The Growing Threat of Dollar Stores

Parkdale Dollarama, Toronto

There is a movement underway, I read, to ban or limit the number of Dollar Stores. CNN gives the case against them, briefly, as “discount chains stifle local competition and limit poor communities' access to healthy food.” 

“Advocates of tighter controls on dollar stores say the big chains intentionally cluster multiple stores in low-income areas. That strategy discourages supermarkets from opening and it threatens existing mom-and-pop grocers, critics say.”

There is, it seems to me, a problem with that logic. The Dollar Stores are not limiting or stifling competition; they are competing successfully. It would be measures discriminating against them that limit or stifle competition.

This is surely no different in principle from a town with two grocery stores deciding that Joe’s store must close in favour of Lee’s store. And on the grounds that Joe’s prices are too low?

To say the Dollar Stores are intentionally clustering multiple stores in low-income areas to discourage supermarkets from opening makes no sense either, on the obvious grounds that Dollar Stores must make a profit. If they are concentrating in a certain area, the traffic must be sustaining this; moreover, it must be more profitable to locate a second store here than in some upmarket area.

Which is hardly a surprise for a bargain store.

As to their limiting poor communities’ access to healthy food, this is arguing that giving people more choices gives them fewer choices. If there is a market for healthier food at higher prices, then it is still there for some other merchant to fill.

In fact, here in Toronto: I see a standard pattern. A Dollar Store always opens next to a discount supermarket. Often they share the same building. The two are obviously complementary. You cannot buy everything you need at the Dollar Store. I cannot believe anyone does, or could, do the bulk of their grocery shopping at one. Their business model limits the Dollar Stores, generally, to non-perishables with a longer shelf life.

You go there for the bargains, then fill out your weekly needs next door at the supermarket.

The supermarkets, interestingly, still stock the same items as the Dollar Stores. You would think, if the Dollar Stores really were so lethal to competition, these supermarkets next door would concentrate on stocking only what the Dollar Stores do not. Instead, they still find it profitable to provide full service.

So what is behind this drive against the Dollar Stores?

I think it must be simply hatred of the poor. They are unsightly. Being made aware of their existence, seeing them in your neighbourhood, makes you feel guilty.

But the sickest thing is how this is all presented as a desire to “help” the poor. CNN headlines the issue: “Dollar stores are everywhere: That’s a problem for poor Americans.”

Another telling example of the general principle that, if you are planning to do something truly nefarious, you always represent it as the exact opposite.