The Dollar Store Crisis
Growing up in New York City for the past eighteen years, three names pop up in my head when I’m asked about what grocery chains I see the most: Dollar Tree, Trader Joe’s, and Whole Foods. Even though the objective of these stores is the same — to sell food to a community — the locations and property values of these stores vary immensely. In the Flatiron District of Manhattan, an area that has an average property value of $1,583 per square foot, I pass by Trader Joe’s and Whole Foods. In contrast, I pass by Dollar Trees in Red Hook, Brooklyn, which has a property value of $729 per square foot.
The noticeable disparity in property value between Dollar Tree, and Trader Joe’s or Whole Foods raises some questions: Are dollar stores strategically placed in areas with low property values? Do these dollar stores actually help the communities they serve?
The majority of modern-day dollar stores are often found in food deserts, low-income, or minority communities. This is a result of generations of racism against minorities, specifically African American communities. Dollar stores perpetuate the discrimination of these communities as their effects are more detrimental than beneficial.
The origin of food deserts can be traced to a combination of five events: The Federal Highway Act of 1956, the Supreme Court case of Brown V. Board of Topeka, the G.I. Bill, White flight, and Redlining.
At the end of World War II, President Franklin D. Roosevelt signed the G.I. Bill into law on June 22, 1944.
The G.I. Bill helped veterans start or continue their education, and find a temporary source of income. It also provided government-guaranteed loans for homes and businesses. While this bill was meant to provide the same benefits to every veteran, regardless of race or gender. However, it was harder for women and people of color to collect their unemployment benefits and to use the benefits of the G.I. Bill, as colleges at the time were either heavily segregated by race or gender. Additionally, even though all veterans were supposed to be able to get government-backed loans with the G.I. Bill, African Americans were usually denied loans by banks in the south for homes and businesses because of their color. However, even if African Americans were able to acquire loans for houses, they were unable to buy houses in the suburbs during the 1940s and 1950s because the FHA (Federal Housing Administration) prohibited this (G.I. Bill).
On top of most African American veterans not being able to get government-backed loans for houses and businesses with the G.I. Bill, African Americans could not get loans because of a practice called redlining. Redlining’s origin dates back to the 1930s when the HOLC (Home Owners Loan Corporation) created a map that classified areas by the amount of risk attached to them. These helped banks determine whether a loan should be given, based on where the person lived. Redlining was created to reduce the number of foreclosures on homes during the period of the Great Depression (Gaspire).
Four main colors to classify areas: green, blue, yellow, and red. Green was defined as a “first-grade” area, meaning that a loan for someone in this area was low-risk for banks. Red was defined as a “fourth-grade” area, meaning that a loan for someone in this area was high-risk for banks. The majority of African American neighborhoods were categorized as red zones, and as a result, a majority of African Americans were not able to get loans (Peyton). Consequently, compared to areas that were classified by other colors, these red zones were undeveloped, resulting in little or no businesses that could not be replaced once they were closed (Gaspire). Even though redlining officially stopped in 1939, it was not banned until the Civil Rights Act of 1968. The act, “prohibited discrimination concerning the sale, rental, and financing of housing based on race, religion, national origin, sex, (and as amended) handicap, and family status” (History of fair housing).
In addition to facing discrimination on the subject of housing, African Americans were having their communities destroyed with the development of new highways. The Federal Highway Act of 1956 was enacted with the intention of expanding the U.S.’s highway network, but at the same time, these new highways provided an opportunity for states to destroy Black neighborhoods. They did this by either displacing Black inhabitants to build highways on their land or by using these highways as a means of segregating white and Black communities (Pyke).
Furthermore, not only did the development of the national highway system segregate Black and white communities, but it also provided a way for white families to move to the suburbs. One of the main reasons for the movement of white families into the suburbs in the late 1950s, also known as the white flight, was the desegregation of schools that resulted from the unanimous ruling of the Supreme Court in the case of Brown V. Board of Education (Wilson): The Supreme Court justices ruled unanimously that segregation in schools was unconstitutional, thus making the practice illegal (Brown V. Board). As white parents feared their children attending schools with children of color, which they believed would ruin their social statuses, white families started to leave for the suburbs (Wilson).
As white families moved into the suburbs, supermarkets followed. Supermarkets have preferred to serve white communities because of the higher profit margins. As a result, white-flight resulted in the majority of African American communities being located in food deserts, which resulted in these communities having to pay extra for healthy food (Meyersohn). A combination of a thriving economy, a growing white middle class, a higher standard of living, more accessibility to highways, racism, white flight, unenforced laws, capitalism, and ethnocentrism is the basis of modern food deserts. This combination has created a demand for accessible and cheap food in these food deserts, which is supplied by dollar stores.
A dollar store, such as a Dollar Tree or Dollar General, is like a miniature supermarket that sells products ranging from food to cleaning supplies, to home decor. However, unlike other grocery chains, as implied by the name, everything in these dollar stores is a dollar. Dollar Tree bought out other dollar store chains, such as Dollar Bill$ in 1996, 98-Cent Clearance Centers in 1998, Dollar Express in 2000, Greenbacks in 2003, 138 Deal$ in 2006, Canadian Dollar Giant in 2010, and Family Dollar in 2015 for nine billion dollars (Dollar Tree).
Dollar Tree’s history is reminiscent of robber barons. People such as John D. Rockefeller, used tactics, like pricing oil below his competitors, and cutting deals with railway companies to get a lower cost of transport (John D.). Then after putting their competitors out of business, they would buy them out for low prices.
The concept of a dollar store sounds very good on paper for food deserts and low-income neighborhoods: These dollar stores can serve food deserts by providing the people who live there a source of food without having to walk, drive, or take public transit for miles; these stores can provide people from these neighborhoods with jobs; almost everything needed by a household is in the store; These stores can provide the area with tax revenue, and all their products are at a “great” price (Zaffar).
The majority of dollar stores are located in food desert communities composed mostly of minorities. A report published by ISLR (Institute of Local Self Reliance) shows how dollar stores target low-income and minority neighborhoods. This report contains the maps of eight cities across the U.S.; Atlanta, GA.; Dallas, TX; Louisville, KY.; Newark, N.J.; New Orleans, LA.; Philadelphia, PA.; Tulsa, OK.; and Washington, D.C. One map shows the areas of a city where households are below the poverty line, and a second map shows the percentage of African Americans living in these areas. For the first map that identifies households below the poverty line the darker, the shade of green equates to a higher percentage of households below the poverty line. The second map identifies the percentage of African Americans living in an area with the color purple. The darker the shade of purple, the higher the percentage of African Americans living in the area.
According to maps that identify households below the poverty line, the majority of dollar stores — Dollar Tree, Dollar General, and Family Dollar — are located in areas that are a dark shade of green. The maps that identify the percentage of African Americans living in an area, place the majority of dollar stores are located in areas that are a dark shade of purple, show a correlation between wealth, race, and placement of dollar stores in these eight cities (Maps Show Alarming). Furthermore, when compared to a map of the U.S. that shows the number of dollar stores per 10,000 people in the U.S., darker shades of blue equate to more dollar stores (“Dollar Store Impacts”), to a map that shows the distribution of the African American population in the U.S., there is a very high correlation between the locations of these stores and the locations of the African American population (Shambaugh et al.)
Dollar stores position themselves as providers who serve food deserts, but they actually either generate food deserts or solidify an area’s likelihood of becoming one. Doug Nech, the owner of the now-closed “The Foodliner”-- a grocery store in Haven, Kansas — tells the city council of Buhler, Kansas the effects the opening of a Dollar General in Haven had on his business. “We lasted three years and three days after Dollar General opened,” he said. “Sales dropped and just kept dropping. We averaged 225 customers a day before and immediately dropped to about 175. A year ago we were down to 125 a day. Basically, we lost 35 to 40% of our sales. I lost a thousand dollars a day in sales in three years'' (Nech).
The opening of a dollar store in the area takes away a huge portion of the local supermarket’s revenue. This ultimately causes the supermarket to shut down. In addition to closing locally owned supermarkets, the competition from the arrival of dollar stores also prevents new locally-owned grocery stores from opening, as new grocery stores would most likely not make a profit (McGreal). “Nech discovered the store had done a deal with Campbell’s Soup to make a 14.5oz can of chicken noodle soup for $1.50, the price he was paying wholesale for an 11 oz can of the same soup” (Nech).
Dollar stores have more buying power because they are able to buy goods in bulk at wholesale prices, compared to locally-owned grocery stores that don’t have the capacity. As a result, products of the same quality can be sold for much less at a dollar store when compared to the prices at locally-owned grocery stores, which results in fewer sales for the grocery stores (Stice).
However, the majority of products sold at dollar stores are either more expensive, of a much lower quality, or even poisonous, when compared to their counterparts sold at other stores. Name-brand, Aims toothpaste is sold at these dollar stores for six ounces, but Walmart sells a four-pack of Aim toothpaste for three dollars and forty cents: around eighty-five cents per tube (Daly).
Batteries also appear to be a great deal, at twenty cents each at the dollar store when compared to an Energizer battery, sold at Walmart, for around sixty-eight and a half cents each. A dollar store battery was found to contain about 2,983 Joules, whereas an Energizer battery contained 10,798 Joules. When calculating the number of Joules per dollar, a dollar store battery provides about 14,900 Joules per dollar, whereas an Energizer battery provides around 15,800 Joules per dollar.
Additionally, batteries sold at dollar stores tend to be made out of carbon and zinc whereas Energizer batteries are made out of alkaline (Allain). Carbon- Zinc batteries, compared to alkaline batteries, are cheaper materials and result in less energy stored, as they are only intended for low energy appliances, and are unable to operate at very low or high temperatures. This means that these carbon-zinc batteries are not a substitute for Alkaline batteries (Why are Alkaline).
In addition to deceitfully selling lower-quality products, dollar stores also sell toxic products. A sample of 164 products tested by “HealthyStuff'' for toxic chemicals from popular dollar store chains, like Dollar Tree and Dollar General, found that the majority of household products sold, not including food or detergent, such as binders, toys, jewelry, and make-up, contained at least one toxic chemical. As stated by the report, “81% of the products (133 out of 164) contained at least one hazardous chemical above levels of concern, and 49% of products contained two or more. 38% of the products tested (63 out of 164) contained vinyl plastic. Of the vinyl products, 38 were tested for plasticizers. 32% (12 out of 38) of these contained toxic phthalates above the CPSC limits for children’s products. Three products contained a phthalate (DiBP) not regulated by CPSC but found to be toxic by the CPSC. One product contained another unregulated phthalate (DDP), for which data are lacking on carcinogenic, reproductive, and developmental effects” (Dollar Store Report).
In New York, dollar store chains, such as Dollar Tree, Dollar General, and Family Dollar, have been fined for selling expired food, medicine, and motor oil. The motor oil sold by these dollar stores was found to be not viable for many modern car engines (Attorney General James). They create an illusion of savings and mask the poisoning of the communities they serve. Such stores seem attractive to these communities, as they are able to provide residents a source of jobs, a source of tax revenue, and the possibility of giving back to the communities they reside in (Zaffar).
However, dollar stores take away more jobs than they replace. The average Dollar General store employs an average of nine people, compared to the fourteen employees in an average, small independent grocery store (Dollar Store Impacts). Dollar stores do not always provide more tax revenue for an area than a locally owned grocery store. In some cases, the tax revenue collected by a community from a dollar store is less than a locally owned store. As food desert communities that only have a few, or one, grocery store(s) seem to be susceptible to the idea that a dollar store will benefit their local economy, and more dollar store franchises will benefit their economy even more. Although the opening of multiple dollar stores in a small area is a bad thing, more openings increase a dollar store chain’s negotiating power.
In the past, some dollar stores used their negotiating power of being the main or sole source of taxes and food for an area, to acquire cuts or breaks to utility bills from the area’s city council. This does result in less tax money for an area, but usually, the communities have no choice.
Unlike locally-owned grocery stores, dollar stores are less likely to give back to the communities they serve, as, for example, Dollar General sets a limit of the
amount of support a store can give to a community (Stice). In addition dollar stores negatively impact the physical and mental health of the people in the communities they serve. The majority of dollar stores cannot be categorized as grocery stores, due to the lack of fruits and vegetables sold, because dollar stores usually cannot store these items. The stores are smaller (Brown), around 8,000 to 10,500 square feet (Real estate), compared to the average small grocery store, around 20,000 square feet (How is the grocery store). The majority of food items sold in these stores can be categorized as unhealthy food, as the majority of the food items can be categorized as processed food, canned food, and instant food, like chips, soft drinks, candy, and instant ramen (Zaffar).
However, the people living in these food desert communities don’t have the option of going to another grocery store, as a food desert is defined by the USDA (United States Department of Agriculture) as the “Total population in the census tract that lives more than one mile from a supermarket or large grocery store (urban tracts) or more than 10 miles from a supermarket or large grocery store (rural tracts)” (Rhone), the only option for these people is to purchase the unhealthy food sold at these dollar stores. As a result, people in these communities are putting themselves at risk for chronic illnesses, such as diabetes and heart disease (Brown).
In fact, studies have shown a correlation between increased BMI (Body Mass Index) of people in areas where dollar stores are present. Furthermore, people who live in areas with more dollar stores have lower levels of happiness/well-being compared to areas with fewer dollar stores (Florida).
The masses of dollar stores in modern food deserts, which are mostly in low-income and/or minority communities, are the of years of racism. The effects of these stores on the communities they serve are more detrimental than beneficial. They are thought to be serving these communities by providing residents a source of food without having to walk, drive, or take public transit for miles; these stores can provide people in these neighborhoods jobs; almost everything needed by a household is in the store; These stores can provide the area with tax revenue, and all these products are at a “great” price (Zaffar). In reality, this is not the case. Dollar stores cause or cement an area’s chance of becoming a food desert, ruin the economies of the communities they serve, sell products that are either, toxic, unusable, or inadvertently more expensive when compared to similar products sold at other stores — and they do not provide healthy food, which effectively ruins the physical and mental health of the people trapped in these food deserts.
By James Zhang
Illustrations were done in collaboration with the New Media Artspace at Baruch College. The New Media Artspace is a teaching exhibition space in the Department of Fine and Performing Arts at Baruch College, CUNY. Housed in the Newman Library, the New Media Artspace showcases curated experimental media and interdisciplinary artworks by international artists, students, alumni, and faculty. Special thanks to docent Anya Ballantyne for creating artwork for this piece.
Check the New Media Artspace out at http://www.newmediartspace.info/