When it comes to getting groceries, dollar stores and discount outlets throughout the nation are becoming a hub for frugal and low-income communities.
In 2017 it was reported that in the U.S. 40 million people were at or under the poverty line. Dollar stores flourish from the circumstance that their main customer base is comprised of those who qualify under federal poverty guidelines.
Garrick Brown, Director of Retail Research at Cushman & Wakefield, told Bloomberg, “Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America.”
In impoverished areas, access to affordable healthy produce and products is absent. By the U.S. Department of Agriculture [USDA] standards, this environment is the definition of a food desert.
According to the Institute for Local Self-Reliance [ILSR], the number of dollar stores throughout the U.S outnumbers the sum of all Walmarts and McDonald’s within the entire nation. Dollar General, a preponderate player in the world of discount retailers, is intending to open about 975 new locations this year, concentrating on lower-income inner cities and rural towns.
The influx of discounted retailers often puts mom and pop shops out of business, due to the inability to compete with the competitive pricing. When discount retailers set up shop in these areas, what appears to be a saving grace can turn out to be detrimental for the community.
Local, independent stores are often the last source of anything healthy within the surrounding area. Lack of grocery stores, farmers’ markets and healthy food providers are what create the food deserts the discount stores thrive in.
Walking down the food aisle at the dollar store, the closest item to fresh produce typically comes in the form of frozen bags, cans and jars filled with preservatives such as sodium. The Food and Drug Administration [FDA] states that the more than 70% of sodium that makes up the average American’s diet comes from consuming packaged and prepared foods.
Even though companies such as Dollar Tree have been trying to implement healthier options that fall within their price point, it is worth questioning the origins of the fluctuating options discount stores may offer.
Justin Shank, who has worked in the food industry for nearly a decade, elucidated how dollar stores and discount retailers typically source their food.
“Dollar stores and discounters are ‘last resorts’ for manufacturers”
“Dollar stores and discounters are ‘last resorts’ for manufacturers,” Shank said.
The reason dollar stores can sell their items — even name brand items — so cheaply is because of the source of their inventory. According to Shank, manufacturers grade harvested crops by their size, color, sugar content and blemishes. Typically name brand grocery stores will sell produce categorized as ‘A’ grade.
Regardless of the final evaluation of any produce, the same amount of money goes into creating the entire crop. This dynamic is why various mainstream companies try to find other profitable uses for their non ‘A’ grade commodities to lessen the blow to their profit margins.
Fruits and vegetables that fall into the ‘B’ or even ‘C’ ranking are frequently repurposed into juices or are promoted as ingredients “perfect for smoothies.” Some companies even rely on the revenue generated from the sale of their unwanted products to discount retailers.
“The produce you find at discount retailers are typically ‘B’ or ‘C’ grade product,” Shank said.
Shops like dollar stores buy cheaply-made products and rejected produce because it is inexpensive and profitable. By purchasing unwanted produce from manufacturers at a discounted price, dollar stores can then alter their purchase into separate, smaller quantities.
Commonly, grocery vendors expect a three-to-six-month shelf life for ambient or frozen food. To avoid this dilemma, manufacturers will sell their cast-off products to discount stores that agree to take “one-time deals.” Items that are discontinued, nearing expiration or have quality issues make up to one half of the inventory found at markdown retailers.
Food that was overstocked or had inventory or distribution problems from the packing facility make up the other half. The plethora of processed, frozen and shelf-stable foods are essentially byproducts from the production of premium goods.
“Dollar stores don’t get any kind of premium or healthy offerings and you never know what they will actually have stocked,” Shank said.
Consumers may save money at dollar stores. The average quality of the goods is so low, however, that the discount prices might not be worth the health risks.
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