Tag Archives: dollar stores

Ordinances and zoning against dollar stores

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With evidence that dollar stores provide poor quality food options and limited jobs, some communities have used certain tools to restrict their presence:

While some local governments continue to lure dollar stores to town with tax subsidies and incentives, others are doing the opposite. A dollar store NIMBY movement has been gaining traction.

In Chester, Vermont, for example, residents argued in 2012 that allowing dollar stores to come to town “will be the beginning of the end for what might best be described as Chester’s Vermontiness,” per the New York Times—a statement that itself perhaps signals the class and race associations dollar stores have come to embody. In Buhler, Kansas, the mayor saw what happened to surrounding grocery stores in neighboring Haven and rejected the dollar store chain, also citing a threat to the town’s character.

“It was about retaining the soul of the community,” he told The Guardian. “It was about, what kind of town do we want?”

More recent efforts have used zoning tweaks to limit dollar stores, whose small footprint usually lets them breeze past restrictions big-box stores cannot. In Mendocino County, California, dollar store foes passed legislation restricting chain store development writ large. And in April, the Tulsa City Council passed an ordinance that requires dollars stores to be built at least one mile away from each other in North Tulsa. It also tacks on incentives for healthy grocers and supermarkets providing healthy food to locate in that area. “I don’t think it’s an accident they proliferate in low socio-economic and African American communities,” Vanessa Hall-Harper, a city councillor who grew up in North Tulsa and shepherded the ordinance, told ILSR. Since then, Mesquite, Texas, has followed suit with a similar move.

Communities have fairly broad powers to encourage or limit the presence of certain kinds of development. If they do not desire the building or the opening of a dollar store, then they can limit or eliminate the possibilities for a dollar store in that community.

Of course, the dollar stores can respond with their own tactics. Here are a few I could imagine (drawing from similar cases involving other businesses):

  1. Building just outside the jurisdiction of the municipality.
  2. Working with a neighboring community who is willing to have them.
  3. Mounting a public campaign against the community to tout the advantages of their business.

While the third option might be more of a nuclear option, the first two mean that another municipality could benefit from sales tax and property tax revenues, the limited number of jobs, and easier access for nearby residents.

The rise of dollar stores and the questions that should follow

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In recent years dollar stores have had a lot of growth:

Surveys have shown that today’s shoppers are more likely to make purchases in dollar stores lately, and chains such as Dollar Tree, Dollar General, and Family Dollar have experienced outstanding sales growth as a result…

Now, according to a study by retail research firm Colliers International, dollar store locations outnumber drugstore locations in the U.S. Specifically, Colliers added up the number of locations for four national dollar store chains (Dollar General, Dollar Tree, Family Dollar, 99 Cents Only), and compared that figure to the total number of locations for the country’s three biggest drugstore chains (CVS, Rite Aid, Walgreens).

The tally, as of mid-2001, stood at 21,500 dollar stores vs. 19,700 drugstores…

Also, the dollar store chains have all experienced remarkably strong sales in recent years, and have been expanding like crazy as a result. Dollar General, for example, has nearly doubled its location total over the past decade, 5,000 to more than 9,500 stores today. And counting.

I’ve wondered recently why Walmart gets a lot of attention while drug stores, particularly Walgreens in this area, and dollar stores have been expanding. Whenever I walk into a Walgreens, I can’t help but think they are mini-Walmarts. Walgreens sells everything from prescriptions to ice cream to photos to cosmetics and so on. Dollar stores are similar but cheaper, selling everything from food to detergent to household supplies.

After noting the growth in dollar stores, we could ask some questions about the effects these stores have. Clearly, they offer cheap goods. But: Are dollar stores good for the local economy? Do they provide good jobs? Do they tend to be found in areas of sprawl or strip malls and are dependent on automobile traffic? Are the goods primarily made in the US or overseas? Is the food for sale healthy? Perhaps these questions aren’t asked since it is assume dollar stores will recede in popularity when the economy improves. But since this likely won’t be for a while, shouldn’t we think about what it means to have a lot of dollar stores?

How Wal-Mart plans to regain its edge

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Here is an interesting summary of Wal-Mart’s corporate plans for the near future. The headline of the article says it all: “Wal-Mart, humbled king of retail, plots comeback.”

Three years ago, Wal-Mart ruled for convenience, selection and price. But today it is losing customers and revenue, and smarting from decisions that backfired.

Wal-Mart is not in danger of ceding its place atop the retail world. But competitors have begun to chip away at its dominance.

Over the last year, revenue at Wal-Mart stores open at least a year has fallen by an average 0.75 percent each quarter, according to the International Council of Shopping Centers. Revenue rose by an average of nearly 1.7 percent at Target, 8 percent at Costco and 5.9 percent at Family Dollar.

To fight back, Wal-Mart is again emphasizing low prices and adding back thousands of products it had culled in an overzealous bid to clean up stores. It’s also plotting an expansion into cities, even neighborhoods where others dare not go.

Even as the article talks about stagnant or slightly declining sales at existing stores plus some questionable decisions (like reducing the number of products on the shelves), the main issue seems to be perceptions. On the business side, Wal-Mart has been challenged, particularly on the lower end by dollar stores. But business has not tanked and Wal-Mart still thinks it has new markets to tap in the United States, particularly in urban areas. What do investors and shareholders think – is it just about stronger growth right now? On the public image side, stores like Target have offered an enticing alternative. And yet Wal-Mart has changed the layout and design of its stores to look more like Target and this seems to have helped. Ultimately, the article says Target’s revenues are still one-sixth of that of Wal-Mart.

It sounds like Wal-Mart thinks they need to make some changes. There is no guarantee that any business, even a behemoth like Wal-Mart, will continue to expand or even be profitable. And just by virtue of its size, Wal-Mart’s actions will continue to be scrutinized.