The neon yellow of a Dollar General sign is as American as an apple pie. Since the early 2000s, dollar stores have sprung up like weeds all over the country.
Though unassuming at first, these weeds have started a downright infestation. And slowly but surely, their roots are squeezing every last cent out of working-class America’s pocket.
An Empire Built On A Dollar
The first Dollar General store opened in Springfield, Kentucky, in June 1955. Family Dollar followed suit in Charlotte, North Carolina, in 1959. Almost 70 years later, the dollar and variety store industry is worth around $94 billion.
The stores’ premise is simple. All inventory is at or right around a dollar, which, in theory, seems like a great deal—right?
How Everything Stays So ‘Cheap’
There are an estimated 34,215 dollar stores across the United States. That’s more than Walmart, CVS, Target, and Walgreens combined. “On average,” Crockett’s report reads, “a new one pops up every six hours.”
Dollar stores manage to stay in business by selling surplus, discontinued or old merchandise. For every $1 in sales, Dollar General and Dollar Tree earn an average gross profit of $.30. (Again, that’s more than Walmart, CVS, Target, and Walgreens’ profit margins.)
Dollar General also manages to skim off the top by partnering with name brands to create smaller-sized products that fit the store’s $1 price point.
“That $1 Old Spice deodorant might seem like a good deal,” Crockett says. “But at 0.8 oz, it’s less than one-third the size of the standard 3 oz stick. On a per-unit basis, it’s significantly more expensive than larger-sized offerings at other retailers.”
Counting On The Clueless (And The Cashless)
No one’s expecting the epitome of luxury at the dollar store. But wouldn’t the average American consumer be able to spot a scam in broad daylight?
According to Dollar Tree founder Macon Brock’s biography, those stores count on the answer being no. Dollar stores’ core demographic is lower-income families.
On the one hand, lower-income homes also tend to be less educated. They might be easily duped. On the other hand, these low-income homes might not have a choice. Even if they know they’re getting a bad deal, dollar stores are their only option with no wiggle room in the budget.
Plus, 75% of Dollar General stores serve areas with populations of 20k or less. The stores are strategically placed in food deserts and rural areas where grocery options are miles away.
So, these dollar stores are not so much enticing you with good deals as they are entrapping poor people into cheap ones.