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Dollar stores thrive amid concerns Some see good value, but others worry about image problem

We may not not have a Neiman Marcus, a Whole Foods or even an IKEA, but we do have a lot of discount dollar stores. Maybe that's because Buffalo loves a bargain.

The number of dollar stores locally has doubled over the past 10 years, and during the next decade, that figure is expected to double again, according to one analyst's projections.

But resentment toward newly planned locations for these deep discount outlets -- which have quietly become a staple in our society's shopping environs -- is becoming palpable.

Take the latest proposal for a Dollar General on Seneca Street in South Buffalo, where neighborhood residents have voiced concern that the area might be drowning in dollar stores.

"Another dollar store just doesn't cut it," said Linda Bain, a South Buffalo resident who is active in the Pomona Block Club.

She said she understands the discount businesses generate some jobs and create new venues for affordable shopping. Yet she and others want something special for Seneca Street.

"We appreciate that a building is going to be torn down. But a Dollar General is just another dollar store," grumbled Bain, who complained to Buffalo's Planning Board last week about the planned store on Seneca Street that would replace a long-vacant Pizza Hut.

One of the region's leading retail experts says he knows what's behind the opposition.

Putting in a dollar store "devalues the presence of every other store in the area," said Arun K. Jain, chairman of the marketing department at the University at Buffalo's School of Management.

"Everybody would like to see more upscale stores, which carry their own brand equity and make the area look better," Jain said. "But with a dollar store, the perception is these are cheap stores serving to bargain hunters and low-income families. And that's what they don't want."

The region had about 50 dollar stores in 2000, and there are roughly 100 now, said Burt Flickinger III, president of Strategic Resource Group, a New York City-based retail consultant.

Today, most of the stores here are part of three big chains -- Dollar General, Dollar Tree and Family Dollar.

Flickinger's firm anticipates Erie, Niagara, Cattaraugus and Monroe counties will have a total of 200 dollar stores by 2020.

John McCain stopped at a Dollar General at Elmwood and Hertel avenues one day last week to buy some fish oil capsules.

The Buffalo resident said he paid $6.75 for an item that would have cost him $10 or $11 at a drug store.

"You get more value for your dollar," said McCain.

> Steady growth

Several factors have led to the steady growth in the number of dollar stores in the United States, according to Flickinger.

Dollar stores work with major food and beverage manufacturers to get items specially made for them, he said.

There are smaller sizes and amounts of products unique to these discount outlets that aren't available to supermarkets.

For example, dollar stores sell 4 to 6 ounces of bologna for $1, compared with 16-ounce packages for between $2 and $4 at bigger food stores.

Underlying that are tough economic times with high unemployment, individuals who have less money to spend and people shopping for items a day or a few days at a time, Flickinger said.

Kathy Cobella stopped at the Dollar General at Elmwood and Hertel last week for a greeting card, which can sometimes be a couple of dollars cheaper than those found elsewhere.

"If you're watching your money ," the Buffalo resident said, "it's a good place to go."

But for Bain, of the Pomona Block Club, "thrift-type" stores undermine the image of neighborhoods.

Similar views were echoed by one of the most high-profile block clubs in the city. Arthur J. Robinson Jr. of the Seneca-Babcock Community Block Club said he's skeptical that some communities can sustain multiple dollar stores for a long period.

"Do you put one business in, then put two others out [of business]?" Robinson asked.

But there is a market for such stores, said David E. Pawlik of Creative Structures Services, a Buffalo company that plans to open two new Dollar Generals in the city this year.

The company has also been involved in constructing two Dollar Generals outside the city.

Pawlik's company plans to build the 9,100-square-foot store at 2137 Seneca St. near Kingston Place. The company is also in the process of building a Dollar General at Genesee Street and Fillmore Avenue. Construction is about 25 percent completed, and the store is expected to open in early fall.

Pawlik said he's willing to meet with South Buffalo residents to try to ease their concerns about the proposed project on Seneca Street. But he reaffirmed the company's plans to move forward with the new store.

"We have a long-term relationship with Dollar General for 15 years," Pawlik said.

> Opposition pops up

What about those who suggest that such stores "cheapen" commercial districts, making them less desirable for other development?

"I totally disagree with that. A brand new store provides quality and important services to a community," Pawlik said. "At the end of the day, we will provide an attractive site. We'll bring in jobs and significant investment, and these add value to a community."

Opposition to dollar stores has popped up around the country.

Earlier this year, lawmakers in New Orleans began considering bans on "medium-box retail stores" in parts of the city, according to the New Orleans Times-Picayune.

But the perception that these stores cater to mostly low-income shoppers took a jolt this month when Dollar General's chairman and CEO, in a statement to the National Association of Convenience Stores, said the fastest-growing segment of his company's customers are those with an annual income above $70,000.

Rick Dreiling also said the company plans to open 625 new stores this year.

One reason those making more than $70,000 seem to be turning toward discount stores is that many are seeing the value of their homes drop, which is affecting the financing of their retirements, Flickinger said.

Thus, they are looking to save more money for retirement and spending less, he said.

While overall dollar stores have seen growth, not all dollar stores bear great fruit.

Dollar Brite was billed as an "upscale" dollar store when it opened in on Maple Road in Amherst in May 2003. A little more than two years later, its owners filed for bankruptcy protection.

Another dollar store now occupies that location -- it is one of two Everything for a Dollar Store USA outlets. The company has more than 60 locations in Canada, according to a representative in the company's Markham, Ont., headquarters.

Its other U.S. location is in the McKinley Mall in Hamburg.

Other independent dollar stores in the area include A Dollar, which has locations in the Main Place Mall and on Transit Road in Williamsville, and Ming 99 Cent City on Union Road in Cheektowaga.

> Limited powers

Many people would prefer to see businesses other than dollar stores popping up on commercial strips, acknowledged Buffalo South District Council Member Michael P. Kearns. But he said in some instances, options are limited. For example, that Seneca Street site was once a laundromat, and it has had environmental issues that scared some developers away, Kearns noted.

Meanwhile, some municipal planning boards have limited regulatory powers over controlling the types of businesses that move into certain commercial areas. James K. Morrell chairs Buffalo's Planning Board, and he noted that the panel's focus is generally confined to the design, landscaping and other physical characters of a proposed development.

"This body is responsible for site plan review. In terms of use and competition [concerns], there's not much that we can do," Morrell said.

The Buffalo Planning Board delayed approval at Tuesday's meeting after some residents complained that the developer failed to seek enough public input.

While the companies that run dollar stores face more outspoken criticism and opposition, a Dollar Tree spokeswoman defended the company's addition of retail outlets.

"We're proud that we continue to grow," said Shelly Davis, spokeswoman for the Chesapeake, Va.-based company. "We are providing our customers with a fun, friendly, fast, convenient shopping experience. And we provide the things they want and the things they need."

For Jain, the UB marketing professor, putting up a dollar store should be considered in the context of what makes sense for the community as a whole.

"It is so easy to put a dollar store in there," Jain said. "It is more difficult, it takes much, much greater effort, much greater strategic thinking to put in a store which will enhance the attractiveness of the area. That is the challenge."

e-mail: abesecker@buffnews.com and bmeyer@buffnews.com

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