Last Updated: November 15, 2024 (First Published: Oct. 2018)
Chain dollar stores are multiplying rapidly. Since 2011, the two largest U.S. chains — Dollar General and Dollar Tree (which owns Family Dollar) — have grown from about 20,000 locations to almost 40,000. Both plan to expand even further. In 2024, the two chains announced that they plan to add roughly 1,300 new stores within just the next year.
Chain dollar stores can create many problems for communities, from increased crime to dangerous traffic conditions. But one of the most serious problems for a community’s economic health is their impact on existing businesses and, in particular, their impact on grocery stores. Most chain dollar stores stock only a limited selection of fresh or frozen vegetables, fruits, or meats. Even those that offer an expanded selection of fresh food, like DG Market and Dollar Tree Plus!, still provide only a fraction of the fresh food that a grocery store of comparable size offers. Yet, in both urban neighborhoods and small towns, these chains are opening stores at such a density that they crowd out full-service grocery stores and make it nearly impossible for new ones to open. In fact, a 2022 study by UCLA and the University of Toronto found that, if there are three chain dollar stores within a two-mile radius of one another, a full-service grocery store there will probably close.
As we noted in our 2023 report about dollar store proliferation: “One might assume that the dollar chains are simply filling a need, providing basic retail options in cash-strapped communities. But the evidence shows something else. These stores aren’t merely a byproduct of economic distress; they are a cause of it.”
In response, a growing number of cities and counties are limiting or regulating new dollar store development. There are five approaches, in particular, that are gaining traction:
Formula business restrictions place limits on chain stores in general, including dollar stores, while fostering a balanced mix of local businesses. These regulations limit formula or chain retailers that have standardized services, methods of operation, and other features. In 2024, for instance, the town of Joseph, Oregon adopted a formula business ordinance, partly to help protect against dollar store proliferation (learn more about this approach here). Some communities have achieved a similar outcome by limiting the number of business licenses available for different types of businesses. Forest Park, Georgia, for example, issues business licenses for a maximum of three dollar stores, with a provision that it will issue one additional license for every 5,000 new residents beyond 30,000.
Dispersal ordinances specifically target dollar stores. Dispersal ordinances (also called minimum-distance ordinances) set limits on how close to an existing dollar store a new one can be developed (typically requiring a minimum distance of one to five miles). Such regulations take into consideration the existing concentration of dollar stores within a neighborhood or city and help prevent these chains from choking out existing grocery stores and from making it difficult or impossible for new ones to take root and grow. Chicago’s ordinance requires a minimum of one-mile between new dollar stores and existing ones, for example, while Brunswick, Ohio’s ordinance requires a minimum distance of two miles.
Healthy food overlay zones improve access to healthy food. In 2018, for example, the city of Tulsa, Okla., drawing on ILSR’s Policy Tools, amended its zoning code by creating an overlay district that encourages development of healthy food stores in north Tulsa, a predominantly Black neighborhood, in large part by requiring at least one mile between new dollar stores and existing ones. North Tulsa is home to many chain dollar stores, some no more than a block apart. “That proliferation makes it more difficult for the full-service, healthy stores to set up shop, and operate successfully,” notes Tulsa City Councilor Vanessa Hall-Harper, who led the effort to pass the ordinance.
Conditional uses: Some communities have made dollar stores a “conditional use,” requiring them to meet certain conditions, such as not having a negative impact on existing food stores or devoting a certain minimum amount of shelf space or square footage to fresh food, in order to receive a development permit. For example, Fate, Texas adopted an ordinance in 2021 that makes chain dollar stores a conditional use, with a permit issued only if the proposed store meets certain requirements, including not posing a threat to nearby stores offering healthy food. Oshkosh, Nebraska’s ordinance makes both small and large discount stores conditional uses. In some instances (including in Fate), conditional use requirements have been combined with the minimum-distance requirements of dispersal ordinances.
“Police powers”: Civic leaders in at least two communities — Newton County, Georgia and Tangipahoa Parish, Louisiana — have used their broad police powers, derived from the Tenth Amendment to the U.S. Constitution, to reject dollar store development proposals because of the chains’ negative impacts on the health, safety, and welfare of community residents.
Articulate a Clear Purpose
Cities enacting policies limiting dollar store development should articulate a clear purpose and tie the policy to a broader public goal. For example, Riverdale, Georgia’s ordinance lists five objectives it seeks to advance by restricting dollar store development, including “foster[ing] a community-based approach to the distribution and purchase of fresh meats, fresh fruits and fresh vegetables” and “encourage[ing] greater diversity In retail offerings.” outlines its desire for “greater diversity in retail options and convenient access to fresh meats, fruits and vegetables.” Mesquite’s ordinance addresses the concern that “residents typically have more access to convenience stores and fast food than to nutritious food.”
Define “Dollar Store”
It is important to define which stores are subject to restrictions. Tulsa’s ordinance defines “dollar stores” as those with “retail sales uses with floor area less than 12,000 square feet that offer for sale a combination and variety of convenience shopping goods and consumer shopping goods; and continuously offer a majority of the items in their inventory for sale at a price less than $10.00 per item.” Kansas City adopted a more general definition of a “small box variety store,” which is a store of “15,000 square feet or less which sells at retail an assortment of physical goods, products, or merchandise directly to the consumer.”
Limit Dollar Store Density
So far, most dollar store ordinances regulate store development by limiting their density, requiring minimum distance limits between existing and new dollar stores. The Tulsa ordinance creates a “dispersal standard” requiring a new store to be a minimum of 5,280 feet (one-mile) from an existing dollar store. Stockbridge, Ga. initially required one mile of distance from an existing discount store, then later increased the required distance to five miles. In Kansas City, Kan., the ordinance included both a separation requirement of 10,000 feet from an existing store and 200 feet from residentially zoned property. Some ordinances apply the density limits only to a specific neighborhood or zoning area, while others apply citywide or countywide.
Support Alternatives to Dollar Stores
In addition to the dollar store density requirements, a community’s dollar store development policies might also include incentives to encourage better alternatives. Tulsa’s ordinance reduces on-site parking requirements for grocery stores by 50 percent within the overlay district. East Point, Georgia’s policy reduces the minimum distance required between new and existing dollar stores by 50 percent if at least 10 percent of a new store’s interior or exterior space is donated to farm stands selling fresh produce.
Invite Public Participation
As dollar store development policies are crafted, cities can gather community input through hearings and public comment periods. These are important ways to develop policies that respond to local needs and goals. For example, Tulsa’s ordinance grew out of a community-driven effort to stop new dollar stores from opening in the neighborhood. This led the city to adopt a temporary moratorium on dollar stores, during which the city council held hearings to better understand the issue and develop its policy. Many communities, from Apopka, Florida to Toledo, Ohio have adopted similar moratoriums on dollar store development to give civic leaders time to learn more about the issue, explore options, and ultimately make informed decisions.
You can find much more information on restricting dollar store development in Stop Dollar Store Proliferation in Your Community: A Strategy Guide.
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