Addressing the Impact of New Dollar Stores – Part 2

So rumors are floating around that a dollar store is sniffing around town, looking at properties to locate to. Are you ready? Do you have an understanding of the impact on your community? Are all your regulatory tools in place in anticipation of their interest?

By M.O. Stevens Creative Commons Attribution-Share Alike 4.0 International, from Wikimedia Commons

As with many developments, there is a possibility that a new dollar store will test the limits of your comprehensive plan and the zoning ordinance/zoning map. A good exercise is to create a focus group of select planning commission and city council members to do some scenario planning. It may be viable to add someone from the real estate field and/or construction field that may provide some professional input on potential sites and related development restrictions.

Some possible considerations for this focus group would be:

• Most dollar store sites are 1 to 2 acres in size, with the median size likely below 1.5 acres. Though this might fit a few parcels in town, it is a good idea to discuss other potential sites. Developers are trained to look for the most optimal piece of ground, regardless of lot lines. They account for the entitlement processes like replatting in their timeframes.
• Review the future land use map and the zoning map in relation to currently allowed areas for dollar stores. Are there potential areas that might pique the interest of a dollar store or retailer that you haven’t adjusted for yet? Often, smaller communities don’t adjust their plans sufficiently after a notable change, such as a highway bypass around the edge of town that shifts the potential development demand area.
• Do you have architectural design standards? If so, how would they apply to such as store. To make the economics work, dollar stores are designed for efficiency in operations, merchandising and even building design. If there are no design standards in place, they’ll likely put forth their base-level building. Something that will stick out like a sore thumb in most downtowns. Design guidelines can at least help to blur the transition.
• Are your grocery stores prepared? Local grocery stores are going to take a hit, likely even more than general retailers. In Iowa, the number of grocery stores with employees in shrunk in half between 1995 and 2005. Most of that loss has been attributed to rising overhead costs and the expansion of the large chain grocery stores. However, dollar stores cannot be crossed off as a culprit as either. The City of Moville, Iowa is a glaring example of this. After a significant ground swelling of work and financial commitment to bring back a local grocery store, a Dollar General moved in.

Although there is pain in the hearts of those who were involved in bringing back the local grocery store in Moville, there’s also happiness for communities like Cawker City, Kansas. This little burb of 450 residents appears to be delighted to have their dollar store as the local grocery store has long been closed.

Regardless of how the town folk of your community view the impact of a new dollar store, it is important to be prepared for that day when one comes knocking.