A Dollar General store in Sunnyside, Pennsylvania (Photo via Flickr | CC-BY-SA 2.0)
The influx of dollar stores into the rural landscape can have a devastating effect on grocery stores and other small businesses in rural areas, as research has found.
When dollar stores enter a rural area, independent grocery stores are at higher risk of closure, according to a new study by the U.S. Department of Agriculture (USDA). The study found that employment and sales decrease at existing grocery stores in areas with a dollar store presence, with rural areas experiencing more pronounced effects.
“They’re targeting the easily accessible consumer sales in these communities,” explained Kennedy Smith, a senior researcher at the Institute for Local Self-Reliance, in an interview with The Daily Yonder. “These are communities too small for Walmart and likely without major grocery chains, presenting a prime opportunity for dollar stores.”
Dollar stores’ expansion into rural areas is a deliberate strategy, as highlighted in ILSR’s 2023 report, The Dollar Store Invasion. The report notes a higher concentration of dollar stores in low-income and rural regions.
The study by USDA researchers revealed that the likelihood of rural grocery stores closing after a dollar store opens nearby was three times greater compared to urban areas. Rural grocery stores also experienced a nearly double decline in sales (9.2%) and more significant decreases in employment (7.1%) as compared to urban counterparts. The impact of a dollar store was more enduring in rural areas than in urban settings.
Two major companies, Dollar General and Dollar Tree, dominate the dollar store market, with Dollar Tree also owning Family Dollar stores. Dollar General has rapidly expanded its locations, reaching 18,000 stores in recent years and solidifying its position as the largest U.S. retailer, based on the ILSR report.
The total number of dollar stores in the U.S. has doubled between 2000 and 2019, exceeding 34,000 establishments, including Dollar Tree, Family Dollar, and Dollar General outlets. However, Dollar Tree announced plans to close 1,400 stores due to corporate losses in 2023, still leaving more dollar stores than the combined number of Walmarts, Targets, McDonald’s, and Starbucks in the U.S.
Communities where dollar stores are established often lack resistance to their presence, according to ILSR’s Smith.
Kathryn J. Draeger, a professor at the University of Minnesota, highlighted that dollar stores impact not only grocery stores but also pharmacies, hardware stores, and other small retailers, affecting the overall community culture.
While dollar stores can offer advantages like addressing food deserts, their entry could lead to adverse effects on local businesses. However, there are efforts by some local communities to regulate the spread of dollar stores through zoning and planning measures.
Supporting local grocery stores over larger chains can help retain profits within the community, contribute to local economies, and preserve the unique character of rural areas. Rial Carver, from the Rural Grocery Initiative, emphasized the challenges faced by rural grocery stores and the importance of community support to address them.
*This article first appeared on The Daily Yonder and is republished here under a Creative Commons license.*
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