The effect of retail chain expansions on local small businesses: The case of Dollar General in Florida

Abstract

In 2023, the 20,000th Dollar General store opened in the United States, as the company, which has locations in 48 states, continued to add more stores. Dollar General is a low-cost retailer that makes shopping convenient by utilizing small stores, rather than following the traditional big box approach. Using the National Establishment Time Series dataset (NETS) for the state of Florida between 1990 and 2019, we use the difference in timing of Dollar General openings to investigate its effect on small businesses nearby. Specifically, we quantify the effects on nearby firm revenue, employment, and likelihood of exit. The unique nature of the NETS data allows us to focus on the impacts of businesses in a narrower setting and identify a treatment group of firms within 0.5-mile radius of a new Dollar General, rather than using pre-defined geographic boundaries. Our results suggest that Dollar General can drive some firms out of business but provide positive spillovers in terms of revenues and employment for the ones that survive. These results are heterogenous across industries and retail subgroups.