Dollar Store

To a certain slightly uninformed expert, t Faith is a tiny place, a remote, no-stoplight prairie town of 367. It's got a couple of gas stations and a couple of inns and restaurants and an auto-part store, but what it doesn't have is a single nationwide brand. It doesn't have a single branch of any store, restaurant, or service that exists beyond the region around, except for Dollar General. But that doesn't explain the full extent of the anomaly, because Dollar General isn't just the only chain in Faith, it's the only chain in a 45-minute radius until one arrives at t A 367-person population just isn'typically enough to attract a nationwide brand. There's just not enough money in the area to make capturing it attractive, and yet, somehow Dollar General makes it work. W It's not some tourist mecca, it's not an interstate oasis, it does sit at the intersection between a state and US They're consistently persistent in places simply too small for other chains. Its next nearest location to the north is in a town of 1200, to the east 1100, and to the south and west 540 and 590, respectively. Walmart is also one of the most regular retailers in rural America, but they don't even come close to these n There's no way to know for sure which are their lowest traffic stores, and therefore what the minim 6700 live within a 20 minute driving radius of this store, but revenue is Similarly, Wyoming's least popular Walmart is its outpost in Rawlings, with a 6300 person population within the same radius, but once again its revenue is So perhaps the best evidence of the minim 8700 people live wit Walmart revolutionized retail through its ability to turn a profit in small remote communities Total staff headcount at a given location typically sits between 6 and 10, and of those, just 2 or 3 might work at a given time. Given typical hourly rates and typical opening hours, that means Dollar General can spend as little as $3 to $400 a day staffing their lowest traffic stores. Then there's product offering complexity. A Walmart averages 140,000 unique products. They'll sell Coke in 10 count mini cans, 30 count mini cans, 12 count full size cans, 24 count full size cans, 12 count mini bottles, 6 count full size bottles, 12 count full size bottles, 1 count 2 liter bottles, 4 count 4 liter bottles, and then they'll offer all these sizes for Diet Coke, Coke Zero, Cherry Coke, and then they'll offer they have the exact soda, variant, bottle size, type, and quantity that any given person wants, but the permutations really add up. More individual products require a more complex supply chain, more floor space, and added staffing dedicated to organization, w Dollar General, meanw They offer just 10,000 unique products, but they do t In a way, they're trying to be a mini Walmart, offering a one-stop-shop experience, as long as you're willing to compromise on brand, size, quality, or quantity of a given product. So whereas Walmart has a pan or toilet paper or detergent aisle, Dollar General has a pan, a toilet paper, or a detergent. Now, Walmart is If it were to stop stocking Tide, P&G's revenues would take an enormous But correspondingly, given the popularity of Tide, Walmart could take a hit if cons Dollar General, meanw Walmart's competitive advantage is that they're the definitive one-stop-shop. They combine the local supermarket, hardware, electronics, home goods, and clot Dollar General's competitive advantage is that they're the shop. They are the only game in town, and so they just need to offer one brand of laundry detergent, and that's the detergent people will get. T Manufacturers will bend to their w That's what leads to products Dollar General's $1 Tide brand detergent. To balance the retailer's need for a low-cost offering with their desire to maintain a premi Now, Walmart actually sells their $120 fluid-out size works out to under $0. 12 per load, almost half of Dollar General's $0. 20 per, but Dollar General's target cons They cater to the class of cons So Dollar General actually charges more per load, and even better, their cons But Dollar General's true strategic linchpin is the most anomalous aspect of its business model, its remote locations. The retailer has turned what would be a weakness for others into the core of its strength. It starts with cost. Rent at that works out to between $3 and $400 in rent per day, w In general, they just won't set up a location in a place where they'll have to pay over $150,000 or so in annual rent. It just breaks their low-cost business model. But low rent costs are far from the key that unlocks rural America. Rather, remoteness itself enables their remoteness. Take their location in Haven, Kansas. They have a gas station and a liquor store at a coffee shop in Diner, but they don't have a grocery store. Dollar General is not a grocery store, but their locations do stock shelf-stable dry goods and frozen food, and some sell a limited supply of perishables. The closest dedicated grocery store is a full 10-minute drive away in the next town, and it'small, not when they could necessarily fulfill all of a person's needs. The closest supermarket is a full 22 minutes away in the city of Hutchinson, so what happens in practice, when Dollar General enters a market But increasingly, they all do the same they all trend north and east. But people live here, too, and they, too, need food to eat and stores to buy food to eat. For anyone, t Making t Unsurprisingly, this correlates closely with tracts that are low income, as all these areas have a poverty rate of over 20%, or a medi Put together, Atlanta residents with the least money and least mobility are the farthest from supermarkets. Now, of course, it's not a simple coincidence that some of the poorest and least mobile populations of Atlanta are farthest from supermarkets. These, after all, areas still grappling with the legacy of redlining in the past, and areas that some academics have identified as current instances of supermarket redlining, the process by w But regardless of their reasons, supermarkets simply don't exist in a large portion of the Atlanta metro area, creating an urban food desert. T Un And they provide an important service. They provide foodstuffs and basic home supplies at a low price point wit T And in most of these urban cases, dollar stores effectively plug a hole that desperately needs to be plugged. It's for t But plugging a hole is not solving a problem. It's just an imperfect temporary fix, not one meant to last. That's because the impact of a dollar store in a food desert isn't neutral to the health of the community. It's outright negative. Most American food deserts aren't so different from, of all places, Haven, Kansas. They have a dollar store. And they have, or until recently, had at least one grocery store that carries shelf stable foods along with fresh produce and refrigerated meats and dairy products. The products that are lower margin for the business believe to a more nutritious and diverse diet. Such stores have been harder and harder to come by, but many of America's tiniest towns have, against all odds, resisted the massive Albertsons and Kroger-Fueled grocery industry consolidation. Too small to be attractive for the supermarket chains and are home to some of the country's last independent grocers, right-sized to fit the communities they serve, barely hanging on as the brutal economics of America's monopolistic food supply system push them over the edge. But their perilous economics become all but impossible with the arrival of a neighboring dollar store. In Haven, Kansas, t For any grocery store, it's typical for sales to drop by up to 30% when a dollar store is open nearby, as cons T And the impact of dollar stores on communities is broader than just what people eat. In early 2019, the Dayton Daily News reported on plans for a new Dollar General on the east side of town. It'd be taking the place of a now-closed grocery store, and it'd be the 70th dollar store wit Where their density is the At the end of 2019, local news reported that there were 28 separate dollar store robberies in the Dayton area, down from the Effectively, dollar stores here have become a hotbed for crime. Now, in the case of Dayton, it's not that dollar stores are to be blamed for the area's crime rate, but rather that the design of the stores make them easy targets. Principally, these businesses deal in cash, as not until 2004 did Dollar General even take credit cards, making them ideal for a criminal of any level of experience. Beyond cash, overflowing trash outside, cluttered aisles inside, full window advertisements, light staffing, and outdated poorly placed cameras, all hallmarks of dollar stores both attract opportunistic burglary and make it difficult for police to safely navigate once they arrive on scene. In Dayton, the problem got to a point where the police received an average of nearly 1,000 calls to respond to dollar stores every year. In response, the police began to proactively work with family dollar employees to establish policies and management practices from upkeep to more frequent cash transfers that would reduce vulnerability. But the training just didn'take, as employees turned over so frequently and cared so little about their near minim Such Even with further drying out food deserts and tempting crime, dollar stores provide areas with only a few meager jobs. The lean labor model may work for dollar stores' profitability, but it doesn't do much for the surrounding community. To keep labor costs low, a dollar store will only employ 6 to 10 people and they'll only be paid around minim Dollar General, for instance, pays 92% of its employees under $15 an hour. By themselves, these n That independent grocer provides around 20 jobs, the dollar store, less than 10. That independent grocer's profit stays circulating with food, crime, and jobs, dollar stores aren'the root of a problem that impacts low-income communities. Nor are they the answer. They're a creative response to problems that take advantage of problems and then exacerbate those problems. But perhaps the most foolproof evidence to articulate that dollar stores are just plain bad for rural and urban America a In response to the lack of pay and the danger inherent in working at Dollar General, employees in 2023 protested around the company's headquarters in Goodlessville, Tennessee for better working conditions. In 2018, the city of Tulsa passed an ordinance to limit new dollar stores and instead encouraged full-service grocery stores. In the moves wake, 75 communities have blocked dollar store proposals and 54 cities have enacted limits on dollar store development. Of course, these n That these communities, now marked by the neon sign that the rest of the world has largely forgotten about them, are a problem, and enough of a problem to bring communities together to fight back. Fundamentally, Dollar General and its close equivalents are simply following the economic path of lease resistance. They're out competing local businesses, and they're doing it fairly, but that path of lease resistance leaves a trail of destruction that disadvantages individuals. That's because individuals' best interests can work against their best interests. People prefer having a dollar store and a grocery store and shopping at both, but in the process of doing what they prefer in the short term, they destroy that grocery store and create a scenario that is less desirable for themselves in the long term. So that's what government is for. It's an assembly of individuals into a collective that can solve these strange mismatches between two sets of best interests. The American Main Street is a fragile environment. It's already taken a beating as big box retailers built up across the country, but that battle was fought from a distance. The one t Dollar General can, and it is. It's got a simple yet unbeatable business model. It's a black hole that sucks up variety and vitality and litters the American landscape with these perfectly destructive beige boxes. Somet That's why I'm such a big fan of our sponsor, Brilliant. 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