Dollar Stores Are the ‘Fastest-Growing’ Food Retailers In US, Study Finds

As the cost of everything from food to gas goes up, Americans—especially in rural areas—are getting a bigger share of groceries at dollar stores.
Dollar Stores Are the ‘Fastest-Growing’ Food Retailers In US, Study Finds
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Most Americans are struggling to find cheaply-priced eggs and other groceries, but their options for where to buy them have also been shrinking over the years.

A study published on Thursday in the American Journal of Public Health looked at data from 50,000 households collected between 2008-2020, looking at trends in household food purchases by type of store. What they found is that a smaller share of food purchases are being done at grocery stores, and a growing amount of food is bought at dollar stores, as well as larger shopping centers and department stores.


While dollar stores are still nowhere close to the share of household food purchases of grocery stores, they drew particular alarm from researchers because of the rate at which they’re growing and their lack of fresh food options. Researchers said dollar stores, “offer foods that are mostly packaged, shelf-stable, higher in calories, and lower in nutrients.”

According to the study, households spent an average 62.3 percent of their food budget in traditional grocery stores in 2008, which decreased to 58.3 percent by 2020. Most of that difference was made up by club stores like Costco, which  require a membership and where customers typically buy in bulk. Their total share of Americans’ household food budgets increased by 2.4 percent. This was followed by supercenters (think Walmart) which increased their share by 1.5 percent, and dollar stores, which increased their share by 1 percent. While that might not sound ominous, researchers said “dollar stores were the fastest growing retail channel,” for food purchases, with an 89.7 percent increase between 2008-2020.

The trends varied by region: Southern households spent the most on food in dollar stores, households in the West coast spent the least. And “rural non-Hispanic Black” shoppers spent 11.6 percent of their food budgets in dollar stores, the most of any demographic group in the data

The growth was more pronounced in rural areas, where Dollar Stores increased their share of household food purchases by 102.9 percent. Much of that growth was attributed to two large chains, Dollar General and  Dollar Tree (which owns another large chain, Family Dollar). Dollar General alone opened 1100 retail locations last year and plans to open another 1050 this year.  An analyst told The Wall Street Journal in December that dollar stores thrive in rural areas because “They really can outcompete the local grocer in a smaller market.” 


“On the one hand, dollar stores may challenge and force out local grocers through competitive pricing, leaving consumers with limited, less-healthy food options,” one of the study’s authors, Wenhui Feng, Tufts Health Plan Professor of Health Care Policy wrote Motherboard. “On the other hand, in some places, local grocers may not have enough business to support maintaining a store, or that grocery stores’ consolidation may leave residents with less food options. In these cases, dollar stores may be the only option in terms of food access.”

When supercenters began taking over a larger portion of peoples’ food budgets, there was a similar concern about a lack of healthy food options, Feng said, but, “Over the years, as supercenters offered a larger variety of foods, such concerns subsided.”

Dollar General claimed to have more physical locations than any other retail outlet in the U.S, according to a December earnings call. Facing criticism for taking advantage of food deserts, Dollar General’s CEO said that the chain already sold fresh produce in 3,000 of their over 18,000 stores, and plans to up that number to over 10,000 

According to Forbes, a big reason more consumers are buying their groceries at dollar stores is their ubiquity, which factors into costs of living: residents who may prefer grocery stores can’t afford the gas costs if they have to drive 20 miles to a grocery store, but there’s a dollar store nearby. There is a Dollar General within 5 miles of 75 percent of the U.S. population, according to Forbes. The outlet said Dollar General uses an algorithm to propose new locations, which takes into account population density and traffic patterns.

Some cities have been cracking down on the expansion of dollar stores, concerned about growing food deserts. 

The City of Birmingham, Alabama banned new dollar stores opening within one mile of an existing one. They also allocated $500,000 to spur the development of new grocery stores. Forth Worth, Texas requires new dollar stores to be at least 2 miles from an existing store and requires that they devote 10 percent of their floor area to fresh food. Dekalb County, Georgia established a moratorium on new dollar stores that has been in effect since December 2019. According to the Institute for Local Self-Reliance, there are also restrictions on dollar stores in Kansas City, Kansas; New Orleans, Louisiana; Akron, Ohio; and Oklahoma City and Tulsa in Oklahoma.