Hunton Retail Law Resource

Few other retail sectors have seen the expansion that dollar stores have in the past decade, not to mention in the chaotic first half of 2020. During a time when other retailers are struggling to stay afloat due to social distancing requirements and widespread economic uncertainty, dollar stores are continuing to increase their physical presence as well as their profits. Dollar stores tend to cluster in either rural areas where access to traditional grocery and retail stores is limited or in underserved urban communities that lack full-service grocery stores.

Dollar stores are generally more prevalent in lower income communities. As unemployment numbers have skyrocketed due to the COVID-19 pandemic, and many Americans are becoming more budget-conscious, dollar store prices on everyday items are increasingly attractive to many consumers. Additionally, the smaller size of dollar stores when compared to big-box retailers may appeal to customers trying to maintain social distance.

Although there are several major companies and brands that fall under the “dollar store” category, the general business model is the same across the board. Dollar stores often sell the same popular brand-name products as full-service grocery stores but in smaller sizes, which often translates to dollar store customers paying more money per unit of product.

While surely a success story from a profit and expansion perspective, some localities are fighting the rapid growth of dollar stores in their communities. Some cities, such as Birmingham, have passed legislation that restricts the opening of dollar stores, arguing that these types of retail stores oversaturate lower income communities and create “food deserts.” “Food desert” is a term used to describe certain geographic areas where access to affordable, healthy food options is limited or nonexistent. Opponents of dollar stores argue that clustering convenience stores and dollar stores within certain communities creates a barrier to entry for traditional grocery stores selling fresh vegetables and fruit. Other cities, such as Kansas City, Oklahoma City, and Atlanta, have revised their zoning codes in order to limit the number of dollar stores in their cities.

Recently, dollar stores are selling more fresh produce and healthier food options. Studies have found that produce being sold for lower prices at dollar stores are comparable in quality to produce sold at traditional grocery stores (although dollar stores typically have much less variety of fresh produce). If dollar stores continue to increase the availability of fresh and healthy food products, dollar stores could prove beneficial to communities with otherwise limited access to affordable, healthy food.

Dollar stores’ popularity has seemingly endured both economic booms and economic downturns by attracting higher income shoppers seeking discounts as well as lower income shoppers on fixed budgets. While their expansion and presence in lower income communities has not been without resistance and opposition, it appears that dollar stores are here to stay.