Closure of five Dollar General stores in New Orleans East could open the door for a new supermarket

When Dollar General quietly notified employees and store customers earlier this summer that it would be shutting down its five New Orleans East locations in August, the news drew bittersweet reactions from a community long deprived of retail businesses — especially grocery stores.

The discount chain has been targeted by community organizers, national media reports and even the U.S. Department of Justice, largely for keeping independent grocery stores away by selling poor quality merchandise at discounted prices. Still, some neighborhoods have few other options.

“The problem with the dollar stores has been the oversaturation, the proliferation, but they do serve a purpose,” said Tangee Wall, who heads the nonprofit neighborhood group New Orleans East Matters. “They are needed.”

Now, the stores are gone, and the community and its business leaders are trying to figure out how to capitalize on a tough situation. They acknowledge it won’t be easy to backfill more empty storefronts in an area already littered with vacant retail space. But some see it as an opportunity for New Orleans East, home to 88,000 residents and just two full-service supermarkets, to attract a third grocer to the area.

“It’s never a good thing when stores close because retailers want to flock to where others are successful,” said New Orleans Business Alliance President and CEO Louis David. “But it does open a section of the market.”

Taking another look

The Nashville-based discount chain, which has more than 20,000 locations nationwide and more than 600 in Louisiana, never officially announced the closures and didn’t respond to multiple requests for comment about why it was closing only its New Orleans East locations.

A spokesperson for Mayor LaToya Cantrell’s office said city officials had several conversations over the past months with Dollar General about addressing “any of their concerns at specific store locations” and were disappointed to learn it had decided to close the stores. The city declined to provide additional details about the nature of the conversations or the concerns at specific stores.

In the wake of the closures, Rouses CEO Donny Rouse said his rapidly growing chain, which has 66 locations across the Gulf Coast and two more opening this fall, will take another look at New Orleans East.

A 2019 City Planning Commission study, which eventually led to an ordinance limiting the number of discount stores in New Orleans, quoted Rouse as saying discount chains like Dollar General make it difficult for his store to compete. The study noted that the cost to build and open a new Rouses at the time was $5 million, compared to the $250,000 it cost Dollar General to lease a new store.

Five years later, Rouse said having fewer discount stores in the area makes it potentially more attractive.

“East New Orleans is an area we have always looked at and we will look at again,” Rouse said.

Other local chains, including Canseco’s and Ideal Market, said they have no plans to open grocery stores in New Orleans East right now. Metairie-based Breaux Mart did not return calls seeking comment.

Two years ago, Target was mulling a move into New Orleans East. But the deal, which Mayor LaToya Cantrell announced before it was finalized, never materialized. The company has not said why. Sources familiar with the situation say talks are not dead and there is still a possibility the popular chain will come to the area, but no deal is imminent.

Knocking on doors

Part of the challenge attracting new grocers is the need for new, large visible locations, according to David, who said he is currently talking to several supermarket chains about potential deals.

“What we hear from the national chains is that they want specific locations,” he said. “There is no shopping center under construction that meets the modern standards of perfect visibility from I-10.”

While that may be a requirement for a national chain, others say New Orleans East has several sites well suited to local or regional grocers. Christy Verges manages a portfolio of retail and office buildings in New Orleans East developed by her late father, Wade Verges, and has been trying to interest grocery chains in vacant land next to a strip center at Bullard Avenue and Morrison Road.

The site was home to a Winn Dixie when she was growing up in that area in the 1980s, and in recent months, she has attracted two new national retailers to the center, including a commercial driving school and a pizza restaurant. But no grocery stores.

“No one is knocking on our doors but we’re knocking on theirs,” she said. “I take the lack of interest with a grain of salt. They’re eventually going to come around because people need them out here.”

Perceptions vs. reality

Another challenge hampering efforts to attract retailers to New Orleans East is the perception that the area is a dangerous place to do business. City Council member Oliver Thomas and others point to statistics that show a 40% decrease in violent crime over the past year, and say the area is no less safe than other parts of the city.

Local small business owners say the perception is a false narrative that keeps other businesses and, sometimes customers, away.

“It isn’t as bad as people say it is out here,” said Gerald Butler, who, with his wife, owns Thai NOLA restaurant and an adjacent tattoo shop in a strip center on Bullard.

At the same time, discount stores, and particularly Dollar General, have been plagued by theft and shoplifting at stores all over the country. In earnings calls this year, Dollar General executives acknowledged that “shrink,” the industry term for merchandise lost primarily from theft or damage, was the company’s biggest challenge and the main reason profits were down.

There’s no data to show whether the problem was worse at the Dollar General locations in New Orleans East than elsewhere. But Sonal Shah, who owns the now-shuttered Dollar General location on Morrison Road, said store management told her that excessive theft was the reason the company was closing that location.

New Orleans Police Department Superintendent Anne Kirkpatrick is aware that “theft/shoplifting at dollar stores and other local businesses have been an issue for quite some time in multiple districts across the city,” the NOPD said in a prepared statement. 

Needs and possibilities

As for the five empty Dollar Store sites, each around 12,000 square feet, experts say the buildings could be converted to a variety of specialty uses. When two Dollar General stores in southwest Louisiana closed a couple of years ago, one became a lawnmower sales and service store. Another was leased to a Hispanic market, said developer Jay Wood, who builds sites for Dollar General then sells them to investor landlords.

Four of the local sites are owned by out-of-state investors, who could not be reached for comment or declined to comment on the future of the buildings. Shah, the only local owner, said she has been contacted by real estate brokers interested in listing the building, but hasn’t heard from any prospective tenants yet.

At a recent meeting of the New Orleans East Business Alliance, members said the area’s network of small businesses have myriad needs and would like to see a FedEx store or some other service provider that would make it easier for them to do business.

“There are so many needs and possibilities,” said Corinne Villavosso, a business consultant who works in New Orleans East. “We just all need to work together.”