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Closures impact low-income areas, worsening food access

issues

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Alternative shopping options are more expensive and less

accessible

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Family Dollar said it was closing nearly 1,000 stores

By Jessica DiNapoli and Kaylee Kang

NASHVILLE, Sept 29 (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 buy Hot Pockets or frozen pizza, and staples

like milk.

But Family Dollar shut down the location earlier this year, as

part of closures of nearly 1,000 stores out of its 8,200, a move

intended to boost profits. Cuts last year to the largest U.S.

anti-hunger safety net, the Supplemental Nutrition Assistance

Program (SNAP), previously called food stamps, after the end of

the COVID pandemic hit the retailer's sales in the months before

the closures.

Purchases made with SNAP represent $11 out of every $100 spent

at the bargain chain, according to retail research firm HSA

Consulting.

The closure leaves Begley with only a few convenience stores

within one mile of the former Family Dollar, expensive options

she can't afford. The U.S. Department of Agriculture (USDA) has

identified her neighborhood, in a historically Black part of

Nashville, as low-income and with low-access to healthy,

affordable food, an area formerly called a food desert.

"It's harder for us and me," said Begley, who works at the

city's housing agency. "I have to stop after work, or else we

don't have anything for the night."

Begley said she relies on her mother to help with childcare

and to make ends meet, and, if she did not have her, would turn

to food pantries.

Most of the nearly 1,000 stores Family Dollar is closing are in

areas where it had competition from other low-cost food

retailers like Walmart ( WMT ), according to a Reuters analysis

of data from the retailer locator for SNAP. Family Dollar's

parent company, Dollar Tree ( DLTR ), is not sharing the

locations of the closed 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's with

high poverty rates and only convenience shops and drug stores

within a one-mile drive, a widely used distance for measuring

consumers' access to food.

The shut downs come after executives at the retailer's

parent company late last year linked softening sales to

reductions in food benefits, saying "the month-by-month

deceleration" in sales at Family Dollar "matched the progressive

reductions in national (food benefit) payments."

The closings, 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 healthcare providers

told Reuters.

Food prices at drug and convenience stores are often

significantly higher than at dollar stores like Family Dollar,

which offer a wider variety of cheaper private label items and

have leverage with suppliers because of their scale.

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 using food benefits

at dollar stores depend on them for meals and pantry staples

more than shoppers who use all forms of payment, buying cereal,

milk, bread, soup and frozen dinners more often on visits to the

stores, according to data for the year ended August 11 from

research firm Circana shared exclusively with Reuters.

A spokesperson for Dollar Tree ( DLTR ), Family Dollar's parent

company, said that the retailer's focus is on "identifying

favorable opportunities to position Family Dollar for long-term

success with continued investment in new and existing stores."

The Chesapeake, Virginia-based company, which reported $4.6

billion in gross profit in the six months ended August 3, is

also looking to potentially sell or spin-off Family Dollar, it

has said.

The spokesperson added that customers can use their food

benefits on delivery app Instacart to order from Family

Dollar.

However, buying groceries at Family Dollar through Instacart

is often more expensive than in stores, and customers cannot use

the food aid to pay for delivery and service fees.

"In these neighborhoods, it's removing a place where people

are shopping, where they've been 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 is going to make food access harder."

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 figure, depending

on the size of their household.

As Family Dollars close, those earnings buy significantly

less at stores like Walgreens, 7-Eleven or local bodegas

and gas station convenience shops that remain open.

For example, a package 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 at a Shell gas station, a

12-ounce box of Honey Bunches of Oats was $5.99. At Family

Dollar, the same item is $3.75, according to Family Dollar's

website.

Most Family Dollar locations do not offer fresh fruit and

vegetables, but for communities with little else, the shutdowns

further limit residents' options for buying food. The stores

also sell budget household essentials including laundry

detergents, dish soaps and toiletries.

"When these close it is exacerbating an already existing

problem," said C.J. Sentell, the CEO of the Nashville Food

Project, a non-profit that distributes food to the city's

hungry. He said that North Nashville - where two Family Dollars

closed recently - has bodegas and corner stores, some of which

do not even sell milk, but very few grocery stores. The closing

of the 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.

Since 2019, 61 municipalities including Chicago and Tulsa,

Oklahoma, have taken a less positive approach to dollar stores,

passing laws limiting their expansion on the grounds they

undercut local grocers, according to the Institute for Local

Self-Reliance, a non-profit. Family Dollar did not respond to

questions about such concerns.

Dollar stores - though all of them now sell merchandise for more

than $1 - are among the fastest growing retailers in the United

States. Two companies, Dollar Tree ( DLTR ), which owns and operates

Family Dollar, and its bigger competitor, Dollar General ( DG )

, operate nearly 37,000 U.S. dollar stores.

Executives at Family Dollar's parent company said in June

it under-invested in many of the stores it is closing and that

it would be too costly to fix them.

But the retailer is also continuing to expand in some areas,

opening 69 new stores and relocating 19 in the half-year ended

August 3, according to company disclosures.

In its data analysis, Reuters found that the retailer opened

just one store in a high-poverty area with only drug and

convenience stores close by. The store, in Norfolk, Virginia, is

a re-opening of one that had previously closed, according to

local news reports.

Tonya Young, 53, of Nashville, shops at Family Dollar

frequently, searching for store-brand snacks she can feed her

three grandchildren who live with her.

"Prices are completely cheaper than Kroger ( KR ), Walmart ( WMT ),

Target ( TGT )," she said, adding that she received food benefits

until the beginning of this year and also qualified recently

through one of her grandchildren.

She has turned to the resource center at Healing Minds and

Souls, a local non-profit, more often since one of the Family

Dollars in North Nashville closed. Healing Minds and Souls'

executive director, Ella Clay, said more people are using the

center, which has food and personal items, after the bargain

chain closures.

Stanley Chase, 64, who sells copies of "The Contributor"

newspaper, previously depended on one of the Family Dollars that

closed in North Nashville, located less than half a mile away

from his apartment in a city-managed building. He made full

dinners from the canned goods, meat, eggs and milk he bought at

the store.

A veteran using a wheelchair, Chase does not own a car and

supplements his income with food aid. He said he now faces a

one-hour bus ride to go to Kroger ( KR ), and when he can't make that

trip, he heads to a convenience store where he has spent $8 on

hot dogs, more than double the price of those at Family Dollar.

His customers give him snacks like Nutrigrain and Millville

granola bars, holding him over until his next trip to the

supermarket, he said.

FOOD BENEFITS DROVE SALES HIGHER

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 surged.

Shoppers, flush with cash thanks to extra allotments for

food benefits, also flocked to Family Dollar during the

pandemic, stocking up on food, and additional discretionary

items like toys and clothes.

The retailer said in March it was closing 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, according to securities filings.

In the Shepard neighborhood of Columbus, Ohio, Felicia

Manns, a senior who was reluctant to give 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 she shops at the "dinkiest" convenience store nearby

out of "desperation" and otherwise pays family or buys them gas

to drive her to Kroger ( KR ). She said the community in Shepard feels

"ignored" since the chain and a nearby Wendy's fast food

restaurant shut down.

"We're all really tore up," she said.