Family Dollar stores are closing. These city officials are happy about it

New York CNNWhen Vanessa Hall-Harper, a city councilor in Tulsa, Oklahoma, learned this week that Family Dollar was closing nearly 1,000 stores, she had a surprising reaction.

“For communities that have been negatively impacted by the proliferation of dollar stores, it’s a great thing,” she told CNN. “I’ve been waiting on this announcement for a long time.”

The loss of these stores will lead to layoffs and may leave a void for low-income Americans with already limited shopping choices. The companies and proponents of dollar store chains say they provide affordable food and essentials for low-income Americans. In some places, dollar stores are the only retailers around.

But critics of Family Dollar and other dollar store chains’ business practices like Hall-Harper say the closures highlight the risks of communities relying too heavily on dollar store chains. They hope that the closures will push cities to improve their efforts to draw in independent supermarkets and create alternative retail options in areas saturated by dollar stores.

Hall-Harper has led Tulsa’s effort to restrict the growth of the three major dollar store chains — Family Dollar, Dollar Tree and Dollar General — in the predominately Black area of North Tulsa. (Dollar Tree, typically located in the suburbs, owns Family Dollar, which focuses mainly on cities. Dollar General, the biggest of the three chains, operates in mostly rural areas.)

In 2018, Tulsa became the first major city to pass legislation blocking such types of stores from opening within a mile of an existing location. At the time, Tulsa had more than 50 of the three chains’ stores in the city.

Since then, at least 60 cities and counties have passed restrictions blocking new dollar store development — including Tulsa; Cleveland; New Orleans; Birmingham, Alabama; Fort Worth, Texas; and Akron, Ohio — according to the Institute for Local Self-Reliance, an advocacy group that opposes economic consolidation. Last month, the Chicago City Council overwhelmingly approved a measure aimed to limit the growth of dollar stores in the city.

In statements to CNN, Dollar General and Dollar Tree both said that these restrictive measures harm communities. Dollar General said the laws would limit customer choice, convenience and affordability, particularly during times of inflation.

Dollar General said it regularly hears from communities and customers asking it to bring a Dollar General store to their hometown, and the company disagrees with the Institute for Local-Self Reliance and other opponents’ characterization of its business practices and impact on communities. Dollar Tree said it will “continue working with local leaders to address their concerns.”

Tulsa’s “healthy neighborhoods overlay,” the city policy designed to limit new dollar stores, aimed to spur more grocery stores and mom-and-pops that offer fresh meats, fruits and vegetables.

The measure has not alleviated access gaps in Tulsa, but Oasis Fresh Market, the first supermarket in North Tulsa in 14 years, opened in 2021. Hall-Harper helped the locally owned business secure financing.

She hopes that the recent Family Dollar closures will make it easier for local grocers to open. The expansion of dollar stores has led to a decline in the number of grocery stores and a reduction in fresh produce consumption for some lower-income households, a study last year by researchers at the University of Toronto and UCLA found. Markets lose one grocery store for every three new dollar stores that open, the study found.

“When dollar stores proliferate, it causes grocers to go out of business,” Hall-Harper said.

Dollar General told CNN that it is not designed to be a grocery store, but all of its stores offer components of a nutritious meal, including proteins, grains, dairy and frozen and canned vegetables. In around one-quarter of stores, Dollar General has added fresh fruits and vegetables in recent years, although health experts say the fresh food assortment is narrow.

Family Dollar has started to sell a small assortment of produce in a limited number of stores.

Backlash to dollar stores

Dollar General, Dollar Tree and Family Dollar have spread rapidly since the Great Recession, opening more than 15,000 small stores. From 2018 to 2021, roughly half of all retail stores that opened in the United States were dollar stores.

“The rise of dollar store chains has profoundly reshaped the U.S. retail sector,” the University of Toronto and UCLA researchers said in their study.

But they have more recently run into opposition in many cities and towns for their business strategies and tactics.

Local leaders in cities that have sought to curtail dollar stores say they target low-income and minority neighborhoods. Research in 2020 from the University of Georgia found that race was a key predictor of the three chains store locations. Family Dollar stood out as the retailer that most clearly located in communities of color, filling gaps in communities when small grocers closed, the research found.

Critics also say stores have become magnets for crime, violence and sanitation issues. Federal health and safety officials have citied hundreds of the chains’ stores for workplace safety violations. US regulators reached a settlement last year with Dollar Tree over hazardous conditions in Dollar Tree and Family Dollar stores.

Revitalizing mom-and-pops

Local opponents say Family Dollar’s closures show the need for independent stores and a wider array of retail options.

“The problem is corporate brands that don’t care about these cities,” said Cleveland City Council President Blaine Griffin, who led the city’s effort to impose limitations on new dollar stores from opening. “As soon as they feel like they can’t make margins, they leave.”

“Our strategy is to move to a local resilience strategy instead of a proliferation of dollar stores,” he said. “What I want to promote is neighborhood markets.”

He pointed to Meijer opening small supermarkets in Cleveland in underserved areas as a model for future retail growth in the city.

But similar models have failed in other cities. Other chains, such as Walmart and Target, have attempted to open small stores in cities such as Chicago and Baltimore and wound up closing, leaving communities in a lurch.

And independent stores face their own challenges staying in business. Consolidation in the grocery sector is growing, and small grocery stores are struggling. In 2019, the 20 largest retailers controlled 64% of total food sales, more than double the share from 1990, according to the Agriculture Department.

Stacy Mitchell, the co-director of the Institute for Local Self-Reliance, said that stronger antitrust enforcement and greater investment in capital programs for small businesses are necessary to revitalize independent grocers.

“We need to level the playing field that gives big chains advantages over” local businesses, she said.

Currently, the Federal Trade Commission is investigating large suppliers and retail chains for practices that disadvantage independent stores, such as giving large chains preferential products and sizes over small stores. The FTC has also sued to block the Kroger-Albertsons proposed merger, saying it would harm competition.

“The smallest towns and poorest communities used to have a grocery store,” Mitchell said. “What has changed is consolidation and a lack of antitrust enforcement.”

A quote in this story was updated to correctly describe Stacy Mitchell’s description of local businesses.