The Dollar Store Boom

Discount stores thrive throughout rural communities

In early February, a quiet but prominent company made an announcement: 1,000 new stores were to open throughout the remainder of 2017, surpassing the 900 it opened last year. One of those stores opened this summer in Creswell, another in Oakridge, although neither one is a town booming with wealth.

Dollar General sells a variety of food, snacks, health and beauty aids, cleaning supplies, basic apparel, housewares and seasonal items, all at strikingly low prices in its 14,321 stores in 44 U.S. states, according to its publicity department.

Dollar General’s greatest competitor, Dollar Tree — which purchased the third largest chain, Family Dollar, in 2015 — also sells a large variety of household items, including snacks, health and beauty products, stationery and useful household items, cleaning supplies and countless knick-knacks and toys.

Dollar stores are thriving due to their presence in lower-income rural communities.

“The more the rural U.S. struggles,” Dollar General company officials said in a press release, “the more places Dollar General has found to prosper.”

A Growing Presence

According to its most recent annual report, Dollar Tree operated 14,108 stores in the U.S. as of March this year. Everything sold at Dollar Tree is priced $1 or less.

Eugene has no Dollar General, but there are 22 within the surrounding 100 miles in cities such as Creswell, Sweet Home, Drain, Sutherlin and Mill City.

Dollar Tree on the other hand, which seems to have more locations than Dollar General, has three locations in Eugene alone, five including Springfield and Junction City, and 50 altogether within the surrounding 100 miles, according to its store locator.

All Dollar Trees accept EBT cards — aka Electronic Benefit Transfer cards. In Oregon EBT cards are known as Oregon Trail cards and Oregon Trail Cards are used mostly for food benefits from the Supplemental Nutrition Assistance Program (SNAP), aka food stamps. They also are used for cash benefits through the Temporary Assistance for Needy Families (TANF) program.

Both dollar stores share obvious goals: providing low-priced items for everyday use. On my occasional visits to a local dollar, I’ve quickly grabbed wrapping for a gift, dish soap for my kitchen or any assortment of necessary supplies that stand out in the stores brightly lit aisles.

For easy-stop shopping locations, the number of Dollar Generals and Dollar Trees in the U.S. significantly outnumber all CVS, Walgreens and Rite Aid stores combined.

The presence of dollar stores around the U.S. is soaring.

A Rural Focus

Dollar General’s black-and-yellow trademark and Dollar Tree’s green-and-white logo are making their mark as they spread throughout the country’s rural areas — often making way into towns where other major grocery stores and outlets have failed.

In 2011, Walmart began a new program: 102 Walmart Express stores opened around the U.S. to primarily offer even lower-priced goods in rural communities.

The company’s venture to combat dollar stores lasted less than five years. In January 2016, Walmart announced plans to close 269 stores worldwide, including all 102 Express stores.

“While we have learned a lot from this pilot, including a deeper understanding of the everyday needs of our customers, we have decided not to proceed with this offering,” Walmart president and chief executive officer Doug McMillon said of the closing on a company blog.

Less than six months after the announcement, Dollar General purchased 41 of Walmart’s closed Express stores, announcing that, while many large retailers are closing outlets, it planned to continue building more stores.

“The economy is continuing to create more of our core customer,” chief executive Todd Vasos told The Wall Street Journal in a Dec. 5 article.

Despite their low prices, profits at both stores are going through the roof. Dollar General marked $22 billion in sales in the 2016 fiscal year, marking their 27th consecutive year of sales growth.

Elizabeth Racine, a public health professor at the University of North Carolina at Charlotte, has closely studied dollar store chains. Her research included an analysis of the food sold in 90 different stores.

“I could quickly tell there are a lot of dollar stores in rural areas. Clearly they operate in low income areas,” Racine tells me. “Often, even if a lower-income community can get the money to start up a real grocery store, it isn’t successful.”

Oakridge, site of Dollar General #17448, has 29.7 percent of individuals below the poverty level.

Dollar General representative Crystal Ghassemi says that the company strives to give its customers more than everyday low prices on merchandise as part of its mission of serving others — and it’s clear that the company has found the right communities to serve.

“Dollar stores have found a business model that works and are implementing it in the right places,” Racine says. “They’ve helped make a lot available to these low-income communities.”

Food for a Dollar

When I’ve meandered through a local dollar store, I rarely stopped to focus on the food — but after recognizing that many communities are shopping here as their grocery store of choice, the last time I went, I did.

Candy, soda, quick and easy snacks, instant ramen, packaged dinner mixes and canned veggies lined the colorful aisles. Nothing seemed to be sold in very large quantity and, as at the local Dollar Tree, it still had to cost $1.

In Racine’s research, she looked closely at the food that dollar stores are selling, knowing that many low-income communities are going to them rather than a general grocery store for food.

Through her research, she found it was clear that while many dollar stores are SNAP authorized, the variety of healthy food options is often limited.

Racine found that no dollar stores sold fresh produce, although some did have frozen vegetables and fruit. For the most part, “What they appear to have is shelf staples, some frozen food and a little bit of refrigerated food,” she says.

Creswell lost its main grocery store, Ray’s Food Place, in 2014. Aside from a small local grocery, Farmlands Market, the availability of fresh foods is low. Creswell has two dollar stores, two Dari Marts and a BiMart, but the nearest grocery stores are in Eugene and Cottage Grove.

“You can’t buy a gallon of milk at Dollar Tree,” Racine says. “It’s interesting when you look at the foods that you can buy for a $1 — for example, a big 2- or 3-liter bottle of soda can be sold at Dollar Tree, but only 16 ounces of milk.”

To be SNAP authorized, stores must sell items that fall under three out of the four categories: meat, poultry or fish; bread or cereal; vegetables or fruits; or dairy products. What a lot of dollar stores do, Racine explains, is sell breads, frozen vegetables or fruits, and small amounts of dairy such as milk and butter. Racine rarely found frozen meats.

“Because dollar stores appeal to lower-income shoppers and because they are often located in lower-income areas, their role in food access should be taken into account,” Racine says.

The dollar stores phenomenon will continue multiplying and expanding to reach more of rural Oregon and across the country — because this “boom” doesn’t seem to be slowing down.

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