By Jessica DiNapoli and Kaylee Kang
NASHVILLE (Reuters) – Nearly every day, Latrina Begley, 37, of Nashville, or one of her six children, shopped at the Family Dollar down the hill from their home, using federal food benefits to get Hot Pockets or frozen pizza and staples to buy. like milk.
But Family Dollar closed the location earlier this year as part of its closure of nearly 1,000 of its 8,200 stores, a move intended to boost profits. Cuts last year to the largest U.S. hunger safety net, the Supplemental Nutrition Assistance Program (SNAP), formerly called food stamps, after the end of the COVID pandemic negatively impacted the retailer's sales in the months before the closures.
According to retail research firm HSA Consulting, purchases made with SNAP represent $11 of every $100 spent at the bargain chain.
The closure leaves Begley with only a few convenience stores within a mile of the former Family Dollar, expensive options she can't afford. The U.S. Department of Agriculture (USDA) has designated her neighborhood, in a historically black part of Nashville, as low-income with little access to healthy, affordable food, an area previously called a food desert.
“It's harder for us and me,” said Begley, who works in the city's housing agency. “I have to stop after work or we won't have anything for tonight.”
Begley said she depends on her mother to help with childcare and make ends meet, and if she didn't have her, she would turn to food banks.
Most of the nearly 1,000 stores Family Dollar is closing are in areas where it faced competition from other discount food retailers such as Walmart, according to a Reuters analysis of data from the retailer locator for SNAP. Family Dollar's parent company, Dollar Tree, does not share the locations of the shuttered stores, but Reuters was able to find and analyze 648 shuttered Family Dollars using the locator.
Fifteen of them are in urban neighborhoods like Begley, where poverty is high and there are only convenience stores and drugstores within a mile, a distance commonly used to measure consumer 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 that “the monthly slowdown” in sales at Family Dollar “matched the progressive reductions in national (food) benefits ) payments. .”
The closures, after a sustained period of high inflation, will worsen access to groceries in poor communities like Begley's that rely on federal food benefits and dollar stores, policy experts, professors, community leaders and health care providers told Reuters.
Food prices at drugstores and convenience stores are often significantly higher than at dollar stores such as Family Dollar, which offer a wider variety of cheaper private label items and have leverage over suppliers because of their size.
The chain has touted that its stores serve low-income people for “fill-in” shopping trips for necessities between visits to supercenters or supermarkets. But shoppers who take advantage of food benefits at dollar stores are more dependent on them for meals and pantry staples than shoppers who use all forms of payment and are more likely to purchase cereal, milk, bread, soup and frozen meals when visiting the stores, according to data for the year ended August 11 from research firm Circana shared exclusively with Reuters.
A spokesperson for Dollar Tree, the parent company of Family Dollar, said the retailer's focus is on “identifying favorable opportunities to position Family Dollar for long-term success with continued investments in new and existing stores.”
The Chesapeake, Virginia-based company, which reported gross profit of $4.6 billion in the six months ended Aug. 3, is also considering possibly selling or spinning off Family Dollar.
The spokesperson added that customers can use their food benefits on the delivery app Instacart 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 for delivery and service fees.
“These neighborhoods are removing a place where people shop, where they buy 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 RESTRICT 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 figure, depending on the size of their household.
With Family Dollars closing, those revenues are buying significantly less at stores like Walgreens, 7-Eleven or local bodegas and gas station convenience stores that remain open.
For example, a pack of eight Ball Park beef hot dogs costs $4.95 at Family Dollar, versus $5.99 at Walgreens. In Nashville, at Salem Market, a convenience store near a Shell gas station, a 12-ounce box of Honey Bunches of Oats cost $5.99. At Family Dollar, the same item costs $3.75, according to Family Dollar's website.
Most Family Dollar locations don't offer fresh fruits and vegetables, but for communities with little else, the closures further limit residents' ability to purchase food. The stores also sell inexpensive household essentials including laundry detergent, dishwashing liquid and toiletries.
“If these close, it will exacerbate an already existing problem,” said CJ Sentell, the CEO of the Nashville Food Project, a nonprofit that distributes food to the city's hungry. He said North Nashville — where two Family Dollars recently closed — has bodegas and convenience stores, some of which don't even sell milk, but very few grocery stores. The closure of dollar stores makes access to groceries even worse, he said.
“It's not the best food, but we can't let the perfect be the enemy of the good,” Sentell added.
According to the Institute for Local Self-Reliance, a nonprofit organization, 61 municipalities, including Chicago and Tulsa, Oklahoma, have adopted a less positive attitude toward dollar stores since 2019. They have passed laws limiting their expansion on the grounds that they undermine local grocers. Family Dollar did not respond to questions about such concerns.
Dollar stores are among the fastest growing retailers in the United States, even though they all now sell merchandise for more than one dollar. Two companies, Dollar Tree, which owns and operates Family Dollar, and its larger competitor, Dollar General, operate nearly 37,000 U.S. dollar stores.
Executives at Family Dollar's parent company said in June that the company has underinvested in many of the stores it is closing and that it would be too expensive to repair them.
But the retailer is also continuing to expand in some areas, opening 69 new stores and relocating 19 in the six months ended August 3, company information shows.
From the data analysis, Reuters found that the retailer opened just one store in a high-poverty area, with only drugstores and convenience stores nearby. According to local news reports, the Norfolk, Virginia, store is a reopening of a store that was previously closed.
Tonya Young, 53, of Nashville, regularly shops at Family Dollar, looking for store-brand snacks to give her three grandchildren who live with her.
“The prices are completely cheaper than Kroger, Walmart and Target,” she said, adding that she received food benefits until early this year and also recently qualified through one of her grandchildren.
Since one of the Family Dollars in North Nashville closed, she has turned more often to the resource center at Healing Minds and Souls, a local nonprofit. Healing Minds and Souls executive director Ella Clay said more people are using the center, which sells food and personal items, after the bargain chain closed.
Stanley Chase, 64, who sells copies of “The Contributor” newspaper, previously depended on one of the Family Dollars that closed in North Nashville, less than a half-mile from his apartment in a city-run building. He made full dinners from the canned goods, meat, eggs and milk he bought at the store.
Chase, a veteran who uses a wheelchair, does not have a car and supplements his income with food assistance. He said he now has to take an hour-long bus ride to get to Kroger, and if he can't make that trip, he goes to a grocery store where he spent $8 on hot dogs, more than double the price of those at Family. Dollars.
His customers give him snacks like Nutrigrain and Millville granola bars, which keep him going until his next trip to the grocery store, he said.
FOOD BENEFITS HAVE BEEN SALES HIGHER
Family Dollar started laying the groundwork for accepting food benefits about two decades ago, hoping to boost sales. Stores installed coolers and expanded their food products 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 had plenty of cash available thanks to additional allocations for food benefits, also flocked to Family Dollar during the pandemic to stock up on food and additional items such as toys and clothing.
The retailer said in March 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 Family Dollars closed, securities filings show.
In the Shepard neighborhood of Columbus, Ohio, Felicia Manns, a senior who has been reluctant to state her age, is facing a similar situation to Begley and Young since the Family Dollar a short walk from her home closed. Manns does not have a car and often uses a wheelchair.
She said that out of “desperation” she shops at the “smallest” grocery store in the neighborhood and otherwise pays family members or buys gas for them to drive her to Kroger. She said the Shepard community has felt “ignored” since the chain and a nearby Wendy's fast-food restaurant closed.
“We're all really torn,” she said.
(Reporting by Jessica DiNapoli in Nashville, Tenn. and New York and Kaylee Kang in New York; Editing by Vanessa O'Connell, Ben Lesser and Claudia Parsons)
