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 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.
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 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 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
makes for some pretty shocking reading. How did you come up with the idea of writing about Dollar General?
Well.
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, 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 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 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 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 were finding and what the people who've worked in or
are still working in these stores are experiencing.
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?
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, which is a common complaint. You hear among communities who oppose the expansion of dollar generals.
And you spoke to one dollar a general employee who describes this very thing.
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 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 back to the shelves.
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 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 was that the store has improved since when they were there, because now the air conditioning is working.
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.
There was one time I seen an exit filled with stacks of water like cases.
That the cases that the cases of water.
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.
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 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 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.
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. 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.
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 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 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
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 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.
And Brendon, you went to Dollar General and presented them with your findings. What did they say about all of this?
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.
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, 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.
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 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.
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. What is Dollar General's business model.
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 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 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 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 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 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. It has thousands more locations, and up until recently it was far out pacing Dollar Tree in terms of sales gains and market value.
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.
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 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 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.
Brendan, Given the working conditions you describe, why do people want to work a Dollar General?
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 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 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 the hours that many employees and store managers say are needed to keep the stores in better conditions.
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, 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 a quarter of them made less than ten dollars an hour.
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?
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.
And yet you write that recently Dollar General's share price has fallen.
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, 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, it also has services like home delivery that Dollar General can't match.
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.
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 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, 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 sent a Dollar General.
And told them to pay zero dollars.
Yes, please remit payment promptly in the amount of zero dollars.
And how do they explain why they would do that?
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 workplace hazards.
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?
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. 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 General is offering.
Brendan, As you continue to keep an eye on Dollar General, what are you watching for in the future.
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 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 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.
Brandon Josh, thanks for coming on the show.
Thanks a lot, Thank you, Thanks.
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