Nanny state regulators are banning dollar stores to protect big business

By Bruce Yandle. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business & Behavioral Science.

"No, this time it’s not about pious reformers shutting down the corner liquor store on Sunday, thereby creating odd alliances between social puritans and sellers of illegal booze. This time, the regulatory target is small-box retail stores, such as Dollar General, Family Dollar, Dollar Tree, and other conveniently located stores that give people in out-of-the-way places and neighborhoods easier access to low-cost groceries and other consumer goods.

This latest example comes courtesy of the Atlanta Journal-Constitution, after reports detailed how the city of Stonecrest, Georgia, outlawed future small-box discount stores with fewer than 12,000 square feet of space and sell most of their goods for $5 or less. Two concerns motivated the move.
First, regulators believe the growing presence of small-box stores gives people the wrong impression about their town’s economic prosperity. As they see things, there’s a stigma associated with having multiple dollar stores. Instead, they are hoping for the entry of more stores such as Whole Foods or Sprouts. It’s the lure of the label.

The second reason offered for getting rid of the smaller, less expensive stores has to do with a paradoxical concern about “food deserts.”

These “food deserts” are geographic areas where people have limited access to fresh produce, vegetables, and other foods associated with a healthy diet. Dollar stores, like their big-store competitors, offer lots of unhealthy sodas, potato chips, sweet cakes, and cookies. But unlike the big stores, they seldom have a produce section, although they do offer plenty of juices, canned soups, and frozen meat products.

Those who worry about food deserts seem to be suggesting that the small-box clientele just doesn’t know how to shop. (I must say that I consider that something of an insult. My family regularly buys groceries from a nearby Dollar Tree, where everything sells for one dollar.)

The paradox should be obvious: Without the availability of smaller stores, people living in isolated areas will have less access to nutritious food, not more. They may shift their shopping to a 7-Eleven or even a corner gas station.

Yet this is not the first instance of local governments seeking to lock out dollar stores. Similar restrictions have been implemented in Birmingham, Alabama, and Fort Worth, Texas.

Indeed, when Fort Worth passed its restrictive ordinance earlier this month, a city official indicated grave concern about the growing presence of the reviled stores. “We know there are at least 100 of these type of stores [in our area]. With their being located on almost every corner, along with payday lenders, it makes them appear to be predators in our community.”

Predators? To whom? Maybe we should think about the symbolic “bootleggers” in this particular case and what they stand to gain when local governments squeeze out small-box stores.

Obviously, there are the large box stores — Kroger, Walmart, Target, and others that are currently seeing their growth chastened by the rapidly expanding small dollar stores. In many towns and cities, leaders clamor to attract superstores and the hoped-for tax revenue that comes with them, sometimes to be disappointed. And do the big stores offer lots of sweet drinks and other fattening foods that may raise health concerns? They sure do.

But of course, this is how a combined Bootlegger-Baptist effort brings changes in public policy. One part of the coalition can take the moral high ground, while the silent partner just smiles on the way to the bank."