Correction: An earlier version of this story incorrectly stated the percentage of Dollar General's annual sales that is derived from food and beverage purchases.
Editor’s Note: Darya Minovi is a Policy Associate at the Center for Science in the Public Interest focusing on healthy retail policies. The opinions expressed in this commentary are her own.
This month, Dollar General reported its best customer traffic and same-store sales in nearly five years. In September, the retailer opened its 16,000th store — it now has more locations than Walmart, Kroger and Target combined. While Dollar General touts itself as offering low-cost options to Americans who need it most, it’s not doing enough to bring fresh food and healthy options to America’s food deserts.
Unlike Dollar Tree, which focuses on customers in suburban and urban areas, 75% of Dollar General stores are located in communities of 20,000 or fewer people. What’s more, these locations are typically at least 15 miles away from a full-service grocery store, leaving families with limited options for food.
Dollar stores offer customers mostly poor choices when it comes to nutrition. Outside of a few staple products like eggs, milk and bread, the shelves are packed with mostly processed and packaged products, like Easy Cheese and Top Ramen. As of July, only 3% of Dollar General’s stores offer fresh produce.
Dollar stores are able to sell products at unbeatable prices because of their simple business model. Operating costs are kept low by employing only a handful of people to stock aisles and limiting the amount of cold storage, which is necessary for fresh food. This is a business model that promotes nutritionally poor food and beverages to low-income customers.
Dollar General opens stores in communities that grapple with gaps in food access that need to be addressed. But the retailers’ approach to growth is rapid saturation, effectively boxing out the competition. Often, when they come into a community, they don’t just open one store, but dozens. In Tulsa, Oklahoma, there are more than 50 dollar stores; in Dekalb County, Georgia, there are 68.
More Markets & Economy Perspectives
This has made it difficult for full-service grocers with fresh options to compete. Sales in local stores have been known to drop by 30% following the opening of a nearby dollar store, cutting into grocers’ already slim margins. And a gridlocked grocery market provides few incentives for new stores — which might offer more local jobs, because they are more fully staffed — to move in.
Dollar General spokeswoman, Crystal Ghassemi, told the Wall Street Journal that the retailer “isn’t and never intended to be a grocery store,” but they’re monopolizing the grocery market in some communities all the same. This can be especially challenging for rural families that are left 15 to 20 miles from the nearest bunch of fresh carrots.
People with low incomes face a significantly higher burden of diet-related diseases, like type 2 diabetes and high blood pressure, than those with higher incomes and tend to have less access to quality medical care to prevent or address those health conditions.
If Dollar General and its competitors want to bring true value, it should be in the form of quality, fresh food. After receiving feedback from customers, the retailer has slowly begun incorporating better options. In 2018, it added “better for you” packaged items, like nuts and dried fruit, to 2,700 of its stores under the “Good & Smart” house brand. It also expanded coolers in 3,500 stores through the DG Fresh initiative, with plans to reach 5,000 stores by the end of this year, according to a report from Supermarket News. Unfortunately, however, what Dollar General considers “fresh food” includes products like Swiss Miss hot chocolate and Lit’l Smokies sausages.
To make a meaningful difference for consumers, Dollar General will need to prioritize fresh produce and more nutritious options. If not, communities will continue to follow the example of places like Tulsa, Oklahoma; New Orleans, Louisiana; and Mesquite, Texas, which have instituted policies to limit the rapid expansion of dollar stores, given their anticompetitive impacts. The success of America’s fastest-growing food retailer should not come at the expense of Americans’ health.