As a ten-year-old, dollar store visits were life-and-death quests — in the basket went soccer balls, magic fairy wands, colored markers, and Play-Doh kits, and out came a receipt of just $13 and the sheer satisfaction of getting the best bang out of my allowance money. If there’s one thing companies know, it’s that the people love their bargains.
With its barebones layout and shockingly inexpensive merchandise, these dollar store retail powerhouses have emerged as an American cultural icon, and more importantly, an absolute necessity for lower-income shoppers. They serve as a convenient nearby option for suburban and rural communities and have historically remained resistant to inflation. The one-dollar price tags have sheltered consumers from economic ups and downs and persistent price climbs; for over 70 years, prices have barely budged (barring recent COVID-related modifications). Some 88% of Americans flock to these discount retailers yearly in search of a range of products, and in response, dollar stores’ footprint across America continues to expand.
Unsurprisingly, rural America holds the largest percentage of regular dollar store shoppers. The establishments are disproportionately concentrated in the Sun Belt and Midwest, catering to consumers with limited options. These discount stores are some families’ local grocer, convenience market, and health store all rolled into one — a rural American’s means of survival.
With the dollar store as the only convenient possibility, Dollar General’s new health clinic rollout can be a revolutionary move in rural health, providing accessible treatment options to those who might not be able to even see a clinician otherwise. Proposed clinics will provide urgent care and lab testing within easy reach when hospitals may be many miles and in some cases many hours away.
Yet two questions remain: Are dollar stores harming or helping rural America? And how much can we really trust dollar stores to administer treatment?
How Dollar Stores Work
Having more locations than Starbucks, Walmart, and McDonald’s combined is no easy feat, yet the dollar stores of America seem to be one of the most resilient establishments in our economy. During COVID-19, similar-sized stores crumbled and declared bankruptcy. Dollar stores, on the other hand, flourished.
What makes the dollar store such a successful model, even in a time of crisis? Most of these discount retailers operate the same way — selling a small selection of cheap wholesale goods to a smaller consumer pool. In many rural areas, the dollar store is the only source of food, health, home, and other vital items for miles. Accordingly, they received an ‘essential’ classification during COVID-19 and enjoyed 16% growth in the year 2020. Dollar stores have historically thrived against similar recessionary backdrops and financial downturns, including the 2008 economic recession, drawing in customers forced to turn away from more expensive establishments in search of cheaper options.
These discount chains employ many tactics to generate profit. First off, some goods aren’t worth a dollar. Dollar stores profit off eighty and ninety cent products; when looking at a Dollar Tree laundry detergent brand, there is a high proportion of water compared to cleaning liquid. Dollar stores also shrink package sizes. The Dollar Tree aluminum foil offering, priced at $1, was only 15 square feet long, while Walmart sold a 75 square foot roll for $4.06, the equivalent of more than 18 square feet per dollar. That’s not to say dollar stores do not offer discounted items; some dollar store merchandise may just be deceptively more expensive per unit. All businesses need to make a profit to survive, after all.
Dollar stores manage to cut venue-related costs by leasing their properties rather than buying them, and having relatively few employees. Their physical layout is also precisely manufactured. Dollar store aisles, particularly in the larger chains, are incredibly tiny, with an overload of merchandise surrounding customers from all angles. Towers of potato chips and party straws jut out into the aisle, so that you must make a point to move around them, and perhaps you’ll make an impulse buy you otherwise wouldn’t if those potato chips look particularly enticing.
Perhaps shoppers do score granola bars for one dollar instead of five, but dollar stores know they most likely won’t leave without a basket full of other things.
The Dollar Store Distribution
Dollar stores are now opening at a rate of 3 a day, and larger chains currently have a whopping 35,421 locations nationwide.
Targeting retail and food deserts, locations are typically situated on remote roads away from downtowns and more populated town centers. However, the selection system is more complex for America’s three dollar store titans: Dollar General, Family Dollar, and Dollar Tree.
The big three employ strikingly similar practices when searching for new sites to occupy, targeting devastated, lower-income areas, areas where no supercenter would dare go for fear of a too-small customer base. In distressed urban and suburban cities and towns, it is common to see three, four, or even five of these dollar stores within a few block radius, choking out smaller chains and grocery stores.
Rural America has seen a disproportionate share of the dollar store frenzy. Three-quarters of Dollar Generals serve communities of less than 20,000 residents, and dollar store giants favor locations that share a proximity with landmarks like a post office or a church, typically situated together in rural towns. These towns also have plenty of customers within the dollar retailer demographic — the “typical” shopper is an older, rural worker with a high school education, and a yearly salary of $40,000. An overwhelmingly high proportion of racial minorities in rural households also shop at dollar stores.
These trends are worrying. Dollar store regulars are not getting high-quality essentials they need and have no way to access them in the first place; these seemingly small sacrifices add up and contribute to a larger issue of health and consumer inequity.
The Rural Food Crisis
Though dollar stores claim they are not a grocery store, many rural Americans still utilize it as one. According to a Tufts University study, They are one of the fastest-growing food retailers in the country.
To increase store revenue, dollar stores do their best to offer the least amount of perishable items; they have lower profit margins and a shorter shelf life. As a result, any fresh produce, meats, and typically nutrient-dense foods are hard to come by, while artificial, packaged, and highly processed options are abundant. Boxes of macaroni and cheese and sour gummies line the aisles, and why not? They’re shelf stable, more visually appealing choices. It’s not hard to understand why rural consumers naturally reach for more convenient and cheaper foods, as outside of the odd farm stand or farmer’s market, the next package of strawberries or fresh green beans may be miles away.
Unsurprisingly, independent grocers struggle in the face of discount giants. A 30% decline in produce shopping is observed in areas with multiple nearby dollar stores, which is enough to harm the fresh food market. To make a problem even worse, soda, snacks, candy, and crackers account for the largest share of consumer spending at dollar stores, only incentivizing more stock of these goods, and making healthy food completely inaccessible to rural Americans.
As regions already plagued with high rates of obesity and food insecurity with no nearby health clinics or hospitals, it appears that rural Americans are doomed to increased risk of heart disease and diabetes. They are deprived of essential food options and adequate health literacy and experience increased rates of poverty due to rising healthcare bills.
Of all potential mediators, Dollar General has emerged as a paradoxical savior with its new healthcare clinics — both contributing to the problem, and helping to fix it.
DG Wellbeing — A Rural Health Lifeline? Or A Disaster?
75% of Americans live within 5 miles of a dollar store. Only 60% are that distance from a hospital.
Dollar General is the first of the discount stores to dip its toes in medical care, outpacing other retail giants in their quest to “retail-ize the healthcare system”. This has been met with some thinly veiled alarm from the media — how can a company known for constantly cutting corners and its discount model adequately take on an entire rural population’s healthcare challenges?
The new initiative, DG Wellbeing, plans to attach health clinics to select Dollar General locations and expand in-store health merchandise, seeking to fill the gaps of rural healthcare deserts. As it stands, the initiative is in its infancy — large vans are positioned outside three Dollar General locations in Clarksville, Tennessee, providing “basic, preventative, urgent care and chronic condition-management services along with lab testing”. Next in the rollout process, Dollar General plans to expand its stock of healthcare products by 30% in its more than 18,000 stores.
Dollar General may be ill-prepared to tackle an entirely new to them $808 billion dollar health sector, and is providing potentially inadequate health treatment to a struggling population a risk worth taking? The company is currently battling employee protests about worker safety violations, claims of provoking neighborhood increases of violent crime, and a disproportionate amount of robberies and customer complaints. The same problems may travel to Dollar General’s healthcare clinics, raising concern about the staffing of underpaid, underqualified workers and low-quality care, effectively shortchanging the already budget-tight rural American population.
Dollar stores began as a budget-friendly, easy way to get crafts, toys, and the occasional snack. They were never intended to dominate the pantry and medicine cabinets of the American public. Growing the dollar store’s foray into the healthcare market only expands its reach into territory where it shouldn’t belong, and risks diverting focus away from longer-lasting, more effective treatment options for vulnerable populations like rural Americans.
While Dollar General’s entry point into the healthcare system is financially advantageous, what if improving existing locations took precedent over endless expansion and experimentation? Offering higher quality goods and accommodating nearby local grocery stores would likely be worlds more beneficial than instituting perfunctory healthcare clinics that may leave rural Americans with unsatisfactory medical treatment. The rural healthcare system is a far more complex, overwhelmed organization that the simple dollar store model is unlikely to successfully combat — perhaps dollar stores should first work on putting fewer cola bottles on their shelves.
