Page 30 - The Economist Asia January 2018

The Economist January 27th 2018
30 United States
2 Los Angeles warehouse squinted as he no- plastic bag full of powder and waited for a Land’s End, Nine West and J. Crew, are
ticed something fishy about a package reading. It came back inconclusive. Then close to bankruptcy? One reason is that it
passing through his x-ray machine. He he used a metal scooperto sprinkle a small filled a void. “They set up shop where Wal-
punched a red button to stop the conveyor sample ofthe powderinto a more sophisti- martdoesnotwantto make an effort,” says
beltand picked up the package in question: cated device called the Gemini, which re- Christopher Merrett at the Illinois Institute
he could tell that it had come from China, semblesa clunkyGameboy. Italso failed to for Rural Affairs, referring to the world’s
butithad no return address. He slashed the match the substance to any of the 21 drugs biggest retailer. Around 70% ofDollarGen-
tape open with a box-cutter and found a in its database, so the powder had to be eral’s customers live in rural places which
paint-roller with dime bags of white pow- sentto a nearbyforensiclab forfurther test- have been slow to recover from the reces-
dertaped inside. ing, which could take a few weeks. “The sion. Anotherreason foritssuccessis thatit
The bags were passed to Jaime Pimen- federal government has responded im- caters to those who are financially
tel, another CBP employee whose job is to pressively quick to the fentanyl threat, stretched. Dollar General sells everything
test the substance. Behind him on a shelf which really didn’t escalate until 2015,” Mr from packaged food and toys to linens and
sat a box of Naloxone, an opioid-overdose Knight muses. “But we’re still walking— household-cleaningproducts, butin small-
antidote, in case Mr Pimentel accidentally crawling really. It’s so hard to seize, that er packages for those who cannot afford to
ingests fentanyl or another opioid. He when we do we almost have to say ‘Wow! buy in bulk. And although, contrary to
pressed a machine called a TruNarc onto a Good job!’” 7 popular belief, not all items cost a dollar, a
quarterofthem do; three-quarters cost less
than $5, and most of the rest will set you
backless than $10.
Dollar General promises low prices
and quick, convenient shopping, but so do
other dollar stores, such as Dollar Tree,
Family Dollar or the near-bankrupt 99
Cents Only. Their secret sauce, explains
Mike Paglia at Kantar, a retail consultant, is
to picka good site. Theyvetthem diligently,
opening their shops next to highways, post
offices, churches or schools. (A church
close to the array of deep discounters in
Lewisburg assures its worshippers that
“God has a 100% refund policy”.) In Up-
town, a down-at-heel neighbourhood in
Chicago thatishome to one ofthe few Dol-
lar Generals in big cities, the company
picked a spot behind a big parking lot next
to a Shell petrol station, a branch of Chase,
Chicago’s most popular bank, and
Planned Parenthood, a non-profit offering
advice on family planning.
The typical Dollar General shopper is
white, working class and tends to rely on
Thrift and profit some form ofgovernment assistance. “The
One buck at a time economy is continuing to create more of
our core customer,” the company’s chief
executive, Todd Vasos, told the Wall Street
Journal in an unguarded moment in De-
cember. He is also likely to be a supporter
of President Donald Trump, says Mr Mer-
rett, although this is changing as rural
LEWISBURG, TENNESSEE America gains pockets of diversity, for ex-
DollarGeneral thrives where low-income families struggle
ample next to slaughterhouses such as Ty-
HEY want to build one every four 14,000 outlets across America (about the son’s plant in Storm Lake, Iowa. Dollar
“Tmiles,” says the cashier at Dollar same number as there are McDonald’s res- General has tried to expand in ethnically
General, a discount shop, in Lewisburg, a taurants) almost 75% of Americans now diverse, left-leaning cities: in 2015 it tried to
small town in the rolling hills of central live within five miles ofa DollarGeneral. buy the more urban Family Dollar. Last
Tennessee. Situated on a big parking lot, “Over the last five years a new Dollar year it took over 322 mostly urban stores
next to a provider ofpayday loans open 24 General opened every four-and-a-half from a private-equity firm that had bought
hours a day, a supermarket chain called hours,” says Garrick Brown at Cushman & them from Dollar Tree, which had
Priceless and Dirt Cheap, another south- Wakefield, a property agent. The chain’s trumped Dollar General in the battle over
ern chain of discount shops flogging the profits have risen like a helium balloon Family Dollar and needed to shrink a bit
unsold or returned merchandise of other since the recession, to more than double forantitrust reasons. The new urban shops
retailers, the shop is one of three Dollar those of Macy’s, one of the most famous will be laboratories for a different type of
Generals in Lewisburg. Tennessee is the brands in retail, in the past fiscal year. Its customer. On a frigid evening just before
home state of Dollar General, which in re- market value is a whopping$28bn. Christmas, the shoppers at Dollar Gen-
centyearsovertookitsrivalsto become the How does Dollar General thrive when eral’s Uptown outlet were mostly black or
retailer of choice of low-income Ameri- so many other retailers are struggling, brown—and almost certainly Democrats.
cans, so it has one of the denser statewide downsizing or, in the case of Sears, Bon- Dollar General intends to continue its
networks of shops. Yet with well over Ton, 99 Cents Only, Neiman Marcus, vertiginous expansion, with plans to open 1