When Cassandra Loftlin moved back to her hometown of Augusta, Georgia, to be with her family during the pandemic, she was frustrated by how hard it was to buy groceries. Her neighborhood had had a Kroger store in the past, but it had closed. The only options left were corner stores and dollar stores with small selections. Loftlin, a chef who develops recipes, couldn’t find the ingredients she needed and saw the lack of choices her neighbors had.
She also realized that the dollar stores, despite their name, weren’t really affordable. “It’s a high price that you’re paying for convenience,” she says. “It seems like it’s a dollar, but the package is smaller, so it’s more expensive.” Low-income residents who don’t have cars feel stuck with the dollar stores, since taking a bus or an Uber to a grocery store farther away adds to the cost.
The scenario isn’t unusual: In lower-income urban neighborhoods and small rural towns, dollar stores are often the only places to buy groceries. But now, across the country, a growing number of community members—including Loftlin—are starting co-op grocery stores in order to have an alternative.
“What we’re seeing is that a growing number of folks are reaching out because they’re looking for a better option in their community,” says Faye Mack, executive director of the Food Co-op Initiative, an organization that works with new co-ops. “They’re really looking for autonomy over where their food comes from and the ability to have the kind of food they want to have.”
The movement is in part a response to the fast growth of dollar stores. Half of all new stores that opened last year in the U.S. were dollar chains, according to a report from the nonprofit, Institute for Local Self-Reliance (ILSR).
In 2011, there were around 20,000 dollar stores in the country; by the beginning of 2022, there were more than 34,000, and another 1,700 were on track to open this year. In fact, there are now more Dollar General and Dollar Tree stores in the U.S. (including Family Dollar stores, which are owned by Dollar Tree) than all McDonalds, Starbucks, Target, and Walmart stores combined.
Companies like Dollar General talk about filling a gap in areas where other retailers don’t want to operate, and argue that they help serve food deserts. But they’ve also helped push grocery stores out of business in these areas by undercutting prices. While there isn’t comprehensive data about how many grocery stores have closed, one study suggests that when three dollar stores open in a two-mile radius, they’re likely to displace a grocery store.
It happens even to long-established businesses, like Dave’s Market, a decades-old family-owned grocery store in Cleveland that closed last year after seven Family Dollar and Dollar General stores opened nearby. “Our own conclusion is that, by displacing full-service grocery stores, dollar stores more often create food deserts than move into food deserts,” says Kennedy Smith, senior researcher at ILSR.
In other cases, grocery stores shut down after Walmart opened a store in a region, and stores like Dollar General later entered the void. And while it’s obviously useful to have a place to buy something like milk if there’s no other option nearby, dollar stores can’t replicate a full grocery store. They’re known for understaffing stores and paying so little that employees sometimes quit en masse, as in a store in Maine where workers left a note on the door: “Closed indefinitely because Dollar General doesn’t pay a living wage or treat their employees with respect.” They’ve also been targets for crime, in part because they’re understaffed.
Co-ops, for-profit grocery stores that are owned by community members and run by a board of directors, can be a viable alternative. In Georgia, Loftlin partnered with other organizers a year ago to begin planning a new co-op for the neighborhood. It’s unlikely that the area would get another grocery store otherwise, she says.
Starting a co-op can be relatively expensive, with costs that are often between $4-and-$5-million, says Mack. (In some communities, it’s still possible to start a small store with simple programming for less than $1 million; costs can be higher in more expensive areas.) Costs are often covered by a combination of loans and grants, and community members typically pay a one-time fee to join. Members get discounts, and when a store has a profitable year, they may also earn a dividend if profits aren’t reinvested back into the store.
It’s not easy to launch a new store, but community members often see it as their only option. “Kroger won’t come back,” Loftlin says. “A Target won’t come. A Trader Joe’s won’t come. Even though we have the population, we’re not economically viable enough to attract a big box store at this point.” Around 42% of the population in the majority-Black neighborhood in Augusta lives below the federal poverty level.
The new store, called Goodness Gracious Grocery, plans to offer a full array of fresh food. If neighbors want to plant large gardens in their backyards, the co-op will buy the produce, providing an extra source of income. The store plans to have a deli with affordable prepared foods as an alternative to fast food nearby. It will offer new jobs, which Loftlin thinks could help people stay in the area as gentrification begins to encroach on the neighborhood and housing prices rise.
The co-op is still in the early stages of launching: signing up members, fundraising, and creating a board. The next step will be surveying the market to find the right location for the store. It’s a long process. “It takes an average co-op about 6 to 10 years to come online,” Loftlin says. “When I found that out, I was crestfallen because we can’t wait. We cannot wait.”
To offer a solution more quickly, she started organizing pop-up events this summer, buying fresh produce from local farmers and gardeners and setting up in a parking lot. Now, she’s looking for a space in a church or community center to keep doing the same thing regularly until the co-op has a permanent home. “We want people to get in the habit of shopping in the neighborhood,” she says.
It’s unlikely, she says, that the co-op will push dollar stores away, especially because they’ve received tax breaks and incentives from the city. And she isn’t trying to replace them. “People think I want to burn the Dollar General down,” she says. “I don’t, because if I did, we won’t have anything. Even though I don’t shop there, a lot of my neighbors do.”
Instead, she says, she wants to give people the chance to buy food that they can’t necessarily find at corner or dollar stores. “We won’t replace the dollar stores because we won’t be offering the traditional, you know, Doritos or Mountain Dews, and people still have a taste for that,” she says. “I’m never going to convince your child that candy is not delicious. But if they could eat a couple of apples and a banana, I’d be thrilled.”
In some areas, a co-op can fill a gap when a town rejects plans for a dollar store. In Moran, Kansas, a town with a population of around 460 people, a Dollar General wanted to open but town leaders said no. (They might have been influenced by seeing what happened in other Kansas towns, like Haven, where the town’s only grocery was driven out of business by a Dollar General.) When the owners of Moran’s local grocery decided to retire, local residents took it over.
“We knew that if it didn’t sell to somebody, it was going to close,” says Marilyn Logan, general manager of the new store, called the Marmaton Market. “There were no other options. So, people in the community got together because there was such a need for a store.” A Dollar General did open around 10 minutes away, in another small town. But because Marmaton Market offers a bigger selection, it draws customers from a wide radius. It also offers people in the small town a place to walk to for their groceries.
“We’re directly across the street from some low-income housing, a majority of which are seniors, and very few of them have transportation,” Logan says. “So, short of catching the county bus that comes one day a week and would only take you to Walmart and back, this is their only option. And most of them do shop here. We deliver to them across the street.”
Many rural areas have a similar situation. In New Mexico, a village called Magdalena lost its local grocery store more than a decade ago. “From my house, it’s a two-hour round trip to the grocery store,” says Laurie Ware, a resident who’s now helping organize a new co-op.
The town now has two dollar stores on its short main street, despite the fact that Ware and other residents tried to resist the second store. “We got about a hundred signatures saying that this community doesn’t need another Dollar General,” she says. “They need education, and we need to come up with something different to help educate people about healthy food choices.”
This February, organizing began on the new Magdalena Food Co-op, with dozens of people at the first meeting. The group has already found a building (a former grocery store), and applied for a grant from the state for a feasibility analysis. The co-op plans to offer fresh fruits and vegetables, other staples like dairy, and foods that the local Navajo community can’t find at dollar stores, such as blue cornmeal or local meat. Eventually, the co-op also plans to offer classes where local residents can share their own cultural recipes.
St. Johnsbury, a small town in Vermont, already has a couple of grocery stores. But the community wanted to add a co-op that could offer a large selection of organic and locally grown food. Early this year, when a Walgreens closed in St. Johnsbury’s downtown—a perfect fit for the future co-op—the organizers reached out to the owner of the building and learned that a dollar store wanted to rent the space.
“We just didn’t feel like a dollar store was very compatible with our vision of what we want the downtown to be,” says Eric Skovsted, board chair of the Caledonia Food Co-op. They were able to convince the property owner to give the new co-op the opportunity to buy the building instead. They’re aiming to complete the sale next April.
“It was the dual motivation of keeping a dollar store out of downtown, and realizing this dream of having a very walkable grocery store that’s community owned, at a critical location,” Skovsted says.
Other co-ops will also soon open in areas dominated by dollar stores, like the Detroit People’s Food Co-op, which plans to open early next year.
Co-ops may have a better chance of surviving than a typical grocery in the same neighborhood, says the Food Co-op Initiative’s Mack. “When a store isn’t owned by just one person, the financial risk is spread out,” she says. “The capital and equity is invested in by many members of the community and through loans and access to grants. And so the risk to starting a business can be smaller than one individual opening a grocery store on their own.”
And while co-ops are for-profit businesses, they also have a community focus that’s different than yet another branch of a chain grocery store. “Their markers of success may be different from that of a more traditional grocery store,” Mack says, “which can allow it to survive and to thrive.”
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