Family Dollar announced it plans to close 1,000 stores by the end of 2025. Communities have an opportunity to chart a different path.
In March 2024, Dollar Tree announced that it plans to close 970 Family Dollar stores and 30 Dollar Tree stores by the end of 2025.[1] Just two weeks later, 99 Cents Only, a dollar store chain in four Western states, threw in the towel and began liquidating all of its 371 stores.[2]
As the news spread, shoppers and civic leaders expressed emotions from shock to elation.[3] But in communities where one of these dollar stores is the only remaining store selling any sort of groceries, people panicked. What might it mean for them if their dollar store closed?[4]
Like all dollar store chains, Family Dollar and 99 Cents Only are not known for selling healthy food.[5] Most of the food they sell is shelf-stable and loaded with preservatives — products such as boxed mac and cheese, canned soup, and sugar-packed cereal, which can last in a pantry for months or even years. Even dollar stores that claim that they’ve expanded their fresh food inventory tend to offer more onions, garlic, potatoes, and other slow-to-spoil produce than truly fresh produce, like leafy greens.[6] For those unfortunate communities in which dollar store chains have pushed out local grocery stores, shelf-stable food is mostly what’s available. But for some communities, even that will no longer be an option.
The good news is that the money that shoppers would otherwise have spent at the dollar store can now help support healthier food stores. At an average of $218/square foot in sales and an average of 7,500 square feet per store, a typical Family Dollar store captures around $1.6 million in local purchases annually.[7] That $1.6 million might now find its way to a locally owned store. For 99 Cents Only, it’s even more; its stores were slightly larger, and its sales per square foot were slightly greater.
Communities that lose a dollar store may now have a solid opportunity to chart a different path for the future. Here are some suggestions:
- Carefully consider the opportunities that the store’s closing might create for your town or neighborhood and build consensus for healthy food options. It may be tempting to try to replace the former dollar store with a new one. And given how aggressively Dollar General is expanding, that might seem like an expedient path.[8] But locally owned full-service food stores are much better choices for communities than dollar store chains. More of their profits remain local. They hire more people and pay better wages.[9] They tailor their product mix to the community’s preferences. They sell healthier food. Rather than rushing to replace the dollar store with another dollar store, pull the community together to explore better options.
- Adopt short-term solutions. Developing a full-service food store takes time. Fortunately, there are plenty of stop-gap solutions to fill the food gap while working to develop or attract a full-service food store. Some communities have created mobile markets — essentially food stores in vans or buses. Some have partnered with grocery stores in nearby communities to deliver groceries daily to refrigerated lockers. Some have worked with farms and CSAs to deliver fresh produce, meat, and dairy products to neighborhood residents. Any of these could serve as interim options until the community can develop or attract a food store.
- Safeguard the community from future chain dollar store development. Dollar stores are an economically invasive species. They choke out competitors, leech sales away from locally owned food stores that carry healthier food, and send their profits out of the community to distant shareholders, undercutting opportunities to build local wealth. If a dollar store is closing in your community, it’s a great time to put some safeguards in place to prevent dollar stores from proliferating there in the future. Some communities have limited dollar store development by requiring a certain minimum distance — usually between one and five miles — between new and existing dollar stores. Some require new dollar stores to offer a certain amount of fresh produce, dairy, and meat. And a few have used their “police power” — the power to protect residents’ health, safety, and welfare of residents — to reject dollar store development proposals altogether
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[1] J. Edward Moreno, “Family Dollar to Close Nearly 1,000 Stores,” New York Times, March 13, 2024. Dollar Tree bought Family Dollar in 1995. Dollar Tree bought Family Dollar in 2015.
[2] Nate Delesline III, “99 Cents Only to Liquidate,” Retail Dive, April 5, 2024.
[3] Nathaniel Meyersohn, “Family Dollar Stores are Closing. These City Officials are Happy about It,” CNN, March 15, 2024.
[4] Mary Calkins, “’It’s a Lifeline’: Family Dollar Closings Could Increase Food Insecurity in Rural Areas,” WBTV, March 15, 2024.
[5] Claire Nguyen and Dr. Mildred Warner, “Dollar Stores: A Potential Threat to Independent Grocery Stores and Community Health,” Cornell University and Tompkins County Age Friendly Center for Excellence, January 2023.
[6] Alex Bitter, “I Went Shopping at One of Dollar General’s Food-Focused Markets for the First Time. I Wouldn’t Go Back Unless it Was the Only Choice I Had,” Business Insider, May 10, 2023.
[7] Dollar Tree, Inc., “Dollar Tree, Inc. Reports Results for the Third Quarter Fiscal 2023,” November 29, 2023; Net Lease Advisor, “Family Dollar Tenant Overview,” updated October 11, 2023. Calculation by ILSR.
[8] Linda Moss, “Dollar General Says it’s on Track to Open Roughly 800 Stores this Year,” CoStar, March 14, 2024.
[9] According to research by the National Grocers Association, there were 21,574 independent grocery stores in the U.S. in 2021, providing an average of 53.3 jobs per store and paying average wages of $36,363. The average Dollar General store employs 9 people (ILSR calculation, based on data from Dollar General’s 2023 annual report). According to the Economic Policy Institute’s Wage Tracker, 92 percent of Dollar General workers earn less than $15/hour.