Dive Brief:

• A new study from the University of Nevada, Las Vegas compared the color, cleanliness, freshness and firmness of fruits and vegetables among 14 dollar-discount stores and 40 traditional grocery stores and found the quality of fruits and vegetables at the dollar stores is just as good as regular grocery store produce.
• While there was slightly less variety of produce at dollar stores, there was no significant difference in quality. “The dollar store fruits may be ripe, and you’ll have to eat it soon, but it’s completely good quality,” said Courtney Coughenour, lead author and UNLV School of Community Health Sciences professor, in a statement.​
• Researchers found that 84% of produce studied was less expensive at dollar stores than traditional food outlets. The findings are positive for budget-conscious shoppers as well as the 17.3. million people living in food deserts, where dollar stores might be an alternative for shoppers. 

Dive Insight:

It's important to note that most dollar stores do not carry produce, and that UNLV's study was limited to 14 discount stores in the Las Vegas metro area. Still, dollar operators have been increasing their produce assortment recently, and as the report indicates, those stores are executing very well.  

Dollar General is leading the charge in adding fresh fruits and vegetables among dollar discounters. Last year, the company announced plans to add produce to hundreds of stores as part of its "traditional plus" store remodels. While the fresh expansion only reached a fraction of its locations, the additions are boosting store traffic and promoting regular trips among shoppers, executives with the chain noted.

In 2016, there were more than 30,000 dollar stores in the U.S., and that figure is expected to grow to more than 37,000 by 2021, according to Statista. Their presence in small towns and rural areas is significant, and their foray into produce is something independent grocers along with large retailers like Walmart are closely following.

A 2018 report from the Institute for Local Self-Reliance found that dollar stores are now feeding more Americans than Whole Foods and that there are now more dollar stores than Walmart and McDonalds locations combined. Dollar Tree, which owns Family Dollar, currently operates a combined 15,100 stores in the U.S. and Canada with plans to hit 26,000. Dollar General has 15,200 stores, mainly in rural areas, and also has robust expansion plans.

Even with some dollar-discount stores selling produce, the selection of fresh fruits and vegetables is smaller than larger grocery stores. Due to the higher cost of many fruits and vegetables, dollar stores are often limited to selling cheaper varieties of produce that won't hurt their bottom line. 

This research comes at a time when small towns and urban areas are grappling with the role of dollar stores. Historically, the stores are built in economically distressed areas and give residents access to cheap staples. On the positive side, this gives low-income shoppers access to affordable milk, bread and other basics. Critics, however, say dollar stores often deepen poverty and push out traditional grocery stores by undercutting them on price.

If dollar discounters want to combat the negative reactions within these communities, adding fresh produce is a wise step. As they expand their footprint in the grocery space, adding healthier items will not only help their reputations, but could also appeal to a new group of shoppers motivated by nutrition and value.