Dollar Stores Vs Lettuce : Planet Money Every six hours a new dollar store opens in the U.S. Are they killing grocery stores?
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Dollar Stores Vs Lettuce

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Dollar Stores Vs Lettuce

Dollar Stores Vs Lettuce

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SARAH GONZALEZ, HOST:

Vanessa Hall-Harper seems like one of those people who are always in a hurry, always rushing. She walks into the public library in north Tulsa, Okla., carrying this folder that is completely stuffed with papers.

VANESSA HALL-HARPER: (Laughter) Yup, this is my bible. What is this - about 5, 6 inches thick (laughter)?

NOEL KING, HOST:

In that folder is everything that Vanessa Hall-Harper needed to fight the fight of her life.

HALL-HARPER: So it's just everything, totally unorganized (laughter).

GONZALEZ: Vanessa is from north Tulsa. And there's one issue that's been on her mind for years. north Tulsa does not have a grocery store - not one.

HALL-HARPER: Got plenty of churches and liquor stores, like most, you know, disenfranchised communities.

KING: Vanessa works in public health, and so she knows that people who live in north Tulsa die 12 years earlier than people who live in South Tulsa. And food is a part of that.

GONZALEZ: She decides to run for city council on a platform promising to bring a grocery store to north Tulsa.

HALL-HARPER: I started noticing that anytime there was any development whatsoever in my community, it was a discount dollar store. And I'm trying to figure out what is going on, right?

KING: Dollar stores - they keep popping up in north Tulsa literally within a few blocks of each other.

HALL-HARPER: And they were just popping up, popping up, popping up. And I was saying, this has to have an effect on the ability of a grocery store to come in and be successful.

KING: Because even though dollar stores are not grocery stores, they do sell groceries.

GONZALEZ: Like pasta and cereal and things like that?

HALL-HARPER: Yeah, those things that are horrible for you (laughter), that causes diabetes and all those types of things. Yes.

GONZALEZ: Dollar stores don't usually sell fruits or vegetables or meat. That is not where the profit is. Grocers say they don't make the real money selling carrots and lettuce. They make the real money selling Twinkies and Cheetos and, like, paper towels. And dollar stores - they really only sell those high-profit items.

KING: So at this point, there are already 10 dollar stores in Vanessa's district, and an 11th dollar store is asking to open. So she's like, hold on; let's not approve this just yet. I actually think this is going to make it harder for me to get a grocery store in here.

HALL-HARPER: And there was - a couple of councilors were like, well, there's no studies to show that what you're saying is accurate. I don't need no damn study, OK? I have common sense.

(SOUNDBITE OF CHUCK CASSEY'S "TULSA TUMULT")

GONZALEZ: Hello, and welcome to PLANET MONEY. I'm Sarah Gonzalez.

KING: And I'm Noel King. Today on the show, should we hate dollar stores?

GONZALEZ: This year, a brand-new dollar store will open up every six hours. There are more than 30,000 dollar stores in the United States. That's more than there are Walmarts, McDonald's and CVS stores combined. Dollar stores are everywhere.

KING: And they are setting up in places that no one else will go - tiny towns, urban areas. So are they filling a need, or is the dollar store takeover destroying something more valuable?

(SOUNDBITE OF CHUCK CASSEY'S "TULSA TUMULT")

GONZALEZ: OK. Vanessa Hall-Harper has 10 dollar stores in north Tulsa. And she wants to consider preventing an 11th from coming - not in all of Tulsa, just in her district, the north side. But she needs the support of the whole city.

KING: Instead, the local chamber of commerce calls her anti-business.

GONZALEZ: And Vanessa's like, I'm not anti-business. I'm just saying we should have at least one other type of business.

HALL-HARPER: I was told this was illegal, you can't do this, that, you know, I don't think this is possible, I think this is illegal, you know, we're going to get sued and blah, blah, blah. And I didn't care about getting sued as long as we won. And that's not necessarily (laughter) the position of some people in the legal department. And I get it. You know, they don't want to invite litigation. But in my opinion, as I told them, that's your job. This is called the legal department. It's your job to protect us.

(LAUGHTER)

GONZALEZ: So you have a lot of friends in city government.

HALL-HARPER: (Laughter) Yes, I have a lot of friends - a lot of friends - not.

(LAUGHTER)

KING: Cities don't like to just say no to new businesses. So they approve the 11th dollar store - the one that Vanessa was fighting against.

GONZALEZ: And her reaction is hilarious. She starts protesting outside, telling people, don't come to this dollar store. At least go to the one across the street. We never wanted this one.

KING: Yeah. Even though she had lost the 11th dollar store battle, she was still fighting the dollar store war.

HALL-HARPER: I said, really? I said, OK. So I started doing my research.

GONZALEZ: There are three main dollar store chains. Dollar Tree sets up in the suburbs. Everything they sell costs exactly $1. And Family Dollar and Dollar General open up in urban and rural areas. They sell everything from canned foods to clothes and toaster ovens - not all for a dollar, but generally at a discount. They're like mini-Walmarts for towns Walmart ignores.

And dollar stores also employ fewer people. If you don't need someone making sure the chicken didn't go bad or the tomatoes aren't all shriveled up, you can operate with much leaner staff. On average, dollar stores employ nine people when local grocery stores employ 14.

KING: The dollar store that is growing the fastest is Dollar General. They have 15,472 stores in this country. That was as of March 1. By comparison, Walmart has about 5,000. Dollar General turned down our request for a recorded interview, but they did tell us that they know their customers and that their customers are only willing to travel about 3 to 5 miles to shop with them, and that is why they open up stores so close to each other.

GONZALEZ: And all of this could mean that the market is working. People are shopping at dollar stores, voting for what they want with their dollars. But sometimes, people vote for what they want with their votes at the ballot box. And in north Tulsa, they elected Vanessa Hall-Harper specifically to bring a grocery store.

KING: Vanessa keeps building her case that dollar stores keep grocery stores from surviving. And she finds out about a guy in the town of Haven, Kan., a couple hours north, Doug Nech.

DOUG NECH: My title was president.

GONZALEZ: And your title now?

NECH: Flunky.

GONZALEZ: Aw, no.

NECH: Cleanup guy.

GONZALEZ: Doug is unlocking what's left of his grocery store.

NECH: Leave the keys in the door. Nobody's coming.

GONZALEZ: Wow. I don't think I've ever seen an empty grocery store. Did this used to have a...

NECH: Bananas.

GONZALEZ: Bananas.

NECH: Banana rack.

GONZALEZ: Onion remnants.

NECH: Onions, potatoes on the bottom.

KING: This was the only grocery store in town.

GONZALEZ: Haven, Kan., has about a thousand residents. It's a tiny town surrounded by fields. And for Dollar General, it was the perfect market. Most of their stores are in towns with less than 20,000 residents. They set up 0.3 miles from Doug's store.

NECH: The first day Dollar General opened, we lost almost $700 in sales. They never even had to advertise. They just...

GONZALEZ: The first day?

NECH: Yeah.

KING: And Doug would go in, and he would walk around the Dollar General. He would check out the competition.

NECH: I'd look at their prices. And I happened to notice one day that they were selling a 14 1/2-ounce can of Campbell's Chicken Noodle soup, name-brand soup, for a dollar. So I come back down here, and I call my warehouse.

GONZALEZ: Calls his soup guy and says, this same can is costing me...

NECH: From my supplier, freight delivered to the store here, about a dollar-fifty. And mine's only 11 1/2 ounces. He called his Campbell's soup representative and asked him, why is this? He said, well, we only make it for them. And we only make it in a 14 1/2-ounce can.

GONZALEZ: Specifically for Dollar General?

NECH: Specifically for Dollar General.

KING: Dollar General buys in bulk, so Campbell's will make some things for them cheaper. Those cheaper products are great for regular shoppers, but they are not great for Doug.

GONZALEZ: People were still shopping at Doug's store, though. He had held on to 70% of his business. They were choosing to spend a lot of their grocery money with Doug.

KING: Although, to put it another way, he had lost about a third of his business.

NECH: We just went down, and nothing ever - we never popped up.

GONZALEZ: He couldn't keep the lights on, had to close.

NECH: You know, they'd say, oh, we just hate to see you close. Well, you tell me. I've sat here for 972 days or whatever losing $700 a day in sales. What do you want me to do? What can I do?

KING: For Vanessa Hall-Harper back in north Tulsa, this was the perfect dollar store horror story. But she needed hard evidence of a connection. And then, one big grocery store chain gave her the evidence. They were interested in coming to north Tulsa, but they actually told Vanessa, if you're just going to have dollar stores popping up constantly forever in this district, it might not be worth it to us.

HALL-HARPER: They had written this letter, and I'll read it. (Reading) While we welcome healthy competition, it is our opinion that a market oversaturated with small convenience-type dollar stores would negatively affect Honor Capital's ability to add future stores throughout Tulsa's underserved grocery communities. And this - I mean, this was very instrumental. This is a grocer.

GONZALEZ: What they're saying is the market is already crowded. So Vanessa's like, how can we legally keep it from getting worse?

KING: And you know who's really good at getting the businesses they want and keeping out the ones they don't want? Wealthy towns.

GONZALEZ: She learns about a city in Southern California, Coronado, that has what's called formula business restrictions. Formula businesses are chains.

HALL-HARPER: And in that community, they had a policy in place that at no time will there ever be more than 10 national chain stores. I don't care if it was a McDonald's, Burger King, whatever. Any national brand - no more than 10. And so that was the commitment.

KING: The city of Coronado got sued, but they won. And now Vanessa has a real-life example of a city restricting business on the grounds that it is good for the city. And there are actually a bunch of cities that do this.

GONZALEZ: Restricting chains in particular isn't what Vanessa wanted, but it was similar. She still had to convince the zoning and legal departments, though. They held two public meetings in Vanessa's district and finally were like, OK, people want this. Here's what they came up with. No dollar store can open up within a mile of an existing dollar store - dollar store zoning.

HALL-HARPER: We identified each existing store and put a 1-mile radius circle around it. There's no more room for any more discount dollar stores.

GONZALEZ: So there is no place in north Tulsa where a dollar store can open up that will be a mile away from another dollar store?

HALL-HARPER: Not in these boundaries, correct.

GONZALEZ: So this 1-mile marker is really the loophole that you found to prevent any new stores from coming because there is no space.

HALL-HARPER: Exactly, because they proliferated so - already.

GONZALEZ: What Vanessa really wanted was for people to have access to healthy food - big picture. So their proposal would also sweeten the deal for grocery stores. Normally, they have to have a lot of parking spaces. This would cut the number of spaces in half. Also, people with community gardens - they would be able to sell any produce they grow right out of their garden, no permit required. That's not allowed anywhere else in Tulsa.

KING: So the proposal comes up for a vote, and the people of north Tulsa pack into city hall.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED COUNCILOR #1: If you’re for it, I have to cut you off because this is - we're talking about the other side. And I know...

GONZALEZ: It gets pretty contentious. One person is like, look; the 11th dollar store heard your protest. They offer some fruits and vegetables now. And we are choosing to shop there.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON: In spite of it being boycotted, protested against, the north side residents is patronizing the same Dollar General.

KING: The city councilors are listening to this. They're hearing everyone out. And they're also raising their own concerns. One of them, who has a background in economics, is like, this sounds like fences. This sounds like preventing business. That's not good. Another city councilor thought the proposal just didn't have enough detail.

(SOUNDBITE OF ARCHIVED RECORDING)

KAREN GILBERT: For me, the hard part of this is - and please don't start throwing tomatoes and stuff like that at me, OK?

BLAKE EWING: They don't have tomatoes. They would have...

GILBERT: Well, don't start throwing Cheetos.

EWING: Packages of Twinkies and stuff.

GILBERT: OK. OK, OK. OK. OK, here we go. I can't vote in favor of this.

UNIDENTIFIED COUNCILOR #2: Councilor Ewing?

EWING: Yes.

UNIDENTIFIED COUNCILOR #2: Councilor Gilbert?

GILBERT: No.

GONZALEZ: Limiting dollar stores passes...

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED COUNCILOR #1: Passes.

GONZALEZ: ...Barely - 5-4.

(APPLAUSE)

GONZALEZ: In effect, no more dollar stores can open up in north Tulsa.

KING: Of course, the dollar stores don't give up that easily. Two new ones open up right on the edge of the restricted area in north Tulsa.

GONZALEZ: But this dollar store ban started to resonate all over the country. New Orleans, north St. Louis, Haskins, Ohio - they all called Vanessa Hall-Harper saying, we have too many dollar stores, too. How can we do what you did?

KING: Mesquite City, Texas, just went ahead and passed the restrictions right away.

GONZALEZ: And what north Tulsa did is make room in the market for a grocery store. They are trying to prop up a business that hasn't worked in the free market. But north Tulsa is still a market. In order for a grocery store to survive, it will have to be better than the 11 dollar stores.

KING: Coming up after the break, how one grocery store made one of the most charming changes we've ever heard of to compete.

GONZALEZ: I went to a local grocery store in Conway Springs, Kan. - the wheat capital of the world, a place so quiet you can hear the grass in the wind. It's a farming town with about a thousand residents.

KING: Jenny Osner and her husband, Clint, own the only grocery store in town.

JENNY OSNER: We're homegrown. That's what we like to say. So high school sweethearts.

GONZALEZ: Really? Were you a cheerleader?

J OSNER: Maybe.

GONZALEZ: I was a cheerleader, also.

(LAUGHTER)

GONZALEZ: High school sweethearts built their store from the ground up. Then, Dollar General decided to open up right in front of their store. Like, here we are, your competition, right across the street.

KING: The Osners saw their sales start to decline, and they decided to compete.

GONZALEZ: Now they're open later, and they work longer on Sundays. And all of this is good for consumers.

You did that because of the competition - you extended your hours?

CLINT OSNER: Yeah, we figured we needed to because our hours weren't what they should've been in the beginning. We know we should probably be open till 9 in the summer every day, but we still like that little bit of family time that we have left, so.

GONZALEZ: And they've tried to find a niche, something they have that Dollar General doesn't, like the coldest refrigerator in town.

J OSNER: Our milk cooler's very cold. It's very well-refrigerated, and so coldest milk in town, coldest beer in town. We take pride in that.

GONZALEZ: (Laughter) Coldest milk and beer in town.

J OSNER: You know, sometimes it's whatever works, right? And that works for us.

GONZALEZ: They also have a pretty intense meat department.

C OSNER: We do a boneless barbecued baby back ribs. We - bone-out Boston butts a lot of times. It just takes a little extra time.

GONZALEZ: Bone-out Boston butts?

C OSNER: Yeah. That's a butcher term, I guess.

KING: And, look; there are examples of grocery stores surviving dollar stores, just like they survived Walmart, which Jenny and Clint did.

GONZALEZ: But dollar stores are different. Walmart is cheap, but dollar stores have this way of making us feel like they're way cheaper. I mean, they're called dollar stores. But they're not always a good deal when you compare prices pound for pound, ounce for ounce.

KING: So back in north Tulsa, Vanessa's long battle to bring fruits and vegetables and meat to her neighborhood - it worked.

GONZALEZ: You have a grocery store coming?

HALL-HARPER: Yes.

GONZALEZ: Like, you know who they are?

HALL-HARPER: Yes. I just can't say it yet, but it's a done deal. We will be breaking ground hopefully late summer. So yes, we have a grocery store coming.

GONZALEZ: They did also get some federal grant money for their grocery store.

As a district that has 11 dollar stores, do you think that that grocery store will be able to survive when it has 11 dollar-type stores to compete with?

HALL-HARPER: Yes, we are very hopeful that it will because I'm going to educate and work and encourage my constituents, look; if we don't support this store, we won't have it, and you'll still be complaining about the same thing you've been complaining about for the last 10 years - that we don't have quality groceries in our community.

GONZALEZ: Some things in the grocery store will be more expensive than the dollar-type stores. But we as consumers regularly pay more for the things we want, including low-income consumers. Like, we might pay more for the coldest milk in town.

KING: And people in north Tulsa might pay a couple cents more to have access to the vegetables they like, like mustard greens. That is what Vanessa really wants.

(SOUNDBITE OF SONG, "TULSA, OKLAHOMA")

UNIDENTIFIED SINGER: (Singing) There they go, moving slow 'cause that's the way in Tulsa, Okla.

KING: If you have a story idea, we would love to hear from you. You can email us - planetmoney@npr.org

GONZALEZ: Today's show was produced by Darian Woods and Liza Yeager.

KING: Bryant Urstadt is our editor. And Alex Goldmark is our supervising producer.

GONZALEZ: Special thanks to Michael Stavola with HutchNews for putting us in touch with Doug Nech. And thanks to Eldar Shafir at Princeton University. I'm Sarah Gonzalez.

KING: And I'm Noel King. Thanks for listening.

(SOUNDBITE OF SONG, "TULSA, OKLAHOMA")

UNIDENTIFIED SINGER: (Singing) And spread your wings. Let's fly right out to Tulsa, don't you know?

GONZALEZ: OK, so maybe there are too many dollar stores, but I grew up loving the one where everything costs exactly $1. People here were skeptical that you could find good quality stuff. Challenge accepted.

KING: OK. What have you got?

GONZALEZ: So I bought...

KING: You have things wrapped in newspaper. Wait; this is fancy. It's like a wine glass tumbler.

GONZALEZ: Like, high quality.

KING: Glade air freshener.

GONZALEZ: Clean linen.

KING: Name brand. What are these?

GONZALEZ: Bath bombs.

KING: Oh, my God - for a dollar.

GONZALEZ: In the shape of a mermaid tail. Hallmark thank-you cards - eight pack.

KING: I would actually use...

GONZALEZ: You can have them.

KING: Can I have them?

GONZALEZ: OK. This is the beauty of the receipt - 24 items, $25.91.

KING: But that's including tax.

GONZALEZ: Tax - a dollar.

KING: A dollar.

GONZALEZ: A dollar, even. There is something so satisfying about seeing a long receipt with only $1 on it.

KING: That is a nice-looking receipt, I agree.

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