Speaker 1: My name is David Williams. I'm a stock at Dollar General,
Speaker 1: and I'm one of the hundreds of thousands of Dollar
Speaker 1: General employees who come into work every day scared for
Speaker 1: our safety. We're scared because we know that the leaders
Speaker 1: of Dollar General are not looking out for the safety
Speaker 1: of workers. The company has expanded so fast and so
Speaker 1: recklessly that on any given day, I might have to
Speaker 1: deal with a rat infestation, a door that won't lock,
Speaker 1: or some one point of a gun at me with
Speaker 1: no security to protect me.
Speaker 2: Last week, we talked about the tough lives of retail
Speaker 2: workers these days and the challenge is facing brick and
Speaker 2: mortar stores in an increasingly online marketplace. Today, a closer
Speaker 2: look at one of the most visible retailers in the US,
Speaker 2: Dollar General. With nineteen thousand plus locations, there are more
Speaker 2: Dollar Generals in America than Walmart's and Wendy's rest Rants combined.
Speaker 2: The company's success is based on selling common necessities for less,
Speaker 2: but Bloomberg's Brendan Case and Josh Idelson report about the
Speaker 2: downside of Dollar General's desire to squeeze out profits by
Speaker 2: also operating the stores themselves as cheaply as possible. The
Speaker 2: company is racked up fines for soiled merchandise, expired food
Speaker 2: left on shelves, and stores that are often dirty and unsafe.
Speaker 2: I'm Westksova today on the big take the high price
Speaker 2: of low prices. Josh, I have to say this story
Speaker 2: makes for some pretty shocking reading. How did you come
Speaker 2: up with the idea of writing about Dollar General?
Speaker 3: Well.
Speaker 4: Dollar General came on to our radar because the US
Speaker 4: Workplace Safety Agency OSHA had repeatedly cited them. They also
Speaker 4: put Dollar General on their severe Violator list of companies
Speaker 4: that were, in the agency's view, showing particular disregard for workers' rights,
Speaker 4: and it was the first time a national retail company
Speaker 4: had been placed on that list. So there were tea
Speaker 4: leaves that suggested that something peculiar was going on here,
Speaker 4: and something that our readers that BusinessWeek might not expect
Speaker 4: from a retail company. People are more used to the
Speaker 4: idea that a job like warehousing or construction or logging
Speaker 4: could come with risks to the worker's health. A lot
Speaker 4: of people think of retail as not a great job,
Speaker 4: but presumably a safe job, and so we were eager
Speaker 4: to figure out what's going on and we did that
Speaker 4: really through two threads, one of which was thousands of
Speaker 4: pages of documents that took months of public records requests
Speaker 4: and follow up to shake loose from states around the
Speaker 4: country as well as from federal OSHA. And the other
Speaker 4: thread was talking to people in these stores, traveling around
Speaker 4: the country to Oklahoma to Louisiana to Florida, talking to
Speaker 4: people who've worked in these stores at the hourly level
Speaker 4: as well as people who've been in management at the
Speaker 4: store level or above the store level, and trying to
Speaker 4: identify patterns in what the safety experts from the government
Speaker 4: were finding and what the people who've worked in or
Speaker 4: are still working in these stores are experiencing.
Speaker 2: And Brendan, through all those documents or all the interviews
Speaker 2: that you did with employees and others, you paint a
Speaker 2: very vivid picture. Can you describe for us what you found?
Speaker 3: So based on our reporting, we found lots of evidence
Speaker 3: of stores being in very rocky shape. There are stores
Speaker 3: where there are products that are way past their due date,
Speaker 3: you know, whether it's yogurt, crackers, even in some cases
Speaker 3: baby products. We found stores that were quite dirty at times,
Speaker 3: which is a common complaint. You hear among communities who
Speaker 3: oppose the expansion of dollar generals.
Speaker 2: And you spoke to one dollar a general employee who
Speaker 2: describes this very thing.
Speaker 3: Yes, his name is Joseph Tinker, and he worked at
Speaker 3: the store in Apache, Oklahoma. And in this case, there
Speaker 3: were colonies of sparrows and blackbirds that nested in the ceiling.
Speaker 3: They got in through a hole in the roof. They
Speaker 3: ended up nesting and laying eggs and began regularly going
Speaker 3: to the bathroom on the goods. His bosses wouldn't let
Speaker 3: him throw this merchandise out. This included pillows stained with feces. Instead,
Speaker 3: the employees were ordered to clean the goods, in some
Speaker 3: cases by taking them home to wash and returning them
Speaker 3: back to the shelves.
Speaker 4: One of the most striking moments for me and reporting
Speaker 4: this story was meeting up in Oklahoma with Joseph and
Speaker 4: his now husband, Josh, who was the manager of the store.
Speaker 4: They both left the store when there was a walkout
Speaker 4: and mass resignation last year over being forced to work
Speaker 4: without functioning air conditioning. We went back into that store
Speaker 4: and I was struck seeing the shelving that was propped
Speaker 4: up with milk crates the lack of light in the bathroom,
Speaker 4: the bugs, both living and dead, the rusty equipment, the
Speaker 4: unhinged doors, the yellowish puddles on the floor, and Josh
Speaker 4: and Joseph they noticed those things too, but their takeaway
Speaker 4: was that the store has improved since when they were there,
Speaker 4: because now the air conditioning is working.
Speaker 3: We talked with one worker who, in his first months
Speaker 3: on the job was told by a manager to purposefully
Speaker 3: block exits with merchandise as a way to deter would
Speaker 3: be shoplifters, and that store actually burned to the ground
Speaker 3: a couple of years after this employee started working there.
Speaker 1: There was one time I seen an exit filled with
Speaker 1: stacks of water like cases.
Speaker 3: That the cases that the cases of water.
Speaker 2: That was employee David Williams. We also heard him at
Speaker 2: the very top of the show addressing Dollar General shareholders,
Speaker 2: and we'll hear a bit more of what he had
Speaker 2: to say at that meeting in a minute.
Speaker 4: David Williams has been working for four years four Dollar General.
Speaker 4: He's someone who knows about worst case scenarios, having been
Speaker 4: made a refugee by Hurricane Katrina as a teenager, and
Speaker 4: he was painted about blocking the exits and then after
Speaker 4: the fire, seeing the lack of change. He's someone who's
Speaker 4: committed himself to trying to change the company. He's part
Speaker 4: of this growing confederation of different sorts of advocates and
Speaker 4: activists within and outside the company. In fact, with a
Speaker 4: proxy from a friendly shareholder, he went to Dollar General's
Speaker 4: shareholder meeting in May. Activists with brass band marched to
Speaker 4: the meeting and David Williams and a couple of colleagues
Speaker 4: went inside and he stood and confronted the company and
Speaker 4: described the conditions he's experienced and that other workers have experienced,
Speaker 4: and urged approval of a shareholder resolution and.
Speaker 1: Also the OSHA Addeddology Unable to Severe Violated lists dedicated
Speaker 1: to employers who have wilful repeated safety violations. These violators
Speaker 1: include oles, emergency exits, fire extinguishers, and electrical panels blocked
Speaker 1: by boxes of merchandise stacked up the six feet high.
Speaker 1: This is all made worse by the serious level of understaffing.
Speaker 1: It is not uncommon for a worker to be alone
Speaker 1: in the store at night in areas where robberies commonly occur.
Speaker 4: There are people who've been in management at the company
Speaker 4: who say they put in tickets in Dollar General's internal system,
Speaker 4: and their concerns were ignored. One woman who was a
Speaker 4: district manager told us that she spent months just trying
Speaker 4: to get outside lights replaced at a store where workers
Speaker 4: were clocking out in dark wakness, and was told eventually
Speaker 4: she needed to provide a photo to show how dark
Speaker 4: it was late at night before the lights could be replaced.
Speaker 4: Workers have described issues with being cut by faulty equipment,
Speaker 4: with what they see as regular fire hazards, also with
Speaker 4: threats of violence from customers. One man I talked to
Speaker 4: said he quit his job because someone was taking products
Speaker 4: and he followed what he had been told was this
Speaker 4: vague directive to stop people from stealing, and then the
Speaker 4: man threatened to kill him, and so he the worker
Speaker 4: decided to go work somewhere else. And a through line
Speaker 4: in many of these issues about dealing with potential threats
Speaker 4: from other people in the stores about the expired products
Speaker 4: of also that workers have seen that we've seen a
Speaker 4: common theme here is staffing. That workers say there aren't
Speaker 4: enough people to look out for each other, to out
Speaker 4: for customers in terms of the ability to move through
Speaker 4: the store, the quality of the products, that this model
Speaker 4: that has let the company grow very quickly and save
Speaker 4: a lot of money, has come at a real cost
Speaker 4: in all of these ways.
Speaker 2: And Brendon, you went to Dollar General and presented them
Speaker 2: with your findings. What did they say about all of this?
Speaker 3: Dollar General had a few things to say to us,
Speaker 3: and one of them is that they strive to be
Speaker 3: a force for opportunities in the communities that they serve,
Speaker 3: and they take their responsibility to provide a safe and
Speaker 3: healthy working environment seriously.
Speaker 2: And it's statement to BusinessWeek about this story. Dollar General
Speaker 2: also said they work with their store teams to promptly
Speaker 2: address any issues. The company said when they learn of
Speaker 2: maintenance or repair needs in or around their stores, they
Speaker 2: take prompt action, and they said they have various cleaning protocols,
Speaker 2: work with pest control firms, and will sometimes take other
Speaker 2: steps to ensure a healthy and safe environment. The company
Speaker 2: is contesting many of OSHA's citations and says it's implementing
Speaker 2: additional safety trainings and compliance audits.
Speaker 3: The company recently said it would spend an extra one
Speaker 3: hundred and fifty million dollars this year to improve in
Speaker 3: store conditions, and a lot of that money will go
Speaker 3: to increase staffing. Whether that's enough, time will tell. They
Speaker 3: didn't dispute the specific findings, and they said that they're
Speaker 3: in talks for a settlement agreement with OSHA, the workplace
Speaker 3: safety regulator. Where those talks end up, how they end up,
Speaker 3: that remains to be seen.
Speaker 2: After the break. How did Dollar General get to this place?
Speaker 2: Brendan Josh earlier said that what's happening at Dollar General
Speaker 2: is emblematic of their business model and how they operate.
Speaker 2: What is Dollar General's business model.
Speaker 3: Dollar General's business model consists of selling basic goods at
Speaker 3: a huge number of stores. They've blanketed the US with stores.
Speaker 3: They've got nineteen thousand locations, that's more than any other
Speaker 3: US retailer, and selling basic essentials at competitive prices, not
Speaker 3: always the lowest price in the market, but competitive prices
Speaker 3: in locations that are designed to be more convenient. And
Speaker 3: then perhaps a Walmart supercenter, for example, that might be
Speaker 3: located five, ten, fifteen, twenty miles from customers, especially in
Speaker 3: rural areas, anybody without easy access to a car could
Speaker 3: struggle getting there. And also going to a big store
Speaker 3: is a big time commitment. Going to a Dollar General
Speaker 3: means popping in and popping out. Most of the goods
Speaker 3: they sell are consumables, and so you'll see a lot
Speaker 3: of basic food items, you'll see a lot of packaged
Speaker 3: food items, and you'll see a lot of non edible
Speaker 3: but grocery items such as you know, paper products or
Speaker 3: plates or what have you. And that model was refined
Speaker 3: over time. The company's first store was opened in nineteen
Speaker 3: fifty five, that's seven years before Sam Walton opened the
Speaker 3: first Walmart. By the time the sun of the founder
Speaker 3: stepped down early this century, the company had about six
Speaker 3: thousand locations. It was then purchased by a private equity
Speaker 3: group led by KKR in two thousand and seven. It
Speaker 3: went public again in two thousand and nine, and that's
Speaker 3: where it's growth really sorry to take off. They began
Speaker 3: opening stores at a very high cadence. They were way
Speaker 3: out pacing Walmart and target other big retailers in terms
Speaker 3: of sales gains, powered in part by the proliferation of locations.
Speaker 3: It's not necessarily a unique business model. Dollar Tree, which
Speaker 3: is its biggest rival, has a similar model, at least
Speaker 3: in a broadbrush perspective, but Dollar General has executed it better.
Speaker 3: It has thousands more locations, and up until recently it
Speaker 3: was far out pacing Dollar Tree in terms of sales
Speaker 3: gains and market value.
Speaker 2: Josh. One other really interesting thing in your story was that,
Speaker 2: unlike a lot of stores were seem to be getting bigger,
Speaker 2: Dollar Generals are very very small stores.
Speaker 4: That's right. The average Dollar General store is around seventy
Speaker 4: five hundred square feet. That's less than a fifth the
Speaker 4: size of a typical neighborhood supermarket, let alone, compared to
Speaker 4: a Walmart supercenter. You could probably hide a Dollar General
Speaker 4: store inside of a Walmart supercenter and struggle to figure
Speaker 4: out where you even put it. And part of what's
Speaker 4: made that model work is not having a lot of
Speaker 4: people in each of those stores. Sometimes there's only one
Speaker 4: or two people, including a manager, on the property. On TikTok,
Speaker 4: earlier this year, a customer posted about what she described
Speaker 4: as the experience of having to watch over a store
Speaker 4: herself as a random customer who'd come in that day,
Speaker 4: so that the one employee working would have a chance
Speaker 4: to go to the bathroom.
Speaker 2: Brendan, Given the working conditions you describe, why do people
Speaker 2: want to work a Dollar General?
Speaker 3: About four of every five dollar General stores are located
Speaker 3: in communities with fewer than twenty thousand people, and so
Speaker 3: a lot of these stores are located in places where
Speaker 3: the options of other places to work are relatively limited.
Speaker 3: We spoke with one woman in Mississippi who said that
Speaker 3: in her town, it's basically a question of working at
Speaker 3: the Dollar General or working at the local chicken plant.
Speaker 3: And just as their real estate strategy has to do
Speaker 3: with convenience for customers' ease of getting there, that holds
Speaker 3: true for workers too. It might be easier for many
Speaker 3: employees to get to a local Dollar General than to
Speaker 3: get to some other employer, particularly if they live in
Speaker 3: more rural areas. All that said, the company is clearly
Speaker 3: acknowledging the need to spend more on labor, and presumably
Speaker 3: that extends to the challenge of attracting workers to work
Speaker 3: there in the first place, in addition to giving them
Speaker 3: the hours that many employees and store managers say are
Speaker 3: needed to keep the stores in better conditions.
Speaker 4: You know, a company like Walmart has gotten a lot
Speaker 4: more scrutiny over the past decade than Dollar General, and
Speaker 4: we've seen a combination of factors, including activism by workers
Speaker 4: and scrutiny from lawmakers and the public forced Walmart to
Speaker 4: make some changes, to the point that in twenty twenty one,
Speaker 4: Walmart raised its minimum pay level to twelve dollars. It's
Speaker 4: now at fourteen minimum at Walmart. That's a contrast with
Speaker 4: Dollar General, where a study of survey data from twenty
Speaker 4: twenty one showed that most workers at Dollar General made
Speaker 4: less than twelve dollars an hour. In that close to
Speaker 4: a quarter of them made less than ten dollars an hour.
Speaker 2: When we come back, what comes next for America's most
Speaker 2: prolific retailer, Brending, You described how the company has increased
Speaker 2: the number of locations very very quickly. How profitable is it?
Speaker 3: To put some numbers on that, net income last year
Speaker 3: was about two point four billion dollars, that was fifty
Speaker 3: percent higher than five years before, and sales were almost
Speaker 3: thirty eight billion dollars, which was sixty percent more than
Speaker 3: five years before.
Speaker 2: And yet you write that recently Dollar General's share price
Speaker 2: has fallen.
Speaker 3: It's been a really tough year for Dollar General in
Speaker 3: the stock market, and unusually so, in fact, since KKR
Speaker 3: brought the company back to the public market gets in
Speaker 3: two thousand and nine. The shares have actually never posted
Speaker 3: an annual decline. It's looking like this year will break
Speaker 3: that streak. And I'd say that you can point to
Speaker 3: a few different problems. What is that lower income customers,
Speaker 3: the kind of people that Dollar General caters to, are
Speaker 3: really under rising financial pressure. That's just a given for
Speaker 3: all retailers at this point, but it hits Dollar General
Speaker 3: particularly hard. Another thing that is a big headwind for
Speaker 3: Dollar General is increased competition. Walmart obviously has very competitive prices,
Speaker 3: it also has services like home delivery that Dollar General
Speaker 3: can't match.
Speaker 2: And Josh, is there any indication that all of these
Speaker 2: OSHA violations that you've talked about is having any effect
Speaker 2: on the company's bottom line.
Speaker 4: It was interesting talking to the head of OSHA, pointed
Speaker 4: by Joe Biden, who acknowledged himself that OSHA does not
Speaker 4: have the power to levy the sorts of fines that
Speaker 4: other agency like the EPA might. His description of what
Speaker 4: OSHA is accomplishing, in part, was getting the company's attention.
Speaker 4: By getting the public's attention, the tens of millions of
Speaker 4: dollars in proposed fines from OSHA is very much a
Speaker 4: drop in the bucket compared to the company's revenue. OSHA
Speaker 4: also has this fragmented structure where around half the states
Speaker 4: have their own mini oshas that are responsible for enforcement,
Speaker 4: and some of them have not seemed eager to bring
Speaker 4: any hammer down on this company. In fact, in a
Speaker 4: number of cases, state labor agencies, even when they cited
Speaker 4: the company, issued zero dollar fines. We found through our
Speaker 4: public records requests actual zero dollar invoices that the government
Speaker 4: sent a Dollar General.
Speaker 2: And told them to pay zero dollars.
Speaker 4: Yes, please remit payment promptly in the amount of zero dollars.
Speaker 2: And how do they explain why they would do that?
Speaker 4: I was told by the State of North Carolina that
Speaker 4: a zero dollar citation they used was part of the
Speaker 4: justification for a larger penalty. A few years later, when
Speaker 4: a similar issue cropped up, the State of Tennessee told
Speaker 4: me that, in their view, the amount of penalty for
Speaker 4: a company doesn't play a role in identifying and correcting
Speaker 4: workplace hazards.
Speaker 2: And also, you write that some towns have now tried
Speaker 2: to block Dollar Generals from opening near them. Why has
Speaker 2: there been this kind of resistance?
Speaker 4: That's right. We write about the towns and cities around
Speaker 4: the country that have either rejected expansion efforts or have
Speaker 4: put in place policies that restrict the construction of more
Speaker 4: Dollar stores, for example, by saying you can't build one
Speaker 4: within one mile or within two miles of existing ones.
Speaker 4: In talking to people in those cities and towns around
Speaker 4: the country, one of the themes that's come up is
Speaker 4: the clutter in the existing stores. Another is the lack
Speaker 4: of fresh produce options. Fresh produce is not a particularly
Speaker 4: profitable product, and it's not the main thing that Dollar
Speaker 4: General is offering.
Speaker 2: Brendan, As you continue to keep an eye on Dollar General,
Speaker 2: what are you watching for in the future.
Speaker 3: Thinking about Dollar General's future, I'd say there's a few
Speaker 3: different things to watch. One of them is local opposition
Speaker 3: to the company's growth. Planet of course, the expansion has
Speaker 3: been so central to the company's financial success over the
Speaker 3: last fifteen years. In recent years, though, you've had about
Speaker 3: seventy five communities around the US that have opposed dollar
Speaker 3: stores in one form or another. Long story short, you know,
Speaker 3: if opposition to dollar stores becomes a lot more common
Speaker 3: around the country, that would certainly have an effect. And
Speaker 3: of course that's just one consideration. If you're thinking about
Speaker 3: Dollar General's future, especially from investors standpoint or an employee standpoint.
Speaker 3: The other things you've got rising costs, you've got increased
Speaker 3: competition from companies like Dollar Tree and Walmart that are
Speaker 3: also going after the same kind of lower income customers.
Speaker 3: And then you've got just the consumer backdrop where there's
Speaker 3: more and more pressure on shoppers, Lots of price increases
Speaker 3: in the last couple of years, rising borrowing costs now
Speaker 3: just a lot of things that are eating away at
Speaker 3: people's purchasing power.
Speaker 2: Brandon Josh, thanks for coming on the show.
Speaker 4: Thanks a lot, Thank you, Thanks.
Speaker 2: For listening to us here at The Big Take. It's
Speaker 2: a daily podcast from Bloomberg and iHeartRadio. For more shows
Speaker 2: from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever
Speaker 2: you listen, and we'd love to hear from you. Email
Speaker 2: us questions or comment to Big Take at Bloomberg dot net.
Speaker 2: The supervising producer of The Big Take is Vicky Virgolina.
Speaker 2: Our senior producer is Katherine Fink. Federica Romanello is our producer.
Speaker 2: Our associate producer is Zeneb Sidiki Field Garcia is our engineer.
Speaker 2: Our original music was composed by Leo Sidrin. I'm Westkasova.
Speaker 2: We'll be back tomorrow with another big take.