I see dollar stores in towns that still have grocery stores. I see even more in towns where the grocery store has already closed.

That is not a coincidence.

Dollar stores are not good for your community

We can argue all day about whether dollar stores are “good” or “bad,” but we should at least be honest about what they bring: shelf-stable food, limited fresh options, and profits that largely leave town.

Walk the aisles. The canned goods are loaded with sodium, so they last longer. The drinks are mostly sugar. The bread is not fresh. The options lean heavily toward processed, packaged, and cheap. That is the business model.

And it works — especially in places where people have fewer options.

Dollar stores tend to locate where access is already limited: smaller towns, lower-income areas, seniors without transportation, kids who can walk there. When those are the most convenient options, those products become habits. Not because people do not care — but because convenience wins.

Sean Park has watched this play out across rural Illinois for years. As program manager with the Illinois Institute for Rural Affairs at Western Illinois University, he put it plainly in an article in Farm Progress: “Dollar (store) has a very extractive model, especially in rural America. They hire the minimum number of people they can at the minimum pay. They’re often built on the edge of town or just outside of town to avoid any sales tax that goes into schools and roads.”

That is not an accident of geography. It is the plan.

Local stores can’t compete

Dollar stores are making it impossible for independent grocery stores to compete.

Independent grocers already run on razor-thin margins — some rural grocery stores report net margins as low as 1%, meaning a $20,000-a-week store might clear only a few hundred dollars in actual profit. There is no cushion left to absorb a competitor stealing sales.

Here is why dollar stores break that model so easily.

They cherry-pick the profitable categories — snacks, drinks, paper goods, cleaning supplies — and skip the expensive stuff. Grocery stores rely on those same high-margin items to subsidize the low-margin, high-cost work of selling perishables: refrigeration, spoilage, staffing for fresh departments. Take away the profitable categories and leave the fresh food burden behind, and you have gutted the grocer’s ability to cover its own costs.

Backed by shareholders and institutional investors, dollar chains can also afford to operate at a loss in a town until the local competitor folds — something a family-owned grocery store can never match. They negotiate directly with manufacturers and order in bulk through centralized distribution, locking in unit costs independent grocers can’t touch.

And research shows they don’t spread out — they deliberately put new stores on the same block or across the street from a town’s only grocery store, stacking the deck instead of sharing the market.

None of this is new, either. For decades, large chains have negotiated better wholesale pricing from suppliers than small independents get for the identical product, an advantage independent grocers can never get close to no matter how well they run their stores.

The numbers back this up.

The USDA’s Economic Research Service found that independent grocers in rural areas are roughly 3 times more likely to close after a dollar store opens nearby than grocers in cities — with employment declines 2.5 times larger, and effects that don’t fade the way urban ones do after a few years.

A UCLA Anderson study found that for every 3 new dollar stores in a town, an area loses roughly 1 independent grocery store — and low-income households cut their fresh produce spending by about 15%.

A University of Connecticut study put the rural exit risk at nearly 3 times higher than average, too.

Three different research teams, three different methods, the same answer.

But dollar stores are not the only problem.

We approve them.

City councils sign off. Incentives get offered. We tell ourselves we are growing the tax base, even when those incentives reduce what they actually contribute. We rarely stop to ask how much money stays local, how many people they employ, or whether they reinvest in the community.

I do not see dollar stores sponsoring the local ball team. I do not see the dollar stores deeply embedded in the life of the town.

If we are frustrated by the outcome, we need to make a change.

North Tulsa, Oklahoma. Some towns have decided to stop approving on autopilot. In 2017, City Councilwoman Vanessa Hall-Harper pushed through a six-month moratorium on new small-box discount stores in North Tulsa after watching them multiply in her district while grocery stores disappeared. The moratorium bought time for hearings and research. In 2018, the city council followed it with a permanent “Healthy Neighborhood Overlay”: no new dollar store within one mile of an existing one, plus a 50 percent cut in parking requirements for any grocery store that wanted to move in. It was not a ban on dollar stores. It was a decision to stop stacking them on top of each other and to make room for something else.

This was a zoning decision, not a federal lawsuit, and any city council can make one. That is the part worth sitting with: the tool already exists, and it does not require Washington’s permission.

But it is not just big cities. Our small towns are taking action too.

Joseph, Oregon — population around 1,200. After a dollar store opened just outside town in nearby Wallowa, residents flooded the planning commission with objections. In June 2024, the Joseph City Council unanimously passed an emergency “formula business” ordinance banning chains with standardized architecture, signage, and color schemes from the commercial zone — worded broadly enough to cover dollar stores without naming them directly. Mayor Lisa Collier framed it as protecting the town’s character and its mom-and-pop businesses. Joseph borrowed that “formula business” language from a wealthy resort town’s ordinance — proof this tool isn’t just a big-city legal maneuver.

Fate, Texas — population roughly 19,000, a fast-growing Dallas suburb. In 2021, it made chain dollar stores a “conditional use.” A permit is granted only if the store won’t threaten nearby healthy-food retailers.

Tangipahoa Parish, Louisiana  — a rural parish where every town is well under 25,000 people. In January 2025, it blocked a dollar store application outright, then followed with a six-month moratorium and a permanent two-mile separation rule parish-wide. They believe there will be a negative effect on the health, safety and welfare of the community. So, they used their police powers (Tenth Amendment to the U.S. Constitution)   to reject dollar store development proposals. Newton County, GA did the same thing.

Local approval is the lever we actually control.

If we want better outcomes, we have to build them — step by step.

Start smaller.

Instead of jumping straight to a full market, create a pop-up traveling farmers market. If your town cannot support it daily, build a route across several communities. Show up once a week. Test demand. Let people get used to buying fresh again.

Are you growing watermelons and showing up on empty lots selling them? Entrepreneurs do that. You could add your own produce or a neighbor’s produce to the mix. What else could you sell by partnering with your neighbors? Fresh cut flowers from local gardens, nuts in season, community garden items — try a few and test the idea.

These small steps can grow into bigger successes. Ripe for Revival, a nonprofit in Rocky Mount, North Carolina, runs a fleet of retrofitted school buses and trailers stocked with locally grown produce, eggs, dairy, and meat across rural counties. It buys surplus crops directly from North Carolina farmers and sells at about 20% below retail. It now covers 14 counties, with a partnership expanding it into eight more through 2027 (NC State/CALS). It helps farmers find outlets for their crops while getting families fresh food — a win on both ends.

Test your ideas.

In Webster City, Iowa, we helped create an informal business incubator using empty buildings. The structure was simple: free rent for three months, reduced rent for the rest of the year, and the tenant pays utilities. The chamber supported marketing, and the SBDC helped them build a business plan while they were actually in business.

Three businesses tried it. One failed quickly — which is okay at that scale. One left for a better family opportunity. The third succeeded, expanded, and bought the building next door. They sell clothing for young people. They also have a small specialty grocery store. They now offer space for entrepreneurs to try out their ideas too.

That is how you build local businesses — through small, manageable steps.

Scale into shared spaces.

The Mercantile in Colfax, Washington, divided an empty storefront into smaller, affordable spaces and created a collection of shops — retail, makers, and entrepreneurs all under one roof – including frozen yogurt and grab-and-go sandwiches. Those food items are seldom found at a dollar store!

That model could easily include more fresh food, local products, and more small-scale vendors. It lowers the barrier to entry and creates energy in downtown areas.

Fix the real estate problem.

In Rocky Ford, Colorado, Julie Worley tackled high rents head-on. She worked with a building owner to adjust rent structures so new businesses could afford to get started. One tenant paid a reduced rent and used the difference to cover needed improvements. Over time, she recovered her investment, the building got needed repairs, and the community had a coffee shop to support.

Julie helped seventeen business open during her time in Rocky Ford, one building at a time.

None of these ideas are flashy. None are instant.

But they work.

If we want healthier communities, stronger local economies, and better options for our residents, we cannot just react to what shows up.

What can you do?

If you’re an economic developer: pull your last three years of retail incentive approvals and ask how much of that investment actually stayed local. Bring the answer to your next council briefing. Discuss how that money can be better used for local businesses.

If you’re on a chamber board: call one property owner about splitting an empty building instead of waiting for one tenant who can fill it all.

If you’re organizing against a dollar store in your town: don’t just protest the store — bring your council a copy of Tulsa’s Healthy Neighborhood Overlay or Joseph’s formula business ordinance and ask them to adapt it.

If you’re a resident who just wants better food: find one grower, one baker, one neighbor with extra produce, and ask them if they’d show up to a pop-up market with you next Saturday.

Dollar stores are not the root problem. They are a symptom of what we allow, what we incentivize, and what we fail to build.

 

Sources: Farm Progress; POS Nation; KCUR; UCLA Anderson Review; ILSR, “17 Problems”; ILSR, “The Dollar Store Invasion”; ILSR on Robinson-Patman; USDA Economic Research Service; UCLA Anderson study, 2025; University of Connecticut; NC State/CALS, Tulsa’s Healthy Nieghborhood Overlay, ILSR Adopt Dollar Store Regulations