Small Minnesota towns push back against dollar stores

Redwood County (Wikipedia)

Dollar stores are seeing explosive growth nationwide, targeting low-income areas and food deserts in cities and rural areas. But local businesses suffer, especially grocery stores, when dollar stores move in. That's why two two towns in Redwood County, Minnesota—and many others—have blocked the discount chains from setting up shop.

This year in Wabasso, pop. 765, the City Council "passed a one-year commercial development moratorium, shortly after declining a request by Dollar General to annex a piece of adjacent farmland where it wanted to build a new store," Patrick Condon reports for the Minneapolis Star Tribune.

In nearby Morgan, pop. 872, "officials and residents banded together" to get Redwood County's planners and its governing board to reject rezoning for Dollar General to build on farmland just outside the city, Condon reports: "A petition against Dollar General's plans to set up in Morgan drew several hundred signatures in a matter of days." One business owner told Condon that a nearby community's independent grocery store went bankrupt within six months after a Dollar General opened there. Though dollar stores typically lack fresh meat and produce, it has some supermarket-style stores.

Many communities worry about the proliferation of dollar stores, Kennedy Smith, senior researcher for anti-corporate-consolidation nonprofit the Institute for Local Self-Reliance, told Condon, who reports, "This year alone, towns and small cities in Wisconsin, Iowa, Ohio, Tennessee, Maryland, New Jersey, North Carolina and Alabama have rejected dollar store development plans, according to ILSR's research. Critics see not just threats to existing businesses but also a disincentive to prospective new retailers once a dollar store has set up in town. An ILSR report in 2018 on the spread of dollar chain stores cited studies that found local grocers typically see a 30% sales drop after a Dollar General opened, a decline that makes it tough for businesses that operate on thin profit margins."

As Kennedy noted and an analysis from The Hustle shows, shoppers at Dollar Tree often don't end up saving, since the unit price of dollar-store items is often higher than those at larger retailers.