NEW YORK — The 99-cent store with the bright red awning cannot compete with the cutthroat pricing or huge selection at the two Dollar Tree outposts in its poor Brooklyn neighborhood.
So it has found another way to lure customers: with the personalized service usually associated with luxury stores.
After one woman requested a reusable lint brush, it began stocking them for 99 cents. It saves items for customers until they can pay for them. It anticipates their needs with air-conditioners in summer, heaters in winter and roses on Valentine’s Day. And it even offers a self-serve coffee stand where they can linger.
“It’s evolved beyond just being a 99-cent store,” said Habib Abdul Musiwir, the manager of 99¢ & Up Millenium Discount & Party Supply in East New York, whose customers have gone to check out the Dollar Tree stores only to return. “We’re meeting the needs of the community.”
Small family-owned dollar stores are under enormous pressure to hold onto customers and remain solvent as national chains like Dollar Tree expand their footprint in New York City and elsewhere, a trend underscored by Dollar General’s recent move to open stores in the city for the first time. Some independent stores have emphasized their neighborhood roots, while others have raised prices or tweaked their inventories beyond party supplies and off-brand shampoos to include household staples like bread and milk and even organic foods.
But just as supermarket and drugstore chains have reshaped local economies and wiped out many small businesses, dollar store chains are beginning to take over neighborhoods where mom-and-pop dollar stores have traditionally dominated. Many independent store owners and workers say they are facing a bleak future as their customers have more choices, and rising rents and operating costs further cut into their dwindling profits.
“The chains are growing rapidly at the expense of the independents — when they open up one chain store, they destroy five or 10 independent stores,” said David Emrani, the owner of Pride Products Corporation, which imports general merchandise and distributes it to about 3,000 independent dollar and discount stores nationally, about half the number from a decade ago.
Emrani himself owned six dollar stores on Long Island in 2008, but closed all but one after Dollar Tree chain stores opened nearby and not only poached some of his workers but also took away his customers. “You constantly have to ring up — if you don’t, you die,” he said. “You have to have more and more customers every day to survive.”
In the Bronx, where independent stores compete against one another as well as the chains, the 99¢ Super Star Discount store is not as busy as it used to be, even though it caters to its largely Hispanic and black neighborhood by carrying Goya agua de coco, Jarritos mango drink, canned beans and guava-flavored snacks, said Sam Essaedi, the manager.
Across the street, 99-Cent and Up Dollar R Us has raised some of its prices to eke out more profit. Muhammed Showaiv, the manager, counted five dollar stores just in the neighborhood, adding, “There’s not enough shoppers for the business.”
Overall, the dollar store industry is thriving at a time when the brick-and-mortar retail landscape is littered with shuttered stores. Promising deep discounts, these stores flourished during the recession and have continued to multiply at a time of seismic shifts in consumer habits and fierce competition from online retailers, especially Amazon, which recently started offering discounts to poorer families for its Prime membership, which covers the cost of shipping.
Nationally, 30,496 dollar stores rang up $33.8 billion in sales of food and household items in 2016, up from 20,543 stores and $14.9 billion in sales a decade earlier, according to Inmar Willard Bishop, a data analytics firm.
“Dollar stores are figuring out how to get people in,” said Marshal Cohen, chief industry analyst at the NPD Group, a market research company. “They have done the best job of changing with the consumer than any other retail store.”
Dollar General, one of the nation’s largest chains, has grown to 13,601 stores from 10,506 stores five years ago. This year, it plans to open 1,290 new stores, including 26 new stores in New York City. It will also remodel or relocate another 760 stores. “As we expand our presence in communities throughout the country, we continue to meet customers’ needs for everyday low prices on items they use and replenish most often,” said Crystal Ghassemi, a spokeswoman for Dollar General
Dollar stores can trace their roots to the mid-1800s, when one-price stores became a popular way to sell clothing, jewelry and knickknacks to thrifty shoppers, said Wendy Woloson, an associate professor of history at Rutgers University. Back then, there were also 25-cent and 49-cent stores. Frank Winfield Woolworth, the founder of F.W. Woolworth Co., later built a chain of five-and-dime stores, starting with a Great Five Cent Store in Utica.
Today, many dollar stores offer steep discounts by selling leftovers from other retail outlets. But as the stores have evolved, they have also expanded their inventory with bigger chains carrying their own brands and many stores adding perishable foods. Dollar Store Services, a developer of 3,000 independent dollar stores nationally since 1992, recently introduced a model for urban neighborhoods that is part dollar store, part bodega.
These no-frills stores have become a refuge for people left behind by the economic recovery, including laid-off workers, middle-class families facing rising living costs and recent college graduates burdened by huge loans. “A lot of customers who traded down to dollar stores can’t trade back up, or see no need, because the dollar stores meet their needs,” said Mark A. Cohen, an adjunct professor and director of retail studies at Columbia Business School. “To them, Walmart is a luxury store.”
Lassina Sanogo, 40, a security guard from the Bronx who earns $30,000 annually, said he always bought his cleaning supplies from a dollar store. “I can’t afford to lose a dollar,” he said. “And what I used to get for a dollar, now that’s up to two dollars.”
There is no official tally of New York City’s dollar stores. But there were 1,247 variety stores, including dollar stores, in 2015, a 24 percent increase from 1,002 stores in 2005, according to an analysis of census data by Queens College. Brooklyn had the largest number of stores, with 469, followed by Queens, with 355, and the Bronx, with 224.
Though national chains of such stores once largely stayed out of New York City, deterred by the high costs of doing business, they are increasingly moving in. There are 174 dollar and discounted general merchandise stores operated by major chains, including Dollar Tree, up from 139 such stores five years ago, according to Chain Store Guide, a research firm.
These stores are finding plenty of customers as wages stagnate and many new jobs are in relatively low-paying fields such as restaurants, food stores and home health care, said Jonathan Bowles, executive director of the Center for an Urban Future, a nonprofit group that tracks national chains in the city. “They’re selling to a large and growing number of New Yorkers who are living paycheck to paycheck,” he said. “They’re still shopping, but they’re not going to Madison Avenue.”
The chains have cropped up in neighborhoods where people are struggling in an ever more expensive city, as the gap between the rich and everyone else keeps widening. In East New York, which is dotted with public housing projects, eager shoppers lined up in May for the opening of a Dollar Tree store, where nothing costs more than $1.
“Anytime I’m out, I’ll stop in and see if they have anything new,” said Jeraldine Whitehurst, 54, an unemployed child care worker who shops there three times a week.
Still, Bill Wilkins, the manager of the East Brooklyn Business Improvement District, said it was important not to forget the dollar stores that served urban neighborhoods long before the chains showed up. “The mom-and-pop stores, that’s what gives you the fabric of our respective communities,” he said. “The corporations are antiseptic. You don’t have that same feeling.”
Along Manhattan Avenue in Brooklyn, which is known for a string of 99-cent stores, independent owners are struggling to adapt as families are replaced by singles who shop less often and are more interested in buying organic than in saving a few dollars.
“Business is very slow,” said Abdul Shran, a clerk at Java Discount, who sees between 20 and 40 customers a day, less than half the traffic of a few years ago. “We’re hoping to make it another month.”
Even so, another dollar store opened on the avenue just five months ago. Saul Ahmed, the manager of Super Saver Discount Center, said his store aimed to serve newcomers to the gentrifying area by stocking cheap housewares and hardware, and eventually organic foods.
“This is our way of helping to support the neighborhood,” he said.