We love dollar stores. But here’s what can happen when they move in: study

Dollar stores have proliferated in recent years, and a study by a University of Connecticut economist has found that they contribute to less healthful food choices in the neighborhoods where they open.

That’s because independent grocery stores tend to close in the same areas where the dollar stores open, according to professor Rigoberto Lopez, whose research focuses on agricultural economics.

“The dollar store expanding is the fastest-growing retail format, and we also have seen a lot of family, independently owned grocery stores going out of business,” Lopez said.

“So we try to link the two and to find not just a statistical correlation, but also we find that indeed when the dollar store comes to the neighborhood these stores tend to go out of business as well.”

The low-priced dollar store — primarily Dollar General, Family Dollar and its subsidiary, Dollar Tree — “is the most successful type of format that is proliferating all across the United States, especially in rural areas and food deserts, which are the more underserved areas,” Lopez said.

According to the study, published in Applied Economic Perspectives and Policy, there were 35,000 dollar stores in the United States in 2019 and they were “among the few food retailers” that grew in revenue after the Great Recession of 2008-10, outperforming big box discounters and retail clubs.

Between 2000 and 2019, dollar stores opening in a neighborhood resulted in a 5.7% drop in independent grocery store sales, a 3.7% decrease in employment and a 2.3% increase in the likelihood of the grocery stores closing, according to the research.

The effects are three times more likely in rural than urban areas, the study found.

The dollar stores tend not to offer fresh produce and meats, with foodstuffs being limited to canned and boxed goods.

“In general they provide an unhealthier food assortment … and less services,” Lopez said. “They don’t have bakery, butchers, they don’t have a lot of these.”

Dollar General disputes the characterization as offering only unhealthful items and notes customers depend on the business with goods they need and can obtain nearby, as well as providing local jobs.

Lopez said the dollar stores’ business model is “low prices, low cost, low quality. … But a lot of the food that they sell is not healthy. It’s processed foods that they can store. Keeping fresh food and vegetables costs money.”

Dollar stores are not necessarily a negative, if there was not a grocery store in the area before, Lopez said.

“Public health advocates, they’re against dollar stores, but a lot of people that visit the dollar store, they prefer to have a dollar store than not to have anything at all in some areas. … But in general … we find if they are driving some of the local businesses out, then that is the negative trend.”

There is also a potential that a dollar store may be “rupturing the connection to local communities and mom and pop stores, so that trend is negative,” Lopez said. “So it’s a mixed blessing, I will say.”

Caitlin Caspi is director of food security initiatives at the UConn Rudd Center for Food Policy and Health and has researched small and non-traditional food retailers.

“Historically speaking, basically, most dollar stores don’t offer any fresh fruits and vegetables and canned fruits and vegetables are the only options for produce,” she said, though she said it appears this has changed some in recent years.

“When we’re comparing dollar stores to other small and non-traditional retailers that sell food — so that includes independent corner stores, gas marts or pharmacy chains — even among that class of stores, dollar stores were really offering the fewest healthy options of any small or non-traditional food retailer,” she said.

The issue is that dollar stores don’t have the infrastructure for refrigeration, sourcing and supply for fresh foods, Caspi said, so they can’t offer those foods at a volume to be profitable.

“That’s going to have consequences for people’s diet quality, because we know that fresh fruits and vegetables is a cornerstone of a healthy diet and recommended in all of the U.S. dietary guidelines,” Caspi said. “It seems like for a long time, historically, they didn’t have the mechanism in place to be sourcing and supplying these foods at their stores.”

Most food sold at dollar stores is “energy dense and nutrient poor,” Caspi said, such as sugar-sweetened beverages and candy. She said the median amount spent on food at such stores is $2.89, with the food containing 1,200 calories, “and more than half of that energy was from added sugar. So this doesn’t paint a picture of a retailer that’s providing a staple.”

While the daily caloric intake is generally 2,000 a day for women and 2,500 for men, Caspi said the statistic is “reflecting the fact that this isn’t maybe where people are doing major grocery shopping. … So these are food retailers, but what is being purchased is not the cornerstone of a healthy meal or diet,” she said.

‘Affordable access to goods’

A Dollar General spokeswoman issued a statement via email:

“With approximately 75 percent of Americans within five miles of a DG store, thousands of our customers rely on us for convenient and affordable access to everyday household essentials. We also believe our mission of Serving Others and our intense customer focus differentiate Dollar General from other seemingly similar retailers,” she said.

“In a wide variety of communities across the country, our neighborhood general stores operate alongside local grocers and business owners to collectively meet customers’ needs. While we are not a grocery store, every Dollar General store offers components of a nutritious meal including canned and frozen vegetables, canned fruits, proteins, grains, dairy, and more,” she said. “Additionally, we’ve worked with a registered dietitian and nutritionist to create Better For You recipes to help our customers create healthier meals from products sourced primarily from our stores.”

“We believe each new store represents positive economic impact through the increased affordable access to goods; new jobs and career growth opportunities; the ability for nonprofits, schools and libraries to apply for DGLF grants and the generation of local tax revenue that can be reinvested into the community.”

Family Dollar also was asked to comment for this story.