September 20, 2023 • 24 mins
The Dollar General retail chain has 19,000-plus locations, more than Walmart and Wendy’s combined. Its business model is to open in towns too small to support bigger retailers, sell necessities at low prices and keep staff to a minimum, sometimes as few as one or two people per shift. This bare bones approach has led to profits but also numerous OSHA citations and millions of dollars in proposed fines against the company since 2017.
Bloomberg reporters Josh Eidelson and Brendan Case join this episode to talk about their reporting on Dollar General, what current and former employees say about what it’s like to work there–and how the company has responded.
Read more: Why Dollar General Might Just Be the Worst Retail Job in America
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
My name is David Williams. I'm a stock at Dollar General,
and I'm one of the hundreds of thousands of Dollar
General employees who come into work every day scared for
our safety. We're scared because we know that the leaders
of Dollar General are not looking out for the safety
of workers. The company has expanded so fast and so
(00:22):
recklessly that on any given day, I might have to
deal with a rat infestation, a door that won't lock,
or some one point of a gun at me with
no security to protect me.
Speaker 2 (00:36):
Last week, we talked about the tough lives of retail
workers these days and the challenge is facing brick and
mortar stores in an increasingly online marketplace. Today, a closer
look at one of the most visible retailers in the US,
Dollar General. With nineteen thousand plus locations, there are more
(00:56):
Dollar Generals in America than Walmart's and Wendy's rest Rants combined.
The company's success is based on selling common necessities for less,
but Bloomberg's Brendan Case and Josh Idelson report about the
downside of Dollar General's desire to squeeze out profits by
also operating the stores themselves as cheaply as possible. The
(01:19):
company is racked up fines for soiled merchandise, expired food
left on shelves, and stores that are often dirty and unsafe.
I'm Westksova today on the big take the high price
of low prices. Josh, I have to say this story
(01:50):
makes for some pretty shocking reading. How did you come
up with the idea of writing about Dollar General?
Speaker 3 (01:57):
Well.
Speaker 4 (01:58):
Dollar General came on to our radar because the US
Workplace Safety Agency OSHA had repeatedly cited them. They also
put Dollar General on their severe Violator list of companies
that were, in the agency's view, showing particular disregard for workers' rights,
(02:18):
and it was the first time a national retail company
had been placed on that list. So there were tea
leaves that suggested that something peculiar was going on here,
and something that our readers that BusinessWeek might not expect
from a retail company. People are more used to the
(02:39):
idea that a job like warehousing or construction or logging
could come with risks to the worker's health. A lot
of people think of retail as not a great job,
but presumably a safe job, and so we were eager
to figure out what's going on and we did that
(03:00):
really through two threads, one of which was thousands of
pages of documents that took months of public records requests
and follow up to shake loose from states around the
country as well as from federal OSHA. And the other
thread was talking to people in these stores, traveling around
(03:22):
the country to Oklahoma to Louisiana to Florida, talking to
people who've worked in these stores at the hourly level
as well as people who've been in management at the
store level or above the store level, and trying to
identify patterns in what the safety experts from the government
(03:44):
were finding and what the people who've worked in or
are still working in these stores are experiencing.
Speaker 2 (03:51):
And Brendan, through all those documents or all the interviews
that you did with employees and others, you paint a
very vivid picture. Can you describe for us what you found?
Speaker 3 (04:03):
So based on our reporting, we found lots of evidence
of stores being in very rocky shape. There are stores
where there are products that are way past their due date,
you know, whether it's yogurt, crackers, even in some cases
baby products. We found stores that were quite dirty at times,
(04:23):
which is a common complaint. You hear among communities who
oppose the expansion of dollar generals.
Speaker 2 (04:29):
And you spoke to one dollar a general employee who
describes this very thing.
Speaker 3 (04:35):
Yes, his name is Joseph Tinker, and he worked at
the store in Apache, Oklahoma. And in this case, there
were colonies of sparrows and blackbirds that nested in the ceiling.
They got in through a hole in the roof. They
ended up nesting and laying eggs and began regularly going
(04:55):
to the bathroom on the goods. His bosses wouldn't let
him throw this merchandise out. This included pillows stained with feces. Instead,
the employees were ordered to clean the goods, in some
cases by taking them home to wash and returning them
(05:15):
back to the shelves.
Speaker 4 (05:17):
One of the most striking moments for me and reporting
this story was meeting up in Oklahoma with Joseph and
his now husband, Josh, who was the manager of the store.
They both left the store when there was a walkout
and mass resignation last year over being forced to work
without functioning air conditioning. We went back into that store
(05:40):
and I was struck seeing the shelving that was propped
up with milk crates the lack of light in the bathroom,
the bugs, both living and dead, the rusty equipment, the
unhinged doors, the yellowish puddles on the floor, and Josh
and Joseph they noticed those things too, but their takeaway
(06:01):
was that the store has improved since when they were there,
because now the air conditioning is working.
Speaker 3 (06:08):
We talked with one worker who, in his first months
on the job was told by a manager to purposefully
block exits with merchandise as a way to deter would
be shoplifters, and that store actually burned to the ground
a couple of years after this employee started working there.
Speaker 1 (06:28):
There was one time I seen an exit filled with
stacks of water like cases.
Speaker 3 (06:36):
That the cases that the cases of water.
Speaker 2 (06:40):
That was employee David Williams. We also heard him at
the very top of the show addressing Dollar General shareholders,
and we'll hear a bit more of what he had
to say at that meeting in a minute.
Speaker 4 (06:54):
David Williams has been working for four years four Dollar General.
He's someone who knows about worst case scenarios, having been
made a refugee by Hurricane Katrina as a teenager, and
he was painted about blocking the exits and then after
the fire, seeing the lack of change. He's someone who's
(07:17):
committed himself to trying to change the company. He's part
of this growing confederation of different sorts of advocates and
activists within and outside the company. In fact, with a
proxy from a friendly shareholder, he went to Dollar General's
shareholder meeting in May. Activists with brass band marched to
(07:40):
the meeting and David Williams and a couple of colleagues
went inside and he stood and confronted the company and
described the conditions he's experienced and that other workers have experienced,
and urged approval of a shareholder resolution and.
Speaker 1 (07:58):
Also the OSHA Addeddology Unable to Severe Violated lists dedicated
to employers who have wilful repeated safety violations. These violators
include oles, emergency exits, fire extinguishers, and electrical panels blocked
by boxes of merchandise stacked up the six feet high.
(08:21):
This is all made worse by the serious level of understaffing.
It is not uncommon for a worker to be alone
in the store at night in areas where robberies commonly occur.
Speaker 4 (08:35):
There are people who've been in management at the company
who say they put in tickets in Dollar General's internal system,
and their concerns were ignored. One woman who was a
district manager told us that she spent months just trying
to get outside lights replaced at a store where workers
(08:58):
were clocking out in dark wakness, and was told eventually
she needed to provide a photo to show how dark
it was late at night before the lights could be replaced.
Workers have described issues with being cut by faulty equipment,
with what they see as regular fire hazards, also with
(09:22):
threats of violence from customers. One man I talked to
said he quit his job because someone was taking products
and he followed what he had been told was this
vague directive to stop people from stealing, and then the
man threatened to kill him, and so he the worker
(09:45):
decided to go work somewhere else. And a through line
in many of these issues about dealing with potential threats
from other people in the stores about the expired products
of also that workers have seen that we've seen a
common theme here is staffing. That workers say there aren't
(10:09):
enough people to look out for each other, to out
for customers in terms of the ability to move through
the store, the quality of the products, that this model
that has let the company grow very quickly and save
a lot of money, has come at a real cost
in all of these ways.
Speaker 2 (10:32):
And Brendon, you went to Dollar General and presented them
with your findings. What did they say about all of this?
Speaker 3 (10:38):
Dollar General had a few things to say to us,
and one of them is that they strive to be
a force for opportunities in the communities that they serve,
and they take their responsibility to provide a safe and
healthy working environment seriously.
Speaker 2 (10:57):
And it's statement to BusinessWeek about this story. Dollar General
also said they work with their store teams to promptly
address any issues. The company said when they learn of
maintenance or repair needs in or around their stores, they
take prompt action, and they said they have various cleaning protocols,
(11:17):
work with pest control firms, and will sometimes take other
steps to ensure a healthy and safe environment. The company
is contesting many of OSHA's citations and says it's implementing
additional safety trainings and compliance audits.
Speaker 3 (11:34):
The company recently said it would spend an extra one
hundred and fifty million dollars this year to improve in
store conditions, and a lot of that money will go
to increase staffing. Whether that's enough, time will tell. They
didn't dispute the specific findings, and they said that they're
(11:57):
in talks for a settlement agreement with OSHA, the workplace
safety regulator. Where those talks end up, how they end up,
that remains to be seen.
Speaker 2 (12:08):
After the break. How did Dollar General get to this place?
Brendan Josh earlier said that what's happening at Dollar General
is emblematic of their business model and how they operate.
(12:29):
What is Dollar General's business model.
Speaker 3 (12:32):
Dollar General's business model consists of selling basic goods at
a huge number of stores. They've blanketed the US with stores.
They've got nineteen thousand locations, that's more than any other
US retailer, and selling basic essentials at competitive prices, not
(12:53):
always the lowest price in the market, but competitive prices
in locations that are designed to be more convenient. And
then perhaps a Walmart supercenter, for example, that might be
located five, ten, fifteen, twenty miles from customers, especially in
rural areas, anybody without easy access to a car could
struggle getting there. And also going to a big store
(13:16):
is a big time commitment. Going to a Dollar General
means popping in and popping out. Most of the goods
they sell are consumables, and so you'll see a lot
of basic food items, you'll see a lot of packaged
food items, and you'll see a lot of non edible
but grocery items such as you know, paper products or
(13:36):
plates or what have you. And that model was refined
over time. The company's first store was opened in nineteen
fifty five, that's seven years before Sam Walton opened the
first Walmart. By the time the sun of the founder
stepped down early this century, the company had about six
(14:00):
thousand locations. It was then purchased by a private equity
group led by KKR in two thousand and seven. It
went public again in two thousand and nine, and that's
where it's growth really sorry to take off. They began
opening stores at a very high cadence. They were way
out pacing Walmart and target other big retailers in terms
(14:22):
of sales gains, powered in part by the proliferation of locations.
It's not necessarily a unique business model. Dollar Tree, which
is its biggest rival, has a similar model, at least
in a broadbrush perspective, but Dollar General has executed it better.
(14:44):
It has thousands more locations, and up until recently it
was far out pacing Dollar Tree in terms of sales
gains and market value.
Speaker 2 (14:55):
Josh. One other really interesting thing in your story was that,
unlike a lot of stores were seem to be getting bigger,
Dollar Generals are very very small stores.
Speaker 4 (15:04):
That's right. The average Dollar General store is around seventy
five hundred square feet. That's less than a fifth the
size of a typical neighborhood supermarket, let alone, compared to
a Walmart supercenter. You could probably hide a Dollar General
store inside of a Walmart supercenter and struggle to figure
(15:25):
out where you even put it. And part of what's
made that model work is not having a lot of
people in each of those stores. Sometimes there's only one
or two people, including a manager, on the property. On TikTok,
earlier this year, a customer posted about what she described
(15:47):
as the experience of having to watch over a store
herself as a random customer who'd come in that day,
so that the one employee working would have a chance
to go to the bathroom.
Speaker 2 (16:01):
Brendan, Given the working conditions you describe, why do people
want to work a Dollar General?
Speaker 3 (16:08):
About four of every five dollar General stores are located
in communities with fewer than twenty thousand people, and so
a lot of these stores are located in places where
the options of other places to work are relatively limited.
We spoke with one woman in Mississippi who said that
(16:30):
in her town, it's basically a question of working at
the Dollar General or working at the local chicken plant.
And just as their real estate strategy has to do
with convenience for customers' ease of getting there, that holds
true for workers too. It might be easier for many
employees to get to a local Dollar General than to
(16:51):
get to some other employer, particularly if they live in
more rural areas. All that said, the company is clearly
acknowledging the need to spend more on labor, and presumably
that extends to the challenge of attracting workers to work
there in the first place, in addition to giving them
(17:14):
the hours that many employees and store managers say are
needed to keep the stores in better conditions.
Speaker 4 (17:22):
You know, a company like Walmart has gotten a lot
more scrutiny over the past decade than Dollar General, and
we've seen a combination of factors, including activism by workers
and scrutiny from lawmakers and the public forced Walmart to
make some changes, to the point that in twenty twenty one,
(17:44):
Walmart raised its minimum pay level to twelve dollars. It's
now at fourteen minimum at Walmart. That's a contrast with
Dollar General, where a study of survey data from twenty
twenty one showed that most workers at Dollar General made
less than twelve dollars an hour. In that close to
(18:05):
a quarter of them made less than ten dollars an hour.
Speaker 2 (18:08):
When we come back, what comes next for America's most
prolific retailer, Brending, You described how the company has increased
the number of locations very very quickly. How profitable is it?
Speaker 3 (18:30):
To put some numbers on that, net income last year
was about two point four billion dollars, that was fifty
percent higher than five years before, and sales were almost
thirty eight billion dollars, which was sixty percent more than
five years before.
Speaker 2 (18:45):
And yet you write that recently Dollar General's share price
has fallen.
Speaker 3 (18:51):
It's been a really tough year for Dollar General in
the stock market, and unusually so, in fact, since KKR
brought the company back to the public market gets in
two thousand and nine. The shares have actually never posted
an annual decline. It's looking like this year will break
that streak. And I'd say that you can point to
a few different problems. What is that lower income customers,
(19:14):
the kind of people that Dollar General caters to, are
really under rising financial pressure. That's just a given for
all retailers at this point, but it hits Dollar General
particularly hard. Another thing that is a big headwind for
Dollar General is increased competition. Walmart obviously has very competitive prices,
(19:34):
it also has services like home delivery that Dollar General
can't match.
Speaker 2 (19:39):
And Josh, is there any indication that all of these
OSHA violations that you've talked about is having any effect
on the company's bottom line.
Speaker 4 (19:49):
It was interesting talking to the head of OSHA, pointed
by Joe Biden, who acknowledged himself that OSHA does not
have the power to levy the sorts of fines that
other agency like the EPA might. His description of what
OSHA is accomplishing, in part, was getting the company's attention.
By getting the public's attention, the tens of millions of
(20:12):
dollars in proposed fines from OSHA is very much a
drop in the bucket compared to the company's revenue. OSHA
also has this fragmented structure where around half the states
have their own mini oshas that are responsible for enforcement,
(20:32):
and some of them have not seemed eager to bring
any hammer down on this company. In fact, in a
number of cases, state labor agencies, even when they cited
the company, issued zero dollar fines. We found through our
public records requests actual zero dollar invoices that the government
(20:55):
sent a Dollar General.
Speaker 2 (20:56):
And told them to pay zero dollars.
Speaker 4 (20:59):
Yes, please remit payment promptly in the amount of zero dollars.
Speaker 2 (21:05):
And how do they explain why they would do that?
Speaker 4 (21:08):
I was told by the State of North Carolina that
a zero dollar citation they used was part of the
justification for a larger penalty. A few years later, when
a similar issue cropped up, the State of Tennessee told
me that, in their view, the amount of penalty for
a company doesn't play a role in identifying and correcting
(21:32):
workplace hazards.
Speaker 2 (21:34):
And also, you write that some towns have now tried
to block Dollar Generals from opening near them. Why has
there been this kind of resistance?
Speaker 4 (21:44):
That's right. We write about the towns and cities around
the country that have either rejected expansion efforts or have
put in place policies that restrict the construction of more
Dollar stores, for example, by saying you can't build one
within one mile or within two miles of existing ones.
(22:05):
In talking to people in those cities and towns around
the country, one of the themes that's come up is
the clutter in the existing stores. Another is the lack
of fresh produce options. Fresh produce is not a particularly
profitable product, and it's not the main thing that Dollar
(22:26):
General is offering.
Speaker 2 (22:28):
Brendan, As you continue to keep an eye on Dollar General,
what are you watching for in the future.
Speaker 3 (22:34):
Thinking about Dollar General's future, I'd say there's a few
different things to watch. One of them is local opposition
to the company's growth. Planet of course, the expansion has
been so central to the company's financial success over the
last fifteen years. In recent years, though, you've had about
seventy five communities around the US that have opposed dollar
(22:57):
stores in one form or another. Long story short, you know,
if opposition to dollar stores becomes a lot more common
around the country, that would certainly have an effect. And
of course that's just one consideration. If you're thinking about
Dollar General's future, especially from investors standpoint or an employee standpoint.
The other things you've got rising costs, you've got increased
(23:20):
competition from companies like Dollar Tree and Walmart that are
also going after the same kind of lower income customers.
And then you've got just the consumer backdrop where there's
more and more pressure on shoppers, Lots of price increases
in the last couple of years, rising borrowing costs now
just a lot of things that are eating away at
people's purchasing power.
Speaker 2 (23:41):
Brandon Josh, thanks for coming on the show.
Speaker 4 (23:43):
Thanks a lot, Thank you, Thanks.
Speaker 2 (23:46):
For listening to us here at The Big Take. It's
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Our senior producer is Katherine Fink. Federica Romanello is our producer.
(24:10):
Our associate producer is Zeneb Sidiki Field Garcia is our engineer.
Our original music was composed by Leo Sidrin. I'm Westkasova.
We'll be back tomorrow with another big take.
My name is David Williams. I'm a stock at Dollar General,
and I'm one of the hundreds of thousands of Dollar
General employees who come into work every day scared for
our safety. We're scared because we know that the leaders
of Dollar General are not looking out for the safety
of workers. The company has expanded so fast and so
(00:22):
recklessly that on any given day, I might have to
deal with a rat infestation, a door that won't lock,
or some one point of a gun at me with
no security to protect me.
Speaker 2 (00:36):
Last week, we talked about the tough lives of retail
workers these days and the challenge is facing brick and
mortar stores in an increasingly online marketplace. Today, a closer
look at one of the most visible retailers in the US,
Dollar General. With nineteen thousand plus locations, there are more
(00:56):
Dollar Generals in America than Walmart's and Wendy's rest Rants combined.
The company's success is based on selling common necessities for less,
but Bloomberg's Brendan Case and Josh Idelson report about the
downside of Dollar General's desire to squeeze out profits by
also operating the stores themselves as cheaply as possible. The
(01:19):
company is racked up fines for soiled merchandise, expired food
left on shelves, and stores that are often dirty and unsafe.
I'm Westksova today on the big take the high price
of low prices. Josh, I have to say this story
(01:50):
makes for some pretty shocking reading. How did you come
up with the idea of writing about Dollar General?
Speaker 3 (01:57):
Well.
Speaker 4 (01:58):
Dollar General came on to our radar because the US
Workplace Safety Agency OSHA had repeatedly cited them. They also
put Dollar General on their severe Violator list of companies
that were, in the agency's view, showing particular disregard for workers' rights,
(02:18):
and it was the first time a national retail company
had been placed on that list. So there were tea
leaves that suggested that something peculiar was going on here,
and something that our readers that BusinessWeek might not expect
from a retail company. People are more used to the
(02:39):
idea that a job like warehousing or construction or logging
could come with risks to the worker's health. A lot
of people think of retail as not a great job,
but presumably a safe job, and so we were eager
to figure out what's going on and we did that
(03:00):
really through two threads, one of which was thousands of
pages of documents that took months of public records requests
and follow up to shake loose from states around the
country as well as from federal OSHA. And the other
thread was talking to people in these stores, traveling around
(03:22):
the country to Oklahoma to Louisiana to Florida, talking to
people who've worked in these stores at the hourly level
as well as people who've been in management at the
store level or above the store level, and trying to
identify patterns in what the safety experts from the government
(03:44):
were finding and what the people who've worked in or
are still working in these stores are experiencing.
Speaker 2 (03:51):
And Brendan, through all those documents or all the interviews
that you did with employees and others, you paint a
very vivid picture. Can you describe for us what you found?
Speaker 3 (04:03):
So based on our reporting, we found lots of evidence
of stores being in very rocky shape. There are stores
where there are products that are way past their due date,
you know, whether it's yogurt, crackers, even in some cases
baby products. We found stores that were quite dirty at times,
(04:23):
which is a common complaint. You hear among communities who
oppose the expansion of dollar generals.
Speaker 2 (04:29):
And you spoke to one dollar a general employee who
describes this very thing.
Speaker 3 (04:35):
Yes, his name is Joseph Tinker, and he worked at
the store in Apache, Oklahoma. And in this case, there
were colonies of sparrows and blackbirds that nested in the ceiling.
They got in through a hole in the roof. They
ended up nesting and laying eggs and began regularly going
(04:55):
to the bathroom on the goods. His bosses wouldn't let
him throw this merchandise out. This included pillows stained with feces. Instead,
the employees were ordered to clean the goods, in some
cases by taking them home to wash and returning them
(05:15):
back to the shelves.
Speaker 4 (05:17):
One of the most striking moments for me and reporting
this story was meeting up in Oklahoma with Joseph and
his now husband, Josh, who was the manager of the store.
They both left the store when there was a walkout
and mass resignation last year over being forced to work
without functioning air conditioning. We went back into that store
(05:40):
and I was struck seeing the shelving that was propped
up with milk crates the lack of light in the bathroom,
the bugs, both living and dead, the rusty equipment, the
unhinged doors, the yellowish puddles on the floor, and Josh
and Joseph they noticed those things too, but their takeaway
(06:01):
was that the store has improved since when they were there,
because now the air conditioning is working.
Speaker 3 (06:08):
We talked with one worker who, in his first months
on the job was told by a manager to purposefully
block exits with merchandise as a way to deter would
be shoplifters, and that store actually burned to the ground
a couple of years after this employee started working there.
Speaker 1 (06:28):
There was one time I seen an exit filled with
stacks of water like cases.
Speaker 3 (06:36):
That the cases that the cases of water.
Speaker 2 (06:40):
That was employee David Williams. We also heard him at
the very top of the show addressing Dollar General shareholders,
and we'll hear a bit more of what he had
to say at that meeting in a minute.
Speaker 4 (06:54):
David Williams has been working for four years four Dollar General.
He's someone who knows about worst case scenarios, having been
made a refugee by Hurricane Katrina as a teenager, and
he was painted about blocking the exits and then after
the fire, seeing the lack of change. He's someone who's
(07:17):
committed himself to trying to change the company. He's part
of this growing confederation of different sorts of advocates and
activists within and outside the company. In fact, with a
proxy from a friendly shareholder, he went to Dollar General's
shareholder meeting in May. Activists with brass band marched to
(07:40):
the meeting and David Williams and a couple of colleagues
went inside and he stood and confronted the company and
described the conditions he's experienced and that other workers have experienced,
and urged approval of a shareholder resolution and.
Speaker 1 (07:58):
Also the OSHA Addeddology Unable to Severe Violated lists dedicated
to employers who have wilful repeated safety violations. These violators
include oles, emergency exits, fire extinguishers, and electrical panels blocked
by boxes of merchandise stacked up the six feet high.
(08:21):
This is all made worse by the serious level of understaffing.
It is not uncommon for a worker to be alone
in the store at night in areas where robberies commonly occur.
Speaker 4 (08:35):
There are people who've been in management at the company
who say they put in tickets in Dollar General's internal system,
and their concerns were ignored. One woman who was a
district manager told us that she spent months just trying
to get outside lights replaced at a store where workers
(08:58):
were clocking out in dark wakness, and was told eventually
she needed to provide a photo to show how dark
it was late at night before the lights could be replaced.
Workers have described issues with being cut by faulty equipment,
with what they see as regular fire hazards, also with
(09:22):
threats of violence from customers. One man I talked to
said he quit his job because someone was taking products
and he followed what he had been told was this
vague directive to stop people from stealing, and then the
man threatened to kill him, and so he the worker
(09:45):
decided to go work somewhere else. And a through line
in many of these issues about dealing with potential threats
from other people in the stores about the expired products
of also that workers have seen that we've seen a
common theme here is staffing. That workers say there aren't
(10:09):
enough people to look out for each other, to out
for customers in terms of the ability to move through
the store, the quality of the products, that this model
that has let the company grow very quickly and save
a lot of money, has come at a real cost
in all of these ways.
Speaker 2 (10:32):
And Brendon, you went to Dollar General and presented them
with your findings. What did they say about all of this?
Speaker 3 (10:38):
Dollar General had a few things to say to us,
and one of them is that they strive to be
a force for opportunities in the communities that they serve,
and they take their responsibility to provide a safe and
healthy working environment seriously.
Speaker 2 (10:57):
And it's statement to BusinessWeek about this story. Dollar General
also said they work with their store teams to promptly
address any issues. The company said when they learn of
maintenance or repair needs in or around their stores, they
take prompt action, and they said they have various cleaning protocols,
(11:17):
work with pest control firms, and will sometimes take other
steps to ensure a healthy and safe environment. The company
is contesting many of OSHA's citations and says it's implementing
additional safety trainings and compliance audits.
Speaker 3 (11:34):
The company recently said it would spend an extra one
hundred and fifty million dollars this year to improve in
store conditions, and a lot of that money will go
to increase staffing. Whether that's enough, time will tell. They
didn't dispute the specific findings, and they said that they're
(11:57):
in talks for a settlement agreement with OSHA, the workplace
safety regulator. Where those talks end up, how they end up,
that remains to be seen.
Speaker 2 (12:08):
After the break. How did Dollar General get to this place?
Brendan Josh earlier said that what's happening at Dollar General
is emblematic of their business model and how they operate.
(12:29):
What is Dollar General's business model.
Speaker 3 (12:32):
Dollar General's business model consists of selling basic goods at
a huge number of stores. They've blanketed the US with stores.
They've got nineteen thousand locations, that's more than any other
US retailer, and selling basic essentials at competitive prices, not
(12:53):
always the lowest price in the market, but competitive prices
in locations that are designed to be more convenient. And
then perhaps a Walmart supercenter, for example, that might be
located five, ten, fifteen, twenty miles from customers, especially in
rural areas, anybody without easy access to a car could
struggle getting there. And also going to a big store
(13:16):
is a big time commitment. Going to a Dollar General
means popping in and popping out. Most of the goods
they sell are consumables, and so you'll see a lot
of basic food items, you'll see a lot of packaged
food items, and you'll see a lot of non edible
but grocery items such as you know, paper products or
(13:36):
plates or what have you. And that model was refined
over time. The company's first store was opened in nineteen
fifty five, that's seven years before Sam Walton opened the
first Walmart. By the time the sun of the founder
stepped down early this century, the company had about six
(14:00):
thousand locations. It was then purchased by a private equity
group led by KKR in two thousand and seven. It
went public again in two thousand and nine, and that's
where it's growth really sorry to take off. They began
opening stores at a very high cadence. They were way
out pacing Walmart and target other big retailers in terms
(14:22):
of sales gains, powered in part by the proliferation of locations.
It's not necessarily a unique business model. Dollar Tree, which
is its biggest rival, has a similar model, at least
in a broadbrush perspective, but Dollar General has executed it better.
(14:44):
It has thousands more locations, and up until recently it
was far out pacing Dollar Tree in terms of sales
gains and market value.
Speaker 2 (14:55):
Josh. One other really interesting thing in your story was that,
unlike a lot of stores were seem to be getting bigger,
Dollar Generals are very very small stores.
Speaker 4 (15:04):
That's right. The average Dollar General store is around seventy
five hundred square feet. That's less than a fifth the
size of a typical neighborhood supermarket, let alone, compared to
a Walmart supercenter. You could probably hide a Dollar General
store inside of a Walmart supercenter and struggle to figure
(15:25):
out where you even put it. And part of what's
made that model work is not having a lot of
people in each of those stores. Sometimes there's only one
or two people, including a manager, on the property. On TikTok,
earlier this year, a customer posted about what she described
(15:47):
as the experience of having to watch over a store
herself as a random customer who'd come in that day,
so that the one employee working would have a chance
to go to the bathroom.
Speaker 2 (16:01):
Brendan, Given the working conditions you describe, why do people
want to work a Dollar General?
Speaker 3 (16:08):
About four of every five dollar General stores are located
in communities with fewer than twenty thousand people, and so
a lot of these stores are located in places where
the options of other places to work are relatively limited.
We spoke with one woman in Mississippi who said that
(16:30):
in her town, it's basically a question of working at
the Dollar General or working at the local chicken plant.
And just as their real estate strategy has to do
with convenience for customers' ease of getting there, that holds
true for workers too. It might be easier for many
employees to get to a local Dollar General than to
(16:51):
get to some other employer, particularly if they live in
more rural areas. All that said, the company is clearly
acknowledging the need to spend more on labor, and presumably
that extends to the challenge of attracting workers to work
there in the first place, in addition to giving them
(17:14):
the hours that many employees and store managers say are
needed to keep the stores in better conditions.
Speaker 4 (17:22):
You know, a company like Walmart has gotten a lot
more scrutiny over the past decade than Dollar General, and
we've seen a combination of factors, including activism by workers
and scrutiny from lawmakers and the public forced Walmart to
make some changes, to the point that in twenty twenty one,
(17:44):
Walmart raised its minimum pay level to twelve dollars. It's
now at fourteen minimum at Walmart. That's a contrast with
Dollar General, where a study of survey data from twenty
twenty one showed that most workers at Dollar General made
less than twelve dollars an hour. In that close to
(18:05):
a quarter of them made less than ten dollars an hour.
Speaker 2 (18:08):
When we come back, what comes next for America's most
prolific retailer, Brending, You described how the company has increased
the number of locations very very quickly. How profitable is it?
Speaker 3 (18:30):
To put some numbers on that, net income last year
was about two point four billion dollars, that was fifty
percent higher than five years before, and sales were almost
thirty eight billion dollars, which was sixty percent more than
five years before.
Speaker 2 (18:45):
And yet you write that recently Dollar General's share price
has fallen.
Speaker 3 (18:51):
It's been a really tough year for Dollar General in
the stock market, and unusually so, in fact, since KKR
brought the company back to the public market gets in
two thousand and nine. The shares have actually never posted
an annual decline. It's looking like this year will break
that streak. And I'd say that you can point to
a few different problems. What is that lower income customers,
(19:14):
the kind of people that Dollar General caters to, are
really under rising financial pressure. That's just a given for
all retailers at this point, but it hits Dollar General
particularly hard. Another thing that is a big headwind for
Dollar General is increased competition. Walmart obviously has very competitive prices,
(19:34):
it also has services like home delivery that Dollar General
can't match.
Speaker 2 (19:39):
And Josh, is there any indication that all of these
OSHA violations that you've talked about is having any effect
on the company's bottom line.
Speaker 4 (19:49):
It was interesting talking to the head of OSHA, pointed
by Joe Biden, who acknowledged himself that OSHA does not
have the power to levy the sorts of fines that
other agency like the EPA might. His description of what
OSHA is accomplishing, in part, was getting the company's attention.
By getting the public's attention, the tens of millions of
(20:12):
dollars in proposed fines from OSHA is very much a
drop in the bucket compared to the company's revenue. OSHA
also has this fragmented structure where around half the states
have their own mini oshas that are responsible for enforcement,
(20:32):
and some of them have not seemed eager to bring
any hammer down on this company. In fact, in a
number of cases, state labor agencies, even when they cited
the company, issued zero dollar fines. We found through our
public records requests actual zero dollar invoices that the government
(20:55):
sent a Dollar General.
Speaker 2 (20:56):
And told them to pay zero dollars.
Speaker 4 (20:59):
Yes, please remit payment promptly in the amount of zero dollars.
Speaker 2 (21:05):
And how do they explain why they would do that?
Speaker 4 (21:08):
I was told by the State of North Carolina that
a zero dollar citation they used was part of the
justification for a larger penalty. A few years later, when
a similar issue cropped up, the State of Tennessee told
me that, in their view, the amount of penalty for
a company doesn't play a role in identifying and correcting
(21:32):
workplace hazards.
Speaker 2 (21:34):
And also, you write that some towns have now tried
to block Dollar Generals from opening near them. Why has
there been this kind of resistance?
Speaker 4 (21:44):
That's right. We write about the towns and cities around
the country that have either rejected expansion efforts or have
put in place policies that restrict the construction of more
Dollar stores, for example, by saying you can't build one
within one mile or within two miles of existing ones.
(22:05):
In talking to people in those cities and towns around
the country, one of the themes that's come up is
the clutter in the existing stores. Another is the lack
of fresh produce options. Fresh produce is not a particularly
profitable product, and it's not the main thing that Dollar
(22:26):
General is offering.
Speaker 2 (22:28):
Brendan, As you continue to keep an eye on Dollar General,
what are you watching for in the future.
Speaker 3 (22:34):
Thinking about Dollar General's future, I'd say there's a few
different things to watch. One of them is local opposition
to the company's growth. Planet of course, the expansion has
been so central to the company's financial success over the
last fifteen years. In recent years, though, you've had about
seventy five communities around the US that have opposed dollar
(22:57):
stores in one form or another. Long story short, you know,
if opposition to dollar stores becomes a lot more common
around the country, that would certainly have an effect. And
of course that's just one consideration. If you're thinking about
Dollar General's future, especially from investors standpoint or an employee standpoint.
The other things you've got rising costs, you've got increased
(23:20):
competition from companies like Dollar Tree and Walmart that are
also going after the same kind of lower income customers.
And then you've got just the consumer backdrop where there's
more and more pressure on shoppers, Lots of price increases
in the last couple of years, rising borrowing costs now
just a lot of things that are eating away at
people's purchasing power.
Speaker 2 (23:41):
Brandon Josh, thanks for coming on the show.
Speaker 4 (23:43):
Thanks a lot, Thank you, Thanks.
Speaker 2 (23:46):
For listening to us here at The Big Take. It's
a daily podcast from Bloomberg and iHeartRadio. For more shows
from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever
you listen, and we'd love to hear from you. Email
us questions or comment to Big Take at Bloomberg dot net.
The supervising producer of The Big Take is Vicky Virgolina.
Our senior producer is Katherine Fink. Federica Romanello is our producer.
(24:10):
Our associate producer is Zeneb Sidiki Field Garcia is our engineer.
Our original music was composed by Leo Sidrin. I'm Westkasova.
We'll be back tomorrow with another big take.
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Sarah Holder
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