Report says Dollar Stores are Getting Rich by Preying on Black Communities & Invested in Maintaining a “Permanent Underclass"- Opening 4 Stores a Day to Expand its Ghetto Empire to 50,000 Outlets

IF YOU SEE A DOLLAR STORE YOU MUST BE IN THE HOOD. From [Newsweek] Dollar-store chains like Dollar General and Dollar Tree are rapidly expanding by targeting the poor, particularly in predominantly black neighborhoods and rural areas, while planning for a permanent American underclass, according to a new report from the community development nonprofit Institute for Local Self-Reliance (ILSR). In cities, dollar stores concentrate in areas that already have few or no grocery stores. Their strategy of saturating these neighborhoods with multiple outlets can make it nearly impossible for new grocers and other businesses to take root and grow.

Though dollar stores sell no fresh vegetables, fruits or meat (Dollar General is testing produce in fewer than 1 percent of its stores), they are quickly becoming one of the primary ways lower-income Americans eat, with the combined grocery sales of Dollar General and Dollar Tree outstripping Whole Foods by more than $10 billion.

Selection is limited to processed or canned foods such as cereals, microwaveable meals and snacks. A section on the Dollar General website for “Fresh Food” advertises Banquet Mega Bowls fried chicken, frozen pizzas, Lunchables, Hot Pockets, blocks of cream cheese and pumpkins.

There are nearly 30,000 dollar stores nationwide, more than Starbucks and Walmart combined, and up from 20,000 in 2011. Dollar General and Dollar Tree are planning 20,000 more. Dollar General is opening four stores a day, a rate the company is expected to maintain through 2019.

Their customers are made up of three demographics: poor people, black people and rural people. The ILSR documented, with Tulsa, Oklahoma, as its test case, how the presence of dollar store chains can correlate even more strongly with race than income, with locations opening in food deserts historically neglected by supermarket chains.

“Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America,” real estate analyst Garrick Brown told Bloomberg in 2017.

Dollar General CEO Todd Vasos agreed, telling The Wall Street Journal, “The economy is continuing to create more of our core customers.” In other words, the more lower-income Americans struggle, the better dollar stores do.

The market tends to agree as well, with Dollar General Corp. valued far above the largest grocery chain, Kroger Co., which still has revenue five times that of its dollar-store competitor. One reason is the dollar-store profit margin, which is significantly higher than grocery stores thanks in part to small-quantity packaging designed to keep prices low even as the value drops, providing customers less for their money.

That isn’t a result of consumer irrationality, but rather is a necessity for lower-income households, whose pinched budgets don’t allow for bulk purchases. 

More than a harbinger of how corporations will profit from a permanently stratified United States (and work to perpetuate that stratification: Dollar General joined other retailers in lobbying for the Republican attempt to fully repeal Obamacare earlier this year), dollar stores are both symptom and disease.

Dollar stores are multiplying rapidly. Since 2011, two dominant chains — Dollar General and Dollar Tree, which acquired Family Dollar in 2015 — have grown from about 20,000 locations to nearly 30,000 total. Both plan to expand even further. In their most recent annual reports, the two chains indicate they have identified locations for a combined total of 20,000 additional outlets. [MORE]

The report says “As our maps of Tulsa show, dollar stores have largely side-stepped the city’s whitest neighborhoods and have instead concentrated in census tracts with more African American residents. Indeed, the presence of dollar stores appears to correlate much more strongly with race than with income.“

While dollar stores sometimes fill a need in cash-strapped communities, growing evidence suggests these stores are not merely a byproduct of economic distress. They’re a cause of it. In small towns and urban neighborhoods alike, dollar stores are triggering the closure of grocery stores, eliminating jobs, and further eroding the prospects of the vulnerable communities they target. These chains both rely on and fuel the growing economic precarity and widening inequality that plague America.

As local grocery stores disappear, some communities are left with only dollar stores for buying food. Although most dollar stores sell only a limited selection of processed foods and no fresh produce, dollar stores are now feeding more Americans than Whole Foods is.

Dollar stores are a poor substitute for grocery stores. A typical dollar store carries no fresh produce, only a limited selection of processed foods. And they aren’t necessarily less expensive. Packaged in single-serving quantities, their food offerings have lower price points, but are often more expensive per ounce.

In conjunction with a longer feature, ILSR has published a detailed fact sheet for organizers, activists, lawmakers, and all concerned citizens on the impact of dollar stores and how to best address them in their communities.

While they provide an economic stop-gap for low-income populations, dollar stores have an ultimately damaging effect on economic wellbeing. They displace independent grocery and retail options, draining communities of their local character, history, and opportunity.

Dollar stores also provide fewer and lower quality jobs, often without benefits, than traditional Main Street businesses. Profits are ultimately being vacuumed up by corporate headquarters, not dispersed throughout the community or recirculated in the local economy.

Dollar stores employ fewer people than the grocery stores they eliminate. Dollar General outlets have a nine-person staff on average, while small independent grocery stores employ an average of 14 people.6 Dollar store jobs are not only fewer in number but also lowwage and low quality. Employees are monitored intensely and subject to a “web of contradictory work policies.” Store managers earn a salary of about $40,000 but must work long hours without overtime. Court records reveal that dollar chains frequently face class-action lawsuits for violating fair labor laws, typically paying millions to settle such suits out of court. These companies also lean heavily on taxpayers to subsidize their employees’ healthcare. [MORE]

Alongside urban black neighborhoods, another place the dollar chains think they will find enduring poverty is rural America. Small towns have been battered by corporate consolidation. Mergers have triggered plant closures. Agribusiness giants have slashed farmers’ incomes. As a result, rural communities have experienced little in the way of new business and job growth during the current economic recovery, new data show.