The prevalence of dollar stores throughout the U.S. appears to be having a negative impact on local, independent grocery stores. The increase in the number of bargain-priced retailers is also having detrimental effects on overall public health in low-income and rural areas that have limited access to traditional grocery stores.
A report from the Institute for Local Self-Reliance (ILSR) shows there are more dollar stores in the U.S. than there are Starbucks and Walmart stores combined. The Rural Grocery Initiative established large chain stores to be the single greatest challenge facing independent grocers in rural areas. Twenty years ago, the biggest threat to smaller, local stores was Walmart. Chains such as Dollar General are now moving into areas where large retailers will not, putting a strain on local businesses. Overall economies in rural and low-income areas are feeling the pressure of bargain retailers, with federal data indicating small independent grocers typically employ twice as many people as dollar store outlets.
The top four grocery chains that account for 44 percent of all groceries sold in the U.S. have divested from rural and low-income areas, leaving so-called “food deserts” where bargain retailers move in. As an example of the impact bargain retailers are having in the grocery sector Dollar General and Dollar Tree have combined grocery sales that overshadow Whole Foods by more than $10 billion. While some dollar store outlets are moving to provide more fresh produce, overall the stores predominately sell shelf-stable and packaged foods.