Independent grocery stores in rural areas take a bigger financial hit than their urban counterparts when dollar stores move into the area, according to a new report from the U.S. Department of Agriculture’s Economic Research Service (ERS).
Based on data from 2000 to 2019, researchers found that sales, employment and store count all drop in rural communities at a much higher rate than in urban communities when dollar stores enter the market.
The entry of dollar stores results in an average decline of 9.2% in sales for independent grocers in rural areas, nearly double the 4.7% decline in urban areas. Employment declines by 7.1% in rural areas versus 2.8% in urban areas, and store count drops an average of 5% in rural areas compared to 2.3% in urban areas, according to the report.
The study by ERS, North Dakota State University, and the University of Connecticut is based on data from the National Establishment Time Series (ETS) database and ERS Rural-Urban Commuting Area Codes.
“In addition, the researchers found that in urban census tracts, these impacts waned after about five years following a dollar store’s entry, but the effects continued in rural census tracts,” the report noted. “This could reduce grocery store options in rural areas for the longer term.”
While the latest report does not specifically address convenience stores, a late 2021 report identified trends in the retail food landscape in rural nonmetro counties over the 25-year period of 1990-2015. It found that the share of grocery stores decreased, while convenience stores; specialty food stores; warehouse clubs and supercenters; and dollar stores have become more plentiful. Dollar stores and supercenters grew the most in percentage terms—150% and 350%, respectively—partly because they were almost nonexistent in 1990.
A version of this story first ran in Supermarket News.
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