‘Everything’s Going the Wrong Way’: Dollar Stores Hit by a Pandemic

‘Everything’s Going the Wrong Way’: Dollar Stores Hit by a Pandemic
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‘Everything’s Going the Wrong Way’: Dollar Stores Hit by a Pandemic

‘Everything’s Going the Wrong Way’: Dollar Stores Hit by a Pandemic

Sandra Beadling was fed up with the 70-hour workweek, with delivery trucks running several days behind schedule, and exhausted from breaking down on her knees to restore the shelves below.

Ms. Beadling, 54, the manager of the Dollar General Store in Wells, Maine, tried to get more help. But it was a tough sell when Walmart was offering $16 an hour and its store was paying $12.

Ms Beadling had spent a long time in the store this summer as one of only a few workers, looking after the register and trying to help shoppers. He had requested his managers to allow the store’s part-time employees more hours, but to no avail.

One night last month, Ms. Beadling closed Dollar General at 10 a.m., came home at 11:30, and then returned to the store at 4 a.m. from her home for an inventory check. “I was so tired I couldn’t find the words,” she said. She sent her assistant manager a text saying she had quit and then blocked her coworkers’ numbers so they couldn’t call back and convince her to stay.

“It was not sustainable,” said Ms Beadling.

Some wonder whether the same can be said for the unbridled success of dollar stores and their business models, which have benefited from the spread of poverty and disinvestment in inner cities and rural America. Dollar stores, which pay some of the lowest wages in the retail industry and often operate in areas where there is little competition, are stumbling in the later stages of the pandemic.

Sales are slowing and some margins of profit are shrinking as the industry grapples with a confluence of challenges. They include burned workers, pressure to raise wages, supply chain problems and a growing number of cities and towns that are rejecting the new dollar store because, they say, the business model hurts their communities.

This week, Dollar Tree, which also operates the Family Dollar store, said it would begin selling more than $1 of its products. Analysts say the move has broader significance beyond the discount retail industry, as it signals that a company that has built its brand on $1 merchandise sold may need to adapt its model to higher wages and an unreliable supply line from Asia. There is a need to transfer the account for

“That means these issues could be permanent,” said Scott Mushkin, founder and analyst at R5 Capital, a research and consulting firm focused on retail.

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The troubles followed a year of rising profits and a period of staggering growth in the industry. Roughly one out of every three stores announced to open in the United States this year is a dollar store, according to CoreSight Research, a retail advisory firm, an indication of how much the industry has seen in 2020. performed well.

The business model, which relies on relatively cheap labor and cheap goods, is designed to thrive even when its core customers are hurting financially. The strategy was honed during the high unemployment and wage stagnation of the 2008 Great Recession.

But dollar stores are not as well equipped for today’s real economy, when activists like Beadling are leaving work in protest and a single coronavirus case on a container ship has caused United to delay two months of receiving Chinese-made goods. Can be made. State.

“This is another case of the pandemic, which has inherent weaknesses in how we set up our economy,” said Stacey Mitchell, co-director of the Institute for Local Self-Reliance. retail salesperson.

While nearly every retailer is dealing with shipping and delivery problems, dollar stores can have a hard time passing on the increased costs to price-sensitive customers.

Dollar Tree said it expects up to $200 million in additional freight costs this year.

In a conference call with analysts in August, Dollar Tree’s chief executive officer, Michael Wittensky, described how one of the company’s chartered shipping vessels was denied entry into a Chinese port when a crew member had tested positive for the virus. The ship had to change crew in Indonesia before returning to China.

Mr. Mushkin said of Dollar Tree: “They have everything going the wrong way.”

Dollar General said it had hired 50,000 additional workers between mid-July and Labor Day, but acknowledged in August that its labor costs were increasing expenses. Analysts say some of these additional expenses are driven by pressure to raise wages.

Even so, higher pay may not be enough to encourage employees to stay on the job. Workers say the stores are long-staffed and rely on part-time workers who are given unpredictable schedules and cannot contribute essential workers to health care benefits.

“We pay competitive wages, which are determined based on a number of factors, including the relevant labor market,” Dollar General said in a statement. The company said that “our operating standards are designed to provide stores with adequate labor hours, and it is not our expectation that store managers should work 70 to 80 hours per week.”

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Part-time workers sometimes face the opposite problem of not having enough work. As a store manager, Ms Beadling said, she was constantly trying to find extra hours to pay her employees, including one employee who was living in a tent because she couldn’t pay rent. Was.

But the hours allotted for the store were limited by higher-up managers, she said.

This summer, social media was abuzz with pictures of dollar stores, from Lincoln, Nebo., Pittsburgh and beyond, where employees taped signs at front doors announcing that they had left their jobs.

“Capitalism will destroy this country,” read a sign in the window of a Dollar General in Eliot, Maine, this spring. “If you don’t pay people enough to live their lives, why should they be slaves to you?”

Paige Murdock, the manager of the Eliot store, was the first to step down. The company limited the hours it gave to its employees, she said, which often meant it was running the store short-handed.

She went weeks without taking a day off or seeing her family, but as a salaried employee, she didn’t get overtime pay. When a manager said Ms. Murdock, 44, couldn’t take a previously approved vacation week to help her daughter, who is in the military, move to Texas, she decided to quit.

“If you look at my resume, I’m a very loyal employee,” said Ms. Murdock. “I’ll work with my heart. I’ll give two weeks’ notice to all the other jobs I leave. I don’t call out. I don’t ask for much.”

Mr. Murdock now works in a warehouse for a coffee company and chooses a delivery job at DoorDash to fill the gap.

In its statement, Dollar General said its manager business “has been at historically low levels over the past few years.”

Chris Burton began working at a Dollar General in New Orleans in the spring of 2020, earning $10 an hour. A saxophonist, he took the job because his work as a substitute teacher and his musical performances were put on hold during the pandemic. After more than a year, his hourly wage has increased to just $11.

“Walmart will get you to $15 pretty quickly,” said Mr. Burton, 34, who works with Step Up Louisiana. “But Dollar General will never pay as much as Walmart. That’s how they keep their prices low. That’s basic economics.”

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Wall Street is also paying attention to employee complaints about low wages and working conditions.

“We regularly see shelves stocked in a chaotic manner,” said Brad Thomas, an analyst at KeyBanc Capital Markets. “As a retail analyst that indicates there is not enough labor or the right labor in the store.”

Mr Mushkin of R5 Capital said other major retailers had responded swiftly to changing labor conditions by raising wages, when their sales were booming last year. Those early moves resulted in a smaller hit to their bottom line than the dollar stores experienced.

“We offer flexible schedules and market-competitive pay to our associates, and in all cases, we are at or above minimum wage in the markets where we operate,” Dollar Tree said in a statement.

Political attitudes towards dollar stores are also changing in some communities. According to the Institute for Local Self-Reliance, since the start of the pandemic, nearly three dozen communities have crossed limits on dollar store development or rejected stores altogether.

Dollar Stores say they are the exception. “We are always disappointed when local lawmakers choose to limit our ability to serve our community, but these relatively few conditions haven’t affected our ability to grow,” Dollar General said.

“We provide our customers with convenient access to essentials and quality brands that contain nutritious food components,” the company said, “including fresh produce, which is being offered in an increasing number of stores.”

Although Oppo makes a dent in the more than $1,620 in stores it opens this year, there have been some measures in major markets like the Atlanta area and Cleveland, and smaller cities like Warrensburg, NY.

The Governing Board of Warrensburg has faced considerable opposition to the One Dollar General, which was proposed to be built on Main Street.

Brian Rounds, a board member, said that Warrensburg in southern Adirondacks had long been a “drive-thru town” on the road to lakeside camps or ski slopes to the north. But during the pandemic, Warrensburg, like many rural areas, became a popular place for Airbnb rentals.

“Things are moving around,” said Mr Rounds. “We don’t need one of these stores.”

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