ALEXANDRIA, Va. – Even though dollar stores offer no fresh produce or milk, their grocery business is expanding rapidly, according to Graham Media Group
In fact, U.S. dollar stores sell $10 billion more in groceries than the Whole Foods chain, reports the Institute for Local Self-Reliance (ILSR).
Most dollar store food offerings are canned or processed and range from juice and soda to soup and canned tuna, cereal and microwavable meals.
Dollar stores are succeeding in the grocery business because they target low-income customers living in rural or inner-city neighborhoods.
Currently, there are nearly 3,000 dollar stores nationwide, which is more than Starbucks and Walmart combined, and up from 20,000 outlets in 2011. Dollar General and Dollar Tree reportedly plan for 20,000 more. In 2017, Dollar General opened new locations at a rate of around four stores a day.
The ISLR report finds that dollar stores tend to target rural and low-income neighborhoods, many of which are considered "food deserts," meaning they lack access to fresh, affordable food. Yet, the ILSR report also cites evidence that dollar stores are preventing disadvantaged communities from getting ahead—and, in some cases, even contributing to the decline of local businesses.
When a dollar store moves into a neighborhood, they tend to undercut mom-and-pop grocery stores, decreasing their sales by about 30%, according to the report. This often ignites a trend of closures among independent businesses as well.