- Dollar stores often target poor, rural communities, but a recent report finds that they've started to overtake cities as well.
- In cities like Philadelphia and Atlanta, dollar stores are more ubiquitous than Whole Foods.
- This abundance of discount chains tends to undercut full-service grocery stores, leaving residents with fewer healthy food options and limited employment opportunities.
Dollar stores have been rooted in small towns for decades, but they've recently begun a rapid expansion across the US.
A December report from the Institute for Local Self-Reliance (ILSR) found that the number of nationwide dollar stores grew from about 20,000 in 2011 to nearly 30,000 by 2018.
The stores have become so ubiquitous, the report said, they are now feeding more Americans than Whole Foods. The comparison signifies the decline of full-service grocery stores in poor neighborhoods, which leaves residents with limited access to healthy food.
Read more: Dollar General is dominating in America. Here's how it keeps its prices so low.
While many dollar stores concentrate in retail-starved towns, others have cropped up in major cities like Atlanta, Dallas, and Philadelphia.
As a follow-up to their report, the ILSR mapped the spread of three popular dollar store chains - Dollar General, Dollar Tree, and Family Dollar - across eight US cities. For the most part, the stores tended to concentrate in poor areas and communities of color.
"They really are pretty blatantly targeting areas [with] worsening economic conditions," said Marie Donahue, who co-authored both reports.
For those living in "food deserts," or neighborhoods that lack access to fresh, affordable food, dollar stores are often seen as a saving grace. Residents who once had to travel miles to the nearest store can now acquire cheap, basic supplies near their home.
But the ILSR has found that dollar stores undercut mom-and-pop grocery stores, decreasing their sales and eventually forcing them to shutter.
With only dollar stores to rely on, members of disadvantaged communities are often confined to unhealthy food selections. While some dollar store chains have made an effort to sell healthy items like nuts, dried fruit, and multigrain chips, it's more common to find sugary cereals and other forms of junk food.
The fall of grocery stores also presages the flight of small businesses. As local shops begin to flee a neighborhood, they take away job opportunities, leaving communities mired in disadvantage.
The ILSR tells the story of a Pic Pac supermarket in Louisville, Kentucky, that closed its doors after 30 years in the neighborhood. The owner told the ILSR that his sales had declined by 30% due to arrival of chains like Dollar General. His shop was soon replaced by a Family Dollar.
In the Atlanta metropolitan area, around half a million residents live in food deserts. Within the city itself, there are more dollar stores than Whole Foods and Kroger stores combined, according to the locations listed on both companies' websites.
The ILSR counted 34 dollar stores within Atlanta's city limits.
Of the eight cities studied in the report, Philadelphia had by far the highest number of dollar stores, with more than 100. Donahue told Business Insider that the city's 2011 vote to allow dollar stores in a historic neighborhood may have contributed to its high total.
The one exception to the pack was Washington, DC, which had only six dollar stores. Even then, the city's count exceeded the number of Whole Foods by one location.
Wherever a dollar store decides to locate, Donahue said, the effects are similar in both rural and urban areas.
"These stores, we argue, are really just feeding off of left-behind places," she said. "It is agnostic to whether they're in a city or a small town."