Dollar Stores Are Killing Rural Grocers

A new USDA study shows the destructive impact of stores like Dollar General on sales and closures.

By Paul Blest, More Perfect Union 

Dollar stores, such as the multi-billion dollar corporation Dollar General, are effectively monopolizing grocery markets in rural America, a recent study by the U.S. Department of Agriculture shows. 

Published last month and based on census tracts from 2000-2019, the study shows that when dollar stores entered a rural market, existing independent grocers in rural areas saw a nearly 10 percent drop in sales and a 7 percent decrease in retail jobs. The number of stores also decreased by 5 percent, three times the rate of urban areas where dollar stores opened. 

There are more than 35,000 dollar stores across the country, according to the study. More than half — nearly 20,000 — are Dollar Generals, which dominate the rural market in particular. 

The research is more evidence of dollar stores’ disproportionate impact on workers, consumers, and local economies, particularly in rural areas. While the study found the impact of dollar stores largely dissipated in urban areas about five years after the store opened, the effects lingered in rural areas. 

Dollar General has a market cap of $26 billion, and it’s one of the worst places to work in the country. Dozens of workers have been killed at its stores over the past decade, and the company was deemed a “serial violator” by Labor Department inspectors for repeatedly violating safety standards at its stores nationwide. Following a series of high-profile actions by workers demanding better conditions, the company recently settled with DOL for $12 million and agreed to a raft of measures to increase safety.

Earlier this year, Dollar General customers filed a class-action lawsuit in New York alleging a “pricing scam” in which the company’s stated prices for merchandise are lower than what’s actually rung up at the register. Lori Hartline, a plaintiff from Texana, Oklahoma, told More Perfect Union earlier this year that after complaining to the state Attorney General about being overcharged at the store, the company offered her a $10 gift card.

“It was insulting,” she said.

People in these areas don’t have much of a choice, because grocery stores have been disappearing for decades. USDA research published last year showed at least 76 counties across the country don’t have a single grocery store, and Kansas State University research found that more than half of rural grocery stores closed between 2008 and 2018, with nothing reopening in their place in half of those communities. (At least four stores nationwide are municipally owned, including three in Kansas, but that model is still in extremely limited use.)

“I think what they’re looking for is places that lack economic and political power,” Stacy Mitchell, the co-director of the Institute for Self-Reliance, said of Dollar General earlier this year. “They’re often building in such numbers that it becomes impossible for a new grocery store…to develop in a neighborhood that really needs them.”

“They kind of lock in poverty as they grow, because poverty is the thing that really fuels these companies’ bottom lines,” Mitchell added. 

But Dollar General and others aren’t exactly fulfilling the vacancy left by rural grocers. The USDA study pointed out that the food options offered at these stores are often “highly processed,” and a separate study last year pointed out that dollar stores replacing independent grocers could “further reduce access to healthy food options in these communities, with potentially adverse implications for public health.” 

In the last few years, communities around the country have begun attempting to restrict further development of dollar stores, following a move in 2018 by the Tulsa City Council to ban dollar stores from opening within a mile of existing locations. At least 75 communities have followed suit, according to a 2023 report by ILSR. 

The same ILSR report suggested that federal policymakers should more strictly enforce antitrust laws and empower local businesses to compete, and that not doing so is “fueling the destructive proliferation of dollar stores.”