Dollar store brands are facing a reckoning after customers slam the industry for selling expired items and creating ‘food deserts’

Dollar General
A sign is posted in front of a Dollar General store
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  • Despite strong sales and rapid growth, dollar store brands are receiving increasing backlash for dubious practices like selling expired products and contributing to food deserts by taking over retail space in low-income rural communities.
  • Dollar General, Dollar Tree, and Family Dollar were collectively fined $1.2 million for selling expired over-the-counter medicine, faulty motor oil, and failing to comply with New York state law policies regarding bottle deposits.
  • Politicians and industry leaders have started speaking out against the exploitative practices of dollar stores.
  • Visit Business Insider’s homepage for more stories.

As the retail apocalypse wages on, discount stores like Dollar General, Dollar Tree, and Family Dollar have been seemingly impervious to large-scale closures and substantial sales dips. However, not everyone is viewing the growth of this multi-billion industry as positive.

The backlash continues to swell against dollar stores, largely as a result of their rapid growth in the rural middle- and low-income communities where they’re edging out full-service grocery due to perceived competition and lack of retail space. In turn, many individuals in these regions lack access to healthy grocery options and depend on dollar store offerings that lack fresh produce.

Read more: Dollar General is dominating in America. Here’s how it keeps its prices so low.

Also adding fuel to the fire is a series of recent lawsuits against the three retailers for selling expired over-the-counter drugs, faulty motor oil, and failing to comply with New York’s bottle deposit law. Here’s a closer look at the reputational issues plaguing the dollar store industry.

Taking action against food deserts

Groceries at a Dollar General store.
Business Insider/Mary Hanbury

Across the three major dollar store companies, there are a total of 30,000 dollar stores in the United States in 2019, up from 10,000 in 2009, CNN Business reported. These stores are effectively displacing and disincentivizing full-service grocery stores from opening in the rural, low-income communities where dollar stores thrive.

“The business model for these stores is built on saturation,” Julia McCarthy, senior policy associate at the nonprofit Center for Science in the Public Interest, told CNN Business. “When you have so many dollar stores in one neighborhood, there’s no incentive for a full-service grocery store to come in.”

As a result, many community members are relying on dollar stores for their nutritional needs — despite the retailer’s inventory of sugary and fatty packaged foods and lack of fresh fruit and vegetables. To counter this, politicans have started taking matters into their own hands.

In July, the Mayor Randall Woodfin of Birmingham, Alabama passed an amendment to prohibit further dollar store openings as part of an effort to prevent food deserts in parts of the city. The legislation demonstrates larger scale efforts to push back on the ubiquity of dollar stores.

“Healthy foods are the cornerstone of a healthy community,” Josh Carpenter, director of Birmingham’s Department of Innovation and Economic Opportunity, said in a statement. “What we are trying to do is show our community that healthy residents make healthy workers, which will lead to a healthier economy. Making sure that people have access to healthier foods is fundamental to our work in not only recruiting grocery stores but other businesses.”

The outcry comes after Dollar General announced a pilot program of DG Fresh in March 2019, an effort to shift to self-distribution of frozen and refrigerated goods. Though Dollar General CEO Todd Vasos said on a call with investors last week that the initiative will provide the company with increased autonomy around grocery, with the hopes of integrating fresh fruit and vegetable in the future, it doesn’t seem like its in the cards any time soon.

“DG Fresh will eventually allow us to control our own destiny on our assortment in these categories,” Vasos said on the call. “This could include a wider selection of both national and private brands as well as an enhanced offering for our better-for-you items. And while produce is not included in our initial rollout plans, we believe DG Fresh could provide the potential path forward to expanding our produce offerings to more stores in the future.”

How dollar store products are endangering consumers

Discounted items in a haphazard pile at a Dollar General store.
Bethany Biron/Business Insider

Also complicating matters is a series of lawsuits against the major dollar stores for collectively selling expired products, resulting in total fines and damages of $1.2 million. On August 26, New York Attorney General Leticia James announced the culmination of a months-long investigation on the sale of expired drugs and unsuitable motor oil, as well as illegal practices regarding the bottle deposit law in the state of New York.

“It’s a tough pill for New Yorkers to swallow that the over-the-counter drugs they were buying may have been expired,” James said in a statement. “New York consumers have a right to expect that products on store shelves are safe, fresh and suitable for their advertised use.”

The fines will also effectively ensure that Dollar General, Dollar Tree, and Family Dollar improve their business practices and update their policies moving forward to avoid further legal action.

Among the most troubling findings, investigators discovered that Dollar General-branded motor oil is not viable for most engines created after 1930, and that the store failed to notify consumers otherwise. Additionally, several over-the-counter medications were months beyond the expiration date.

Moving forward, Dollar General, Dollar Tree, and Family Dollar have a significant amount of work to do to pay their debts, turn business practices around, and stop the acceleration of food deserts in the US.

SEE ALSO: Dollar stores are a billion-dollar industry. Here’s how they get customers to spend more money.

More: Big Box Dollar General Dollar Tree Family Dollar

https://www.businessinsider.com/dollar-stores-face-backlash-exploitative-practices-2019-9

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