The past few years have held a series of difficulties for Family Dollar, which characterizes its brand as a collection of “neighborhood discount stores.”
In 2015, Dollar Tree bought the company in a $8.5 billion deal that the New York Times described as a “a lifeline” for Family Dollar, which had struggled financially for years. However, numerous financial and data analysts — including Neil Saunders, managing director of GlobalData, and Joe Feldman, an analyst at Telsey Advisory Group — have characterized the acquisition as a difficult one. “Basically, almost 10 years on, Dollar Tree is still sifting through the mess it inherited and has not been able to completely turn around,” Saunders told The Guardian.
The issues have been apparent on both store-specific and company-wide levels; for instance, last month, the United States Justice Department slapped Family Dollar with a $40 million fine after it was revealed they had been distributing items from a rat-infested warehouse, forcing hundreds of stores to temporarily close. Now, a month later, Family Dollar’s CEO Rick Dreiling has announced that the company plans on closing 1,000 stores permanently, citing several reasons: an increase in shoplifting, stubborn inflation and and the reduction of pandemic-era Supplemental Nutrition Assistance Program (SNAP) benefits, which has left some families with $250 less to spend on groceries each month.
“Persistent inflation and reduced government benefits continue to pressure the lower-income consumers that comprise a sizable portion of Family Dollar’s” customer base,” Dreiling said Wednesday on a call with analysts.
However, it’s likely those same customers who are going to feel the impact of the closures most. In many rural and urban food deserts, dollar stores have come to double as grocery stores, though critics have pointed out that their existence doesn’t actually solve many food security concerns and, in some cases, only exacerbates them, making this rash of closures a complex loss.
Of course, there’s never a great time for a those living in a food desert — defined by the Food Empowerment Project as a “geographic areas where residents’ access to affordable, healthy food options, especially fresh fruits and vegetables, is restricted or nonexistent due to the absence of grocery stores within convenient traveling distance” — to lose access to a place where they buy groceries, but now is particularly challenging time as food insecurity is on the rise.
As Salon Food reported last year, data from the Census Bureau’s Household Pulse Survey showed that nearly 28 million people reported experiencing food scarcity in October, both the highest number of 2023 and the highest number recorded by the survey since December 2020. There are several factors contributing to that number, ranging from the aforementioned changes in SNAP benefits to sustained food inflation.
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People living in food deserts are more likely to experience food insecurity as it’s simply more difficult to shop for food. As NPR reported in 2020, about 19 million people, or roughly 6% of the population, lived in a food desert.
In 2012, the USDA’s Economic Research Service examined the socioeconomic and demographic characteristics of 6,500 food desert tracts in the United States to” see how they differ[ed] from other census tracts and the extent to which these differences influence food desert status.” The report authors wrote:
Relative to all other census tracts, food desert tracts tend to have smaller populations, higher rates of abandoned or vacant homes, and residents who have lower levels of education, lower incomes, and higher unemployment. Census tracts with higher poverty rates are more likely to be food deserts than otherwise similar low-income census tracts in rural and very dense (highly populated) urban areas. For less dense urban areas, census tracts with higher concentrations of minority populations are more likely to be food deserts.
These also happen to be the same communities where dollar stores tend to reign supreme. To be clear, his is a case of correlation, not causation; as Civil Eats reported in 2022, it’s important to consider that dollar stores satisfied a need as larger grocery stores over the last decade have both exited and avoided opening locations in low-income areas across the country, including many predominantly Black communities, in a move that some experts have referred to as “supermarket redlining.”
“When [grocery stores] started closing, it really left a big gap and dollar stores were very aggressive about filling this void,” said Kevin Kelley, the former president of the Clevelands city council, which, in 2022, unanimously passed a measure that permanently prevents discount stores like Family Dollar, Dollar General and Dollar Tree from opening within two miles of each other.
A 2023 study from experts at Tufts University School of Medicine and the Friedman School of Nutrition Science and Policy, which was published in the American Journal of Public Health, found that “dollar stores are now the fastest-growing food retailers in the contiguous United States.”
“It’s a notable evolution: Dollar stores once focused primarily on personal care and craft items,” the university wrote in a release. “Now, they’re expanding to offer prepackaged, shelf-stable food items. These items might be convenient, but they often have suboptimal nutritional value.”
"Sales in local grocery stores are known to drop by 30% following the opening of a nearby dollar store."
It continued: “While dollar stores don’t tend to specialize in fresh foods and produce, they do fill a void that can’t be ignored, especially for people who live in remote areas. In some ways, their rise is actually a positive development, providing consumers with food options in low-access areas. On the other hand, the recent growth in dollar store food expenditures raises concerns that such stores could force out local grocers through competitive pricing, the researchers write — leaving consumers with limited, less healthy options.”
Along those lines, the Center for Science in the Public Interest found that when dollar stores stores saturate a community’s grocery market, full-service food stores are deterred from opening, and existing grocers are pushed out, reporting that “sales in local grocery stores are known to drop by 30% following the opening of a nearby dollar store.”
For these reasons, Cleveland isn’t the only city to take or consider measures to curb the growth of discount stores. In December 2019, DeKalb County, which is included in the Metro Atlanta statistical area, issued a 45-day moratorium on the construction or expansion of “small box discount retailers.”
The measure was then extended 11 times until, three years later, the DeKalb County Board of Commissioners “unanimously passed comprehensive text amendments to the DeKalb Zoning Ordinance to set distance requirements” for small box discount retail stores.
So, what comes next? According to the New York Times, Dollar Tree, which owns Family Dollar, said Wednesday that it would close 600 Family Dollar locations this year and phase out 370 more when their leases expire. Who exactly will take their place remains to be seen, but will be of the utmost importance to food security in those communities.
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