Dollar stores: Benefit or scourge?
‘There are very much mixed impacts,’ says WIU Professor Chris Merrett
A new Dollar General store created a stir last year in St. Jacob in Metro East. (Facebook/Out & About in St. Jacob)
By Ted Cox
As retail stores suffer through what’s been called a “brick-and-mortar retail apocalypse” with the rise of online shopping, only made worse by the coronavirus pandemic, dollar stores continue to expand, especially in rural areas.
“What’s going on?” Professor Chris Merrett of Western Illinois University said. “What’s driving this growth?”
Merrett gave a webinar Thursday on “The Impacts of Illinois Dollar General Stores on Rural Illinois Communities,” through the University of Illinois Extension and his own Illinois Institute for Rural Affairs at WIU.
As stores close across the nation, especially in smaller towns, and big-box stores like Walmart expand into the areas that are growing, dollar stores, Merrett said, are expanding into areas with declining economies.
Calling it “a counterintuitive business model,” he said that’s especially true of Dollar General. Dollar Tree and Family Dollar tend to be in cities and suburbs, but almost half of Dollar General outlets, 42 percent, are in rural areas, compared with 13 percent for the other chains.
“Dollar General is really going toward the smaller population areas and lower income,” Merrett said. “They are ubiquitous.
“Dollar General continues to grow, and that’s remarkable,” Merrett said, especially in the current economic environment, but he quickly added, “There are very much mixed impacts.”
Dollar General was the top chain for opening stores nationally in 2019, and 75 percent of its outlets are in towns with population under 20,000. Founded in 1939, it’s grown more recently from 71,500 employees in 2007 to 135,000 last year, and it now has 16,700 outlets, more than three times Walmart’s 5,355.
But even in blighted areas they can be a mixed blessing. Sometimes they’re filling a vacuum left by other stores closing; sometimes they’re driving longtime locally owned fixtures out of business. They can fill food deserts, but with a lack of fresh meat and produce, instead offering processed foods in what’s been labeled a “food swamp” (although Merrett granted that a few outlets are trying to address that). They can generate sales and property taxes and jobs, especially when a store is being constructed. But in general they employ fewer people at lower wages than, say, a family-owned grocer, much less a Walmart.
They can help restore downtown shopping districts by occupying empty storefronts, but more typically they threaten the “business ecosystem,” Merrett said, by locating on the outskirts of town, drawing shoppers away.
They can counter a “psychology of decline” in blighted towns, giving locals a sign that at least someone still cares about them. But Merrett said they can also threaten to act as an extraction industry, like coal mining, wringing the last dollars out of a “permanent underclass that will serve as the primary clientele,” then leaving town when even that market expires. “It’s a quick startup and a relatively quick shutdown,” Merrett said. In that, they’re following the course of Walmart, which is “closing down their oldest and least-efficient stores,” like the one in Clinton two years ago. In any case, “profits leave the community,” he added.
“Are they a product of economic distress or creating economic distress?” Merrett said.
Merrett said communities can try to mitigate the impact by creating zoning categories for “small-box discount stores,” in contrast with so-called big-box stores like Walmart and Target. But the chain typically exploits rural areas with lax zoning laws.
He recommended that counties get a handle on the issue by determining “retail capacity,” meaning whether a county has the population and the income to sustain a new dollar store along with existing stores. For instance, in data compiled along with his WIU colleague Adee Athiyaman, they found that Adams County, with the relatively large town of Quincy, was under capacity for stores. The same went for Knox County and Galesburg. Several other Illinois counties, however — Clay, Coles, Effingham, Jo Daviess, LaSalle, Merion, Richland, Saline, Union, and Whiteside — were over capacity, suggesting that if a dollar store were to move in some other store would almost surely go.
Another option is for towns to try to create “community-owned grocery stores,” he said. “That way you’d be able to get healthier foods as a starting point,” perhaps with meat and produce from local farms. Merrett cited Winchester, with the Great Scott Community Market, and the Market on the Hill in Mount Pulaski as examples of towns that have gone in that direction, but he warned that the process can be cumbersome.
Merrett emphasized that population loss is not a new problem. More than a quarter of Illinois’s 102 counties saw their population peak a century ago. That’s in part a product of agriculture getting ever more efficient, with fewer farmers producing more food, so that the counties that have thrived have been those that have diversified from farm economies. But the way chains like Dollar General are now preying on those areas — or is it trying to boost them up? — deserves more study.