Some communities saying no
Morgan, Minn., a city of about 800 people, has two restaurants, several churches, a grain elevator and one small grocery store that sells rib- eye steaks that, according to the mayor, “are the best around.”
The mayor, Jerry Huiras, 76, is protective of the lone grocery, a family business that dates back many generations and operates in a downtown dotted with empty storefronts. So when he got wind in late 2020 that Dollar General was planning to open a store near the town limits, and that this fastgrowing national discount chain was known for undercutting local grocers with its low prices, Huiras vowed to prevent that outcome in Morgan.
Armed with a petition signed by more than 100 people, Huiras was direct in addressing the developer seeking zoning approval to build the Dollar General. “We just don’t want your store,” Huiras, a Republican, recalled telling him.
Morgan is part of a movement of municipalities across the United States that have pushed back against the dollar store industry’s rapid growth during the pandemic.
Since 2019, at least 75 communities have voted down proposed dollar stores, while about 50 have enacted moratoriums or other broad limits on dollar store development, according to a new report by the Institute for Local Self-reliance, an organization that is critical of corporate retailers and their impact on communities.
By comparison, from 2015 to 2018, about 25 communities voted down proposed dollar stores, while only six enacted moratoriums or ordinances limiting their growth.
Although the number of blocked stores is much smaller than the thousands that Dollar General and similar chains have opened in recent years, the movement against the industry has created an unusual group of allies. On many other issues, they disagree, but they are united in their
fight against dollar stores.
Rural, Republican-leaning communities in places such as southern Virginia and North Carolina are pushing back against dollar stores. (In 2020, President Donald Trump easily carried Morgan.) And leaders in cities such as Toledo, Ohio, and Birmingham, Ala., also have mounted opposition, saying the stores are fueling crime and unhealthy food choices. Across Georgia, 18 cities and towns have restricted dollar store development, according to the think tank’s report.
The stores typically operate with lean staffing, and their employees, by some measures, are paid at the bottom of the retail industry’s scale. According to a survey by the Economic Policy Institute, a liberal think tank, 92% of Dollar General workers earn less than $15 an hour, lower than many other companies surveyed, including Burger King, Walmart and Dunkin’. About 20% of Dollar General workers earn less than $10 an hour.
At the same time, the company is highly profitable. In December, Dollar General said its quarterly operating profit had increased about 10% from a year earlier while net sales had increased 11%, to $9.5 billion. Dollar Tree, which also owns the Family Dollar chain, is posting strong results as well. On Wednesday, Dollar Tree said its profit in fiscal year 2022 increased 23% to $2.2 billion and net sales rose 7.6% to $28.3 billion.
More than one-third of all stores that opened in the United States in 2021 and 2022 were dollar stores.
Dollar General alone opened 2,060 locations during those years, far more than any other retailer, according to Core sight Research, and the company now operates 19,000, more than twice as many as Walmart and Target combined.
“As divided as Americans are politically, there’s remarkable agreement that too much of what passes as a legitimate business model is, in fact, fundamentally destructive and unfair,” said Stacy Mitchell, an executive director of the Institute for Local Self-reliance. “Federal policymakers have let big corporations run amok. Cities and towns of all stripes have learned that if you want to protect your community, you have to do it yourself.”
Dollar General said it was often filling a void in parts of the country where many retailers did not operate. The company said that 75% of its stores were in towns with fewer than 20,000 people and that it significantly had been increasing the number of its stores that sell produce.
“We believe the passage of moratoria harm customers who depend on us to help them stretch their budgets, particularly in inf lationary times,” Dollar General said in a statement.
Dollar Tree said its stores had helped alleviate “food deserts” and revitalize struggling strip malls by providing an affordable and convenient place to shop.
“We often take over vacant space in neighborhoods and areas that are already challenged, keeping centers and other adjacent businesses open and serving communities, especially those that are underserved,” Dollar Tree said in a statement.
The opposition to dollar stores is reminiscent of the pushback against Walmart’s expansion in the 1990s and 2000s and the concern that the giant retailer would wipe out small, Main Street stores.
Mitchell said antitrust enforcers had failed to act against Walmart but that the Institute for Local SelfReliance was urging the Biden administration to start reining in the dollar store industry, which has powerful leverage with suppliers that impedes smaller retailers’ ability to compete.
The dollar stores’ growth shows no signs of abating. With inflation still high, discount stores are attracting budget- conscious customers.
In the end, financial analysts say, consumer interest will be the biggest driver of whether the stores continue to spread.
“Sales are really strong,” said Shannon Warner, a partner in the consumer and retail practice of Kearney, a global strategy and management consulting firm. “Consumers are voting for dollar stores with their wallets.”
When concerns over the proposed Dollar General in Morgan emerged, Huiras, the mayor, confessed that he had never been to a dollar store.
So Huiras, who worked in railroad construction until he retired and ran for office, drove to Fairfax, a town 18 miles away, where a dollar store recently had been built. A local electrician said the store had been built entirely with laborers who drove in each day from outside the area. The owner of a local farm equipment store told him that the members of the construction crew had bought exactly one nut to replace one they had stripped — and nothing else from his store. Huiras said that was when he knew the company would not be invested in his community.
Because the Morgan store would be outside the city limits, it required zoning approval by the county.
One of the owners of the Super Valu grocery store in Morgan, according to the minutes of a county Planning Commission meeting in January 2021, told officials that she estimated a Dollar General would reduce her store’s revenue by as much as 20% during its first two years of operation. She said a grocer in a nearby town had closed shortly after a Dollar General opened there.
Other residents expressed concern that Dollar General was a large corporation, and one person said the chain was simply not a “good fit” for their small community.
In the end, the Planning Commission recommended denying the zoning application. The next month, the county’s Board of Commissioners voted unanimously to follow that recommendation. “And they never did bother us again,” Huiras said.