Dollar Stores: Good for Your Wallet, Bad for Your Community

A new dollar store will open up every six hours nationwide this year. There’s already more dollar stores in the U.S. than Walmarts and McDonalds combined. This unprecedented growth is threatening the very communities that rely on them.

Dollar stores make billions so their growth is unsurprising. In 2018, Dollar Tree made $22 billion in revenue and Dollar General’s stock was worth over $35 billion as of this summer. By stocking small, often private-label products for cheap prices dollar stores are designed to get people to spend more, especially those who like finding a good deal. 

Saturating a Saturated Market

Dollar stores are increasingly being built in communities already saturated with Amazon deliveries, Walmart stores and Costco warehouses. In some cases, dollar stores are opening up blocks away from preexisting dollar stores - similar to the growth pattern of Starbucks. That comparison isn’t accidental - researchers say that dollar stores are looking to eliminate competition by carpeting low-income communities with cheap stores.

Stores like Dollar General say they build in clusters because their customers are only willing to travel three to five miles to shop with them. Nonetheless, evidence indicates that dollar stores are being built much closer to each other - in some cases less than half a mile apart. In fact, residents of most American cities live within one mile of a dollar store. 

Why is This a Problem?

Dollar stores contribute to food deserts in low-income communities.

Though they are great for your pocketbook, dollar stores aren’t necessarily good for the communities in which they are built, especially economically depressed communities. For instance, many low-income communities are already struggling to encourage the growth of grocery stores that provide fresh, healthy produce. Easy access to fresh produce is directly correlated with better health outcomes for communities. Though dollar stores may provide cheap food like Twinkies and chips, few stock healthy produce. Bananas and carrots are not profit leaders, especially if they are being priced at or near a dollar. This problem is exacerbated by the fact that dollar stores are seeing their greatest growth in the low-income and rural communities that need the benefits local grocers provide. 

Grocery stores sell both fresh foodstuffs AND the non-perishable items that dollar stores sell. When there are so many dollar stores in a community, grocery stores have no market for their non-perishable goods and thus little incentive to build in those communities. 

Dollar stores frequently sell expired or dangerously defective merchandise.

On August 26 of this year, New York Attorney General Leticia James announced the culmination of a year-long investigation into the sale of expired drugs (some more than a year past their expiration date) and faulty motor oil, as well as illegal practices regarding New York state’s bottle deposit law. The Dollar General-branded motor oil at issue in the investigation was not viable for most engines created after 1930s. Dollar General, Dollar Tree and Family Dollar were collectively fined $1.2 million dollars. 

Unchecked growth at all costs incentivizes shoddy business practices such as stocking expired medications and dangerously defective merchandise.

What Can Be Done?

Slowly but surely, people are waking up to the danger of dollar store saturation. Actions undertaken by community leaders and city councils are good places to inspire your own efforts:

• In July, the mayor of Birmingham, Alabama passed an amendment to prohibit further dollar stores openings as part of an effort to prevent food deserts in parts of the city.

• In Tulsa, Oklahoma, a local city councilwoman relied on laws originally passed to restrict the growth of big-box retailers like Walmart to limit the number of dollar stores that could be opened near each other.

• Fort Worth, Texas is not only looking to limit the growth of future stores, but also regulate preexisting stores by requiring them to carry fresh produce while also providing tax incentives for the development of grocery stores.

It’s important to remember that when built in moderation, dollar stores provide low-income communities with convenient access to cheap and necessary consumer goods. Dollar stores also create jobs, bring in new sales and property tax revenue for cities. However, left unchecked, dollar stores can diminish community health, the vitality of other small businesses, and in the end their very own profits.

Your Fitness Tracker May Be A Little Racist

Your Apple Watch or Fitbit may not be measuring your steps or heart rate accurately if you are a person of color.

Photo by Andres Urena on Unsplash

Lots of people wear smartwatches and fitness trackers — nearly 40 million in the U.S alone. These fitness trackers not only measure steps, but also use sophisticated laser technology to monitor heart rate and other physiological measures of well-being. But the technology that manufacturers rely on was designed effectively with light-skinned people in mind, and according to researchers and reporters, is likely to provide erroneous readings for people with darker skin. 

No wonder all that walking wasn’t making me lose weight.

Not-So-Colorblind Tech

Let’s take Fitbit for example, which uses the industry-standard laser technology in its trackers. If you own one, you’ve probably seen the green lights peeking out from beneath the device when you take it off. These lights rest against the top of your wrist and are used to measure heart rate. In between heartbeats the volume of blood in your blood vessels declines. If a light is shined onto your skin, it reflects back in differing amounts depending on how full of blood your vessels are at the moment. The cadence of darkening and lightening blood vessels changes as a result of your heart rate, and this cadence is what the green lights in your Fitbit measure. They then convert this cadence into a relatively accurate measurement of your actual heart rate.

However, darker skin has more melanin pigment, which has been conclusively proven to block green light, making it much harder to get an accurate reading. The darker your skin, the less accurate the reading. 

Research on the issue is still ongoing, but one of the few papers on the topic noted that not only were there connections between inaccurate readings for dark skin, but also for differing skin types. Anecdotal evidence for this phenomon is also easy to find: lots of consumers have complained about inaccurate readings over the years. Little has been done to solve the problem so far. 

Why Does This Matter?

Unconscious bias in technology is not a new problem. Though new technologies appear objective, implicit biases often leak into how they are researched, designed and marketed to a diverse public. There is substantial unconscious bias in other areas of design (just ask women about the freezing temperatures in older office buildings which were traditionally designed for men) so its discomforting but unsurprising to find the problem crop up in the world of health and fitness wearables. 

The real impact of these biases is felt in the secondary effects the wearable market is having on important scientific research — which often relies on these devices to make important measurements in studies. Health insurance companies and employers often offer lucrative bonuses or discounts to employees who meet certain step or heart rate metrics on their fitness trackers. Individuals of color could be missing out on a number of these benefits without even knowing it. 

What Can Be Done?

Fitbit is apparently aware of this issue and has tried to boost the power of the green light in its trackers to account for skin color. Apple has added an infrared light to its Apple Watch to supplement readings from its bank of green lights. But for now, these efforts may be ineffective stopgaps. Green lasers are used by all of the major brands to measure heart rate because they are cheaper to produce and less prone to erreonous readings due to movement — a must-have in a device that literally measures movement.

Its good that these companies are slowly becoming aware of the issue their devices pose for people of color. At the same time, its also important for researchers, sports medicine doctors, insurance companies, employers and the general public to know how inaccurate wearables can be for darker-skinned people. Awarness is the first step toward conscious design. 

Tools must be consciously designed with forethought and inclusivity in mind, not only because its the right thing to do, but also because it makes business sense … especially when nearly half of the consumers who purchase these products in the U.S. are people of color. 

Why Amazon Isn't Good For Us

It’s not hard to understand why Americans love Amazon. An estimated 60 percent of households subscribe to Amazon Prime and almost half of all online dollars are spent on Amazon’s platform. Hitting Amazon’s “buy now” button kickstarts a cascade of complicated algorithms that deliver products to millions of American households in less than two days, sometimes in less than two hours. No other online retailers can match Amazon’s combination of product selection, price and delivery speed.

How is Amazon.com Possible?

Amazon’s entire business model is to lure consumers in with very low prices, establish market dominance and crush (or buy out) competition and once competition has been eliminated, raise prices as much as they want.

Photo by Christian Wiediger on Unsplash

Here’s how it works:

Aside from well-established merchants, everyone else basically has to either use Amazon Web Services or the Amazon storefront in order to reach customers. Amazon can take up to half a merchant’s sale on the Amazon platform as a fee. If the merchant still manages to sell products at a decent profit and become successful on the Amazon platform … well then they just become an acquisition target and Amazon buys them out … sometimes by withholding access to their platform as a threat until they sell. Or Amazon uses its deep pockets and control over the distribution and manufacturing process to sell a competitive product at a deep discount (all those Amazon Basics cables you buy) which eventually drives the competitor out of business. Once the competition is decimated, prices on those cheap Amazon-branded products are then increased.

So … Amazon isn’t winning over consumers by building better products but by selling acceptable products at cutthroat prices … reducing competition, consumer choice and product quality along the way. That’s bad for everyone but Jeff Bezos.

The Amazon Way Has a Cost

This is where you ask: “How are they able to lower prices so much that they drive competitors out of business?” and where I tell you that the cost of these low prices is borne primarily by the people who work at Amazon.

When a product you buy becomes cheap overnight, it’s because something (like the environment) or someone (like an Amazon contract worker) has borne the cost. Amazon’s goal to reduce prices, eliminate competition and control the online economy results in a workplace where:

• Warehouse workers’ every move is monitored, down to the second.

• Workers are fired if they miss their delivery quotas, even by a small amount.

• Most workers don’t even survive one year, and quit frequently.

• Workers make significantly less than other similar personnel (and in fact, when Amazon moves into a new town, wages drop for all workers by as much as 30%).

And to help out Amazon even more, cities offer tax breaks and all kinds of incentives to get Amazon to build warehouses in their towns. These financial incentives are taken directly from public funds that could have gone to help those workers who’s wages decrease when Amazon comes to town, further exacerbating community resilience and driving down the broader economy.

Photo by Bryan Angelo on Unsplash

Yes, But That’s What Taxes Are For

But that’s OK you say because Amazon pays lots in taxes to help communities they operate in. Wrong. In 2017 YOU paid more in income taxes than Amazon did - because Amazon paid ZERO dollars in corporate income tax. Since roads still have to be built and schools still have to be funded, Amazon’s exploitation of the tax code just increases the tax burden on smaller (usually more innovative) companies as well as ordinary Americans.

Don’t get me wrong. Tax breaks are a legitimate way for governments to incentivize economic growth. The problem with Amazon and other tech giants is that hardly any of the public funds handed over to Amazon go back to the government. In fact, today many large tech companies like Apple funnel profits through foreign countries like Ireland and Luxembourg instead of paying their fair share in taxes.

Meanwhile, non-tech companies pay far more taxes per worker. For instance, Apple hires a small fraction of the employees a more traditional company like GE does. Which means that not only does Apple pay less in taxes than GE, it also contributes less to the local and national economy because it hires less workers and those it hires are far better paid. These better paid workers tend to invest their money (often overseas) rather than contribute to their local economy.

Big Tech’s Tactics Hurt Us All

Amazon’s anticompetitive, monopolistic and anti-labor practices increase economic and social inequality in troubling ways.

For instance, many tech companies have created a massive underclass of workers. Those at the top are the venture capital investors and white collar engineers and executives who “run” the company and at the bottom are the millions of contractors and “part-time” workers who actually run the company. Uber and Lyft are prime examples. Those at the top have full benefits and excellent wages, but the nearly four million ride-share workers who drive for Uber and Lyft have no paid time-off, no benefits or healthcare, and no job security. Moreover, they often end up making less than minimum wage - and this is before you factor in wear and tear on the car and fuel expenses.

Aside from the impact on individual workers, the communities in which tech companies operate are starting to fall prey to deepening inequality as well. As more of these white collar workers and investors have moved to places like Silicon Valley over the last decade, home prices have skyrocketed as has homelessness - which recently hit record highs per capita in San Francisco.

Why Doesn’t the Government Intervene?

Perhaps because the government now receives so many lobbying dollars from big tech that it exceeds those of the traditional lobbying industries.

While tech companies like Amazon go ignored, they continue to grow - getting larger and creating vast monopolies and oligopolies:

• Google now accounts for 90% of all online searches … worldwide. Its Android OS runs on more than 80% of smartphones in the world.

• Apple has $300 billion in cash - more than the gross domestic product of all but the richest countries and double that of any other US company.

• Meanwhile Facebook, like Amazon, either copies or buys out its competition, now owning the four most popular apps in the world - including Instagram and WhatsApp. These apps count 1/3 of the world’s population as users who willingly share their data creating the world’s most effective and comprehensive surveillance apparatus - unmatched by any government agency.

These companies have amassed so much power, quitting them may well be impossible.

Photo by Clem Onojeghuo on Unsplash.

So What Can You Do?

Encourage your elected representatives to investigate the increasing power tech companies are acquiring at consumer expense. Bring to light the funding tech companies provide to congressional campaigns. Encourage lawmakers to apply the fundamental antitrust laws of the United States and investigate whether some companies should be reduced in size. Even a threat of breaking up companies can have a major competitive effect that’s good for business: it was the threat to breakup Microsoft that cleared the way for companies like Google to exist. In many ways applying antitrust laws to big tech is one of the most capitalist things we can do, and also one of the best for our communities.

Finally, if you can afford to do so, consider putting your money where your mouth is: patronize small businesses that create innovative products that compete with Amazon and other tech giants. Be bold. Support indie developers and craftspeople so that they don’t feel like their only path to profitability is to get bought out by Amazon.

What I'm Reading This Week

I get asked this all the time so I’ve decided to start a short regular post sharing books I am currently reading. I usually finish a book a week, so I will try to share these on a weekly basis. This month, I’m about done reading Never Split the Difference: Negotiating as if Your Life Depended on it - an absolutely phenomenal book on negotiating written by former FBI hostage negotiator, Chris Voss.

The book has been very helpful to me in negotiating a MAJOR project I am currently working on and I bought the book on the recommendations of FBI colleagues for especially this purpose. It’s been a game changer. And beyond being relevant, it’s also well-written and hard to put down as a narrative story.

The book takes the viewpoint that life is a series of negotiations you should be prepared for: buying a car, negotiating a salary, buying a home, renegotiating rent, deliberating with your partner. Taking emotional intelligence and intuition to the next level, Never Split the Difference, focuses on the importance of active and empathetic listening and not giving up in a negotiation, and instead asking, “how am I supposed to do that?” to any demand your counterpart makes.

Amazon lets you download a sample chapter in either audio or Kindle format - check it out.

Superman knows wassup

Superman from the 1950s was more on point than half the leaders in this country today.

Happy to have a new Apple Store two blocks from my home, but is it good for the city?

Credit Ehsan Zaffar

The newest Apple Store is opening up in a historic Washington D.C. library. It looks great and it’s only a few minutes walk from my home, so as an Apple customer for decades I’m super excited. But as someone who thinks about resilient communities and civil rights, I’m also concerned and dissapointed.

The opening of this store in a historic space is another example of rampant gentrification, without any thought being given to the original, and generally less well-off inhabitants of the community in which this store opens. Apple will profit tremendously from this store, which is across the street from the DC Convention Center. Yet far as I can tell, nothing was done to engage and assist the community members that used to thrive here, and some of whom still live only one block away. None of them can afford the Apple iPhones that will now be sold in one of their former public library buildings.

Apple could have done a lot to be a good neighbor. For instance, Apple could have held one section of this store aside as a public reading and meeting space for young people. This would have fit the theme of opening a store in a former public library, provided a community space for local struggling youth, developed good PR for Apple, and also led to greater foot traffic in the stores.

Companies much smaller than Apple have engaged in these kinds of community-building efforts. The best example in DC are Capital One “cafe banks” which also serve as community meeting halls where local organizations and non-profits can organize events for free.

Apple dwarfs Capital One in size and reach with over $250 billion in cash reserves and a valuation of almost a trillion dollars. The interest earned on Apple’s cash reserves equals the annual GDP of many US states. At this scale, corporations have a responsibility to provide at least a little bit for the communities that are displaced by their efforts and fill their coffers. Otherwise, there will eventually be no one left to buy their products.