Researcher: dollar store locations track real estate redlining practices
September 2, 2020
Contact: Jerry Shannon  | 706-542-3232  | More about Jerry

New research from the University of Georgia shows significant association between proximity to dollar stores and patterns of racial segregation in major U.S. metropolitan areas. Though the patterns vary across retail chains, the research shows racial classification to be a key predictor of store location.

The new research by Jerry Shannon, associate professor of geography in the Franklin College of Arts and Sciences, was published August 27 in Annals of the American Association of Geographers.

The growth of dollar stores nationwide has exploded over the last decade, but there has been little research on how they impact local communities. Dollar stores are sometimes associated with food deserts, areas with limited access to food, but Shannon argued this metaphor is misleading.

“The term desert suggests something that occurs naturally or, in this case, through the invisible hand of economic forces,” said Shannon, who also holds an appointment in the department of financial planning, housing and consumer economics in UGA’s College of Family and Consumer Sciences. “But differences in access to food and other shopping options are tied to decades of policies that intentionally created racial and economic segregation, like redlining, urban renewal, and restrictive housing covenants.” 

Redlining, or the geographically-based restrictions on home loans common in the mid-20thcentury that often relied on neighborhood racial composition, was a major driver of white flight and suburbanization. Shannon prefers the term retail redlining to food deserts, as it highlights how these past policies contributed to today’s highly segregated neighborhoods. 

“Redlining created racially discriminatory patterns of investment in urban communities, funneling investment to housing in white middle- and upper-class neighborhoods. The disparities we see now in access to major food retailers are a direct result of those policies.”  

Supermarkets became the major source of food during this same period, with a large store footprint well suited to the sprawling suburban landscape. The use of redlining to describe unequal access to food retailers highlights the connections between supermarkets’ retail dominance in some areas and divestment in others based on socioeconomic composition.

“As supermarkets consolidated and grew into today’s supercenters, small and independent grocers that served dense, low-income neighborhoods were forced to close. Dollar stores have filled those gaps, but they usually fail to provide the healthy food options and jobs that groceries do.”

Shannon points out that past research on retailer locations focused on distribution networks and household economic characteristics, seldom on patterns of racial segregation. This new study addresses these issues through an analysis of the growth of three major chains across 27 metropolitan areas over an eight-year period, 2008 to 2015, utilizing data from the U.S. Department of Agriculture, adapting an already existing classification of neighborhood racial composition to study their distribution.

The analysis focuses on three metropolitan statistical areas (MSAs) in each of the nine U.S. Census divisions. Within these divisions, Shannon analyzed the locational strategies of the three major dollar store chains – Dollar General, Dollar Tree, and Family Dollar –across varied, dense, and often highly segregated residential landscapes. Results showed that all three chains are generally closer to census tracts classified as Black, Latino and High diversity than tracts classified as White, even controlling for household income and population density.

According to the study, Family Dollar stands out as the retailer that has most clearly targeted communities of color, filling in gaps in communities when small grocers closed. This pattern became more pronounced across the time period for all three chains.

“This study adds to growing concern in the explosive growth of dollar stores,” Shannon said. “Many cities have begun to restrict or ban dollar stores, with an eye toward policies that promote stronger investment in these communities.”

Image: D.C. Policy Center, via.

This article was written by Alan Flurry, director of communications for the UGA Franklin College of Arts and Sciences.