Dollar General Continues Vermont Expansion

Oct 22, 2013

With 11,000 stores Dollar General is the country’s largest retailer and its presence in Vermont is growing.

Nationally, most of Dollar General’s stores are in towns with populations under 20,000.  Spokesman Dan McDonald says Vermont seemed like a good market when the company began expanding in New England.

“We also had a pretty good distribution network already set up because we had a fairly good presence already in northeast New York and to extend that into Vermont from a supply chain stand point made good sense from a business perspective,” MacDonald explains.

According to its 2012 annual report, there are 17 Dollar General Stores in Vermont, compared with six in New Hampshire, three in Massachusetts, and four in Connecticut.  The company lists no outlets in Maine.

“We’ve been very well received in the markets that we’re operating in in Vermont.  Our stores do quite well,” says MacDonald.

According to one news report the company plans as many as 10 additional Vermont stores by next spring.  The expansion in Vermont has occurred quickly, but not always quietly. 

Dollar General has settled into some Vermont towns without controversy, but in some communities there has been organized opposition.

The most sustained fight over a proposed Dollar General store is underway Chester.

The town development review board and the district environmental commission approved the Dollar General plan, but a local group has challenged both decisions in court.

In June, a Superior Court judge ruled that the Chester development review board needed to include more supporting information in its original decision, and an environmental court judge is currently considering the appeal of Dollar General’s Act 250 permit.

Shawn Cunningham of Smart Growth Chester says Dollar General is a particular threat to smaller communities where he sees the potential for it to change their character and drive local stores out of business.

“What’s going to be the upshot of having one of these things in a small town and do you want to take the chance that you’re going to have vacant storefronts and that sort of thing because there is a store that is a five hundred pound gorilla on your main street,” says Cunningham.

Cunningham is concerned that Dollar General’s buying power gives it a pricing and competitive advantage local businesses don’t have.  He also argues that a 9,100 square foot retail store is outsized in an area where the average retail space is 2,500 square feet.

“Any smaller than that, it really reduces the amount of assortment that we can carry and it’s not consistent with Dollar General and the kind of business model that we’ve created for ourselves,” says Dollar General’s MacDonald.

MacDonald says the company is expanding at a pace of 600 new stores annually and many communities have no objections.  He says the kind of opposition Dollar General is encountering in Vermont is rare. 

“The places where we’ve probably faced the most opposition is Vermont and Massachusetts,” says MacDonald.

Consumables, including packaged foods and cleaning and other home products, represent the largest category of goods carried by Dollar General, accounting for nearly 75 percent of sales. 

That’s the area of sales where Dollar General competes with smaller local grocery stores.

The Vermont Grocers Association does not have a position on Dollar General’s expansion but association president Jim Harrison says the new stores will add to an increasingly competitive landscape for small grocers.

“To the extent that it’s Dollar General or other dollar stores or drug stores, it does split up the pie that many more ways and does, in some cases, pose challenges to our longstanding traditional general stores, superettes, country stores,” Harrison says.

To date, there is no clear evidence that Dollar General’s presence in Vermont has driven other stores out of business, but in communities where there are concerns about the chain’s impact, opponents are scrutinizing town plans and zoning regulations.

Shawn Cunningham of Smart Growth Chester says he recognizes that regulations can’t prohibit retailers like Dollar General but they can dictate the location and design of the stores.

In South Hero, plans for a Dollar General may have been derailed by a public call to adopt more stringent interim zoning regulations in the wake of the company’s application to build a store there.

The new temporary rules limit commercial development to 3,000 square feet. Because Dollar General did not return to the town for a preliminary hearing within six months of its initial application, its 9,100 square foot store is no longer grandfathered under the old regulations.