Written by Jessica DiNapoli and Kylie Kang
NASHVILLE (Reuters) – Almost every day, Latrina Begley, 37, of Nashville, or one of her six children, shops at the Family Dollar down the hill from their home, using federal food stamps to buy Hot Pockets or frozen pizza and pantry staples. Like milk.
But Family Dollar shuttered the location earlier this year, as part of closing nearly 1,000 of its 8,200 stores, a move aimed at boosting profits. The largest US anti-hunger safety net, the Supplemental Nutrition Assistance Program (SNAP), formerly called food stamps, was cut last year after the end of the Covid pandemic hit retail sales in the months before the lockdowns.
Purchases made with SNAP account for $11 of every $100 spent in chain transactions, according to retail research firm HSA Consulting.
The closure left Begley with only a few convenience stores within a mile of the former Family Dollar, expensive options she couldn’t afford. The USDA has designated her neighborhood, in a historically black part of Nashville, as low-income and struggling to access healthy, affordable food, an area previously called a food desert.
“It’s harder for us and me,” said Begley, who works for the city’s housing agency. “I have to stop after work, otherwise we won’t have anything to sleep on.”
Begley said she relies on her mother to help with child care and make ends meet, and if she doesn’t have her own, she will turn to food pantries.
Most of the roughly 1,000 Family Dollar stores closing are in areas where there was competition from other low-cost food retailers like Walmart (NYSE:), according to a Reuters analysis of data from the SNAP retailer locator. Family Dollar’s parent company, Dollar Tree (NASDAQ:), does not share the locations of closed stores, but Reuters was able to find and analyze 648 closed Family Dollars using a locator.
Fifteen of them are located in urban neighborhoods like Bigley where poverty rates are high and only convenience stores and drug stores are within a one-mile drive, a distance widely used to measure consumers’ access to food.
The closures come after executives at the retailer’s parent company late last year linked declining sales to reductions in food benefits, saying the “monthly deceleration” in sales at Family Dollar “is offset by gradual reductions in national (food benefit) payments.”
Policy experts, professors, community leaders and health care providers told Reuters that the closures, after an extended period of high inflation, will worsen access to grocery stores in poor communities like Begley’s that rely on federal food benefits and dollar stores.
Food prices at drug stores and convenience stores are often much higher than at dollar stores like Family Dollar, which offers a wide selection of inexpensive private-label items and enjoys influence with suppliers because of its size.
The chain noted that its stores serve low-income people on shopping trips to “fill up” necessities between visits to large centers or supermarkets. But shoppers who use food perks at dollar stores rely on them for meals and staples more than shoppers who use all forms of payment, and they buy cereal, milk, bread, soup and frozen dinners more often during their visits to stores, according to Food and Agriculture Organization data. The year ended August 11 from research firm Circana shared it exclusively with Reuters.
A spokesperson for Dollar Tree, Family Dollar’s parent company, said the retailer’s focus is “identifying opportunities to position Family Dollar for long-term success through continued investment in new and existing stores.”
The Chesapeake, Va.-based company, which posted gross profits of $4.6 billion in the six months ended Aug. 3, said it is also looking to sell or spin off Family Dollar.
The spokesperson added that customers can use their food benefits on the delivery app Instacart (NASDAQ:) to order from Family Dollar.
However, purchasing groceries at Family Dollar through Instacart is often more expensive than in stores, and customers cannot use food assistance to pay delivery and service fees.
“In these neighborhoods, the place where people shop is being removed, where they are buying more food than ever before,” said Sean Cash, an economist and professor at the Friedman School of Nutrition Science and Policy at Tufts University. “This will make access to food more difficult.”
Store closures limit food options
The poverty line is about $30,000 for a family of four, and the USDA considers a census tract or neighborhood “low-income” if more than 20% of people earn less than that number, depending on the size of their family.
With Family Dollars closed, those profits are being purchased much less at stores like Walgreens or 7-Eleven or local convenience stores and gas stations that remain open.
For example, an eight-piece package of Park (NYSE:) beef hot dogs costs $4.95 at Family Dollar, versus $5.99 at Walgreens. In Nashville at Salem Market, a convenience store located in a Shell (LON:) gas station, a 12-ounce can of Honey Oats was $5.99. At Family Dollar, the same item costs $3.75, according to the Family Dollar website.
Most Family Dollar locations don’t offer fresh fruits and vegetables, but for communities that have little else, closures further limit residents’ options for purchasing food. The stores also sell budget household essentials including laundry detergent, dish soap, and toiletries.
“When these places close, it exacerbates a problem that already exists,” said CJ Sentell, CEO of the Nashville Food Project, a nonprofit that distributes food to hungry people in the city. North Nashville — where a Family Dollars store recently closed — has convenience stores and corner stores, some of which don’t even sell milk, but very few grocery stores, he said. Closing dollar stores makes grocery access worse, he said.
“It’s not the best food, but we can’t let perfect be the enemy of good,” Sentell added.
Since 2019, 61 municipalities including Chicago and Tulsa, Oklahoma, have taken a less positive approach to dollar stores, passing ordinances limiting their expansion on the grounds that they undermine local grocery stores, according to the Institute for Local Self-Reliance, a nonprofit. Family Dollar did not respond to questions about such concerns.
Dollar stores – although they all now sell merchandise for more than $1 – are among the fastest-growing retailers in the United States. Two companies, Dollar Tree, which owns and operates Family Dollar, and its larger competitor, Dollar General (NYSE:), operate approximately 37,000 dollar stores.
Executives at parent company Family Dollar said in June that it had not invested enough in many of the stores it was closing, and that repairing them would be too expensive.
But the retailer is also continuing to expand in some regions, opening 69 new stores and moving 19 stores in the half-year ended Aug. 3, according to company disclosures.
In analyzing its data, Reuters found that the retailer opened just one store in an area with high poverty rates with only drug stores and convenience stores nearby. The store, located in Norfolk, Virginia, is the reopening of a previously closed store, according to local news reports.
Tonya Young, 53, of Nashville, shops at Family Dollar frequently, looking for name-brand snacks that can feed her three grandchildren who live with her.
“The prices are absolutely cheaper than Kroger (NYSE:), Walmart, and Target,” she said, adding that she received food stamps until the beginning of this year and also recently qualified through one of her grandchildren.
She has turned to the resource center at Healing Minds and Souls, a local nonprofit, more often since a Family Dollars in North Nashville closed. Ella Clay, executive director of Healing Minds and Souls, said more people were using the centre, which contains food and personal items, after the chain of deals closed.
Stanley Chase, 64, who sells copies of The Contributor newspaper, previously relied on a closed Family Dollars in North Nashville, located less than a half-mile from his apartment in a city-run building. He made entire dinners out of canned goods, meat, eggs, and store-bought milk.
Chase, a veteran who uses a wheelchair, does not have a car and supplements his income with food assistance. He said he now faces a one-hour bus ride to Kroger, and when he can’t make that trip, he heads to a convenience store where he spent $8 on hot dogs, more than double the price of those at Family. dollar.
He said his customers give him snacks like Nutrigrain and Millville granola bars, and save them until his next trip to the supermarket.
Nutritional benefits led to higher sales
Family Dollar began laying the groundwork to accept food benefits about 20 years ago, hoping to boost sales. Stores installed coolers and expanded their food merchandise to qualify for the government program.
The investment paid off, and in the wake of the 2008 recession, Family Dollar’s sales soared.
Shoppers, who have cash on hand thanks to extra food stamp allotments, have also flocked to Family Dollar during the pandemic, stocking up on food and additional discretionary items like toys and clothing.
The retailer said in March that it would close about 600 Family Dollar stores over the next six months, and another 370 as leases expire. From early February to early August, $657 were closed, according to securities filings.
In the Shepherd neighborhood of Columbus, Ohio, Felicia Manz, a senior who was reluctant to reveal her age, has been facing a similar situation to Begley and Young since the closing of a Family Dollar a short distance from her home. Mann does not have a car and often uses a wheelchair.
She said she shops at a nearby convenience store out of “desperation” and pays her family or buys gas for them to take to Kroger. She said the community in Shepherd has been feeling “ignored” since the chain and nearby fast food restaurant Wendy’s (NASDAQ:) closed.
“It really tore us all apart,” she said.
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