26,000.

In November, the Chesapeake, Virginia discount retailer told Wall Street it plans to open 600 new stores and to renovate 1,250 Family Dollar stores in 2022. The new stores will include 400 smaller Dollar Tree stores and 200 Family Dollar stores with 8,000 to 10,000 selling square feet for both chains. The reduced format size creates “a shopping environment which invites [customers] to shop longer, buy more, and make return visits,” the company said in the report.

Although Dollar Tree-Family Dollar posted profits of $7.8 billion last year, its profit margins slumped 34 percent, so the Dollar Tree side of the business also has tossed its “everything for a dollar” strategy aside in favor of the pricier $1.25 model.

Dollar Tree-Family Dollar officials would not make a company executive available to speak with Civil Eats. Instead, a spokesperson offered a lengthy, prepared statement about the increasing store bans and rapid expansion in poor rural and urban areas.

“We understand the concerns of many local officials regarding the changing nature of our shared communities across the country, and — as part of those communities — we are looking for ways to help our neighborhoods be healthier, safer, and more prosperous,” the statement reads.

Dollar General spokeswoman Crystal Luce told Civil Eats that “a meaningful number of its (new) stores are expected to be in current food deserts to help address food insecurity across the country.”

Since January 2021, Luce said the company has made fresh produce available in nearly 2,100 of its stores, and it has plans to expand that service to 10,000 total stores in the next several years. The largest U.S. retailer by store footprint, Dollar General has more than 18,100 stores in 47 states with nearly 75 percent of the nation’s 331 million residents living within five miles of a so-called DG store. In late December, the company also announced plans to expand internationally with 10 stores in Mexico, slated to open in 2022.

A Dollar General produce section. The company says 2,100 of its 18,000 stores currently carry produce. A company spokesperson says it plans to increase that number to 10,000 in the next several years. Photo by Wesley Brown.

According to Luce, Dollar General is also looking to expand beyond traditional big box territory. “We are not a full-service grocer and don’t consider ourselves to be a dollar store. Instead, we strive to serve communities across the country as today’s neighborhood general store,” she said.

Like its smaller rival, Dollar General introduced two new larger format stores between 8,500 square feet and 9,500 square feet. The company said it expects the larger stores, along with existing Dollar General Plus format of a comparable size, to become its base prototypes for most new stores, replacing the traditional 7,300 square foot format. In 2022 alone, the company plans to add over 1,100 new stores.

The large format stores cover 10,000 square feet of “selling space” and feature expanded cooler space but no fresh meats or produce. The company hasn’t shared details about how many large-format dollar stores it currently operates as it faces new bans and expansion restrictions in cities like Little Rock, Arkansas and Brunswick, Ohio.

Rat-Infected Food, Hostile Takeovers, and OSHA Violations

Dollar Tree and Dollar General’s corporate parents face operational, supply chain, and COVID-19-related financial headwinds that could ultimately alter their expansion plans.

For Dollar Tree, the winds changed in mid-February when the U.S. Food & Drug Administration (FDA) alerted the public that a long list of products at Family Dollar stores may be unsafe for consumers to eat or use because of a six-state store rat infestation.

Family Dollar has since ceased distribution of products across its southern footprint after FDA inspector observed conditions that included “live rodents, dead rodents in various states of decay, rodent feces and urine, evidence of gnawing, nesting and rodent odors throughout the facility, dead birds and bird droppings, and products stored in conditions that did not protect against contamination,” according to the FDA product alert on February 18.

The impacted products originated at Dollar Tree’s distribution facility in West Memphis, Arkansas in January 2021, officials said. That FDA product recall on February 18 took most of the food and non-perishable products off the shelf at 404 stores in Alabama, Arkansas, Louisiana, Mississippi, Missouri, and Tennessee.

According to the FDA, a review of the company’s internal records also indicated the collection of more than 2,300 rodents at the distribution facility between March and September 2021. One FDA inspector’s surprise visit also discovered more than 1,100 dead rats.

“No one should be subjected to products stored in the kind of unacceptable conditions that we found in this Family Dollar distribution facility,” said Judith McMeekin, FDA associate commissioner for regulatory affairs, in a statement. “These conditions appear to be violations of federal law that could put families’ health at risk.”

One day after the rat infestation was made public, longtime Dollar Tree Executive Chairman Bob Sasser quietly resigned from his post amid a hostile takeover bid from Wall Street hedge fund Mantle Ridge.

Family Dollar and Dollar General are also dealing with nationwide workplace safety and health issues that have dogged both companies for over a decade. According to officials with the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA), the nation’s Dollar General was recently hit with more than $3.6 million in penalties in 55 inspections.

In late February, OSHA fined the company after it says it ignored its long history of exposing employees to dangerous working conditions at four stores in Alabama and Georgia in the summer of 2021. In a February 2022 inspection, OSHA identified five willful violations of failing to keep stores clean and orderly, stacking materials unsafely, and exposing “workers to slips, trips, and being struck by objects.” The retailer also exposed workers to fire hazards by failing to clear exit routes and workspaces around electrical panels.

“Dollar General stores have a history of not taking the safety of its workers and customers seriously. OSHA is committed to using every available tool to ensure Dollar General complies with the requirements under the OSHA Act in protecting their workers, including the use of the Severe Violators Enforcement Program,” an agency spokesperson told Civil Eats.

Going through OSHA records dating back two decades, Good Jobs First has found over 370 workplace safety violations at Dollar Tree and Family Dollar. Those violations have accrued over $20 million in fines, according to the progressive Washington, D.C.-based policy research group.

Several cities instituting dollar store bans have also raised health and safety red flags. Cochran-Johnson calls dollar stores in the Atlanta area “crime magnets.” Kelley says he and his Cleveland city council colleagues went out and took pictures of small box retailers in poor neighborhoods that often lack general cleaning and maintenance, inside and out.

“They were pretty terrible. Not only were these (stores) . . . with high process, low-quality sugary foods and life’s non-essentials, they were kept in disrepair and were really becoming an eyesore in the neighborhoods,” said the Cleveland attorney.

Both Dollar Tree and Dollar General officials said they were addressing those issues. “We take this situation very seriously. We have been fully cooperating with all regulatory agencies in the resolution of this matter and are in the process of remediating the issue,” Dollar Tree spokeswoman Kayleigh Campbell told Civil Eats.

“With over 18,000 stores, from time to time we learn of situations where we have failed to live up to our store standards expectations, including those relating to potential safety issues,” said Dollar General’s Luce. “The safety of our employees and customers is of paramount importance to us and when we learn of these situations, we take action to address them and any training gaps.”

After a brief pandemic lull, the two companies have a combined total of over 25,000 new retail locations planned in the comings years. And the implications for overall food access don’t look good.

But the ultimate solution may not be just waiting on cities to ban or limit these stores.

As ILSR report suggests, “solving the broader problem will require action by state and federal policymakers, too. This includes checking the predatory tactics of the dollar chains and reforming the financial system, which delivers vast pools of capital to the chains while denying loans to local grocers to expand, especially in low-income communities.”

Nadine Gracia also points to the importance of supporting policies that encourage better alternatives in the design of neighborhoods.

“It is important we address those social determinants of health,” she said. “Communities should look at it holistically in terms of not only [how to attract] grocery stores and supermarkets but it could also mean community gardens and farmers’ markets.”

• As Dollar Stores Proliferate, Some Communities Push Back [Civil Eats]