Rural Grocers Stare Down Competition From Dollar StoresRural Grocers Stare Down Competition From Dollar Stores
When dollar stores move in, sales fall, Minnesota small grocers say. Rural grocers see themselves as having a responsibility to their community but have deep concerns about the future of their business, a new University of Minnesota survey suggests.

Rural grocers are feeling the competitive heat from dollar stores moving into their communities, a new survey from the University of Minnesota indicates.
More than half of the rural grocers (54%) from across Minnesota who responded to the survey reported that a dollar store had moved into their community in the past five years. Competition from dollar stores ranked No. 2, behind operating costs, as rural grocers’ most-cited top challenge.
The survey was fielded before the start of the COVID-19 pandemic, so the pandemic’s effects on Minnesota grocers are not quantified in survey results, the authors note. Rural grocers were defined as businesses in communities of 2,500 or fewer residents that provide a full range of fresh, frozen and shelf-stable foods.
Owners of rural grocery stores in communities that had seen a dollar store open recently were less optimistic about their business prospects than those who had not seen a new dollar store move in. Said one respondent: “I lost over 30% the day [the dollar store] opened and it has continued to take more and more business.” Another reported their store was down $2,000 a week since a nearby dollar store opened.
The competition from dollar stores looks only to increase: Dollar stores have been strong performers throughout a tumultuous 2020, and last week, one of the sector’s top players, Dollar General, announced plans to open 1,050 new stores in 2021. That expansion will follow Dollar General’s ribbon-cutting on an expected 1,000 stores by the end of its current fiscal year, which wraps up Jan. 29.
Community ties are a key differentiator for rural grocers, who see themselves as both members and caretakers of their communities, the University of Minnesota survey suggests. Nearly 4 in 5 rural grocery owners (79%) live in the same community as their store, and 96% said they agree or somewhat agree that as a small business, they have a responsibility to their community.
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Eighty-eight percent indicated that they participate in Supplemental Nutrition Assistance Program (SNAP)/Electronic Benefits Transfer (EBT) initiatives; 74% said they participate in the Women, Infants and Children program.
Looking toward the future, about half (49%) of rural grocers expressed concern that their store could go out of business in the next five years. Around 80% said they don’t have transition plans in place for the leadership or ownership of their store. Forty-five percent said that while their store is a family-owned business, they do not plan to pass the business down to the next generation.
Where do rural grocers see promise? In collaboration, respondents indicate. Seventy-six percent of respondents said they believe a statewide alliance of small, independently owned stores could have value. A smaller share, 63%, said they have existing collaborations with other independently owned stores.
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