MISSISSIPPI – Sixty-two Dirt Cheap locations — once a staple for budget-conscious shoppers — across eight states now sit empty after the company filed for Chapter 11 bankruptcy on Oct. 10.

The closures, which include stores and warehouses in Mississippi, leave behind not only vacant buildings but displaced workers and limited retail options in rural communities that relied on the discount chain for affordable goods.

Unlike other national chain discount stores, such as Dollar General or Big Lots, Dirt Cheap specialized in liquidated goods and salvage items, offering steep discounts on everything from furniture to electronics.

Of the 62 locations, just over a dozen stores were in Mississippi, including rural areas like Lucedale and Picayune, where alternative retailers are scarce.

For longtime customer Vanessa Underwood, the closures mark a bittersweet farewell.

“There are no stores like Dirt Cheap around,” said Underwood, who has shopped at the Hattiesburg store since it opened in 1990. “I drive 25 miles to come here and get a bargain.”

The bankruptcy explained

The bankruptcy filing affects Channel Control Merchants LLC, the parent company of Dirt Cheap, Treasure Hunt and Dirt Cheap Building Supplies. The company, which was founded in Hattiesburg, listed estimated liabilities between $100 million and $500 million, with up to 999 creditors, a person or institution that is owed money or services.

Among its largest debts are $15.6 million owed to Target Corp.’s Salvage Department and $5.4 million to Amazon.com Services LLC. These debts reflect the company’s reliance on salvaged and returned items, which formed the backbone of its discount inventory.

While Roy Howard Community Journalism Center attempts to reach CCM for comment were unsuccessful, Jeffery Martin, the company’s chief restructuring officer, told the Daily Journal issues with a supplier weakened CCM’s financial position.

Martin’s quoted excerpt from October reads, “Over the past 18 months, Target has de-mixed its pallets, divesting its best returns to B-Stock Solutions Inc., a company competitor. Target has been channeling a deteriorating mix of inventory to the debtors, while increasing the cost of its pallets. Given Target’s position as the company’s foundational supplier, the company lacked the necessary leverage to negotiate or otherwise dispute these increased costs.”

RHCJC staffers reached out to Target for comment to Martin’s statement and is waiting for a response.

Retail landscape

Discount stores, like Dirt Cheap, are typically outlets offering products at prices lower than those found in traditional retail stores. These stores achieve lower prices through bulk purchasing, efficient distribution and reduced profit margins, according to Britannica Money. They often provide a wide range of merchandise, including apparel, electronics, household goods and groceries.

In Mississippi, the retail landscape includes a significant presence of independent retailers. Approximately 54% of the state’s store locations are independently owned, according to shopping research conducted by Capital One. Additionally, about 10% of Mississippi’s small businesses operate within the retail sector.

While specific data on the exact percentage of bargain or discount stores within Mississippi’s total retail market is limited, the prominence of national discount chains such as Dollar General, Family Dollar and Dollar Tree suggests that bargain stores constitute a notable segment of the state’s retail environment, according to Chain Store Guide, a market research company specializing in retail and foodservice industries.

Elif Filiz, an associate professor at The University of Southern Mississippi, specializes in applied economics, labor economic and applied econometrics. She described the store as a haven where luxuries became affordable.

“[The] majority of everyday things in life shouldn’t be expensive,” said Filiz, referencing steep discounts offered by CCM. “… and Dirt Cheap provided that availability for many people and lower-income families, especially.”

CSG research suggests these stores play a crucial role in providing affordable goods to residents, particularly in rural areas where retail options may be limited. The closure of such stores, as seen with Dirt Cheap, can have significant economic and social impacts on the affected areas.

Pointing to a mini-fridge, tea kettle and office supplies, Filiz noted how Dirt Cheap met diverse needs at low costs. Despite the immediate impact, Filiz believes discount retail will endure.

“I personally do not think they will ever be obsolete because we will always have recirculation of returned items from businesses,” she said.

For the Hattiesburg location at Clover Leaf Mall, real estate broker Madeline Dodge said it’s in the hands of the building owner, Channel Control Merchants.

“That said, I do receive calls from interested parties regarding these locations,” Dodge said. “Whether the properties are sold or leased, I do not anticipate they will remain on the market for long.”

Widespread impact

The closures left not only empty storefronts but also displaced employees and struggling customers. Martha Nelson, a security guard at the Hattiesburg Dirt Cheap for more than 25 years, lost both her job and a dependable source of bargains.

“Walmart is too high and out of the question,” Nelson said. “I’m going to be going to garage sales.”

For seniors like Frances Lawrence, a Dirt Cheap customer of 17 years, the closures raise concerns about future affordability. She used the chain to buy household items and gifts for her grandchildren at discounted costs, a necessity on a fixed income.

Lawrence hopes a similar store fills the shopping gap Dirt Cheap is leaving behind and urges retailers to recognize the impact of discount stores on small communities.

“[Businesses] can make money off poor people, too,” Lawrence said.

In times of turmoil, community support organizations, such as churches and nonprofits, often step in to help with the increase in demand. In Blue Mountain, a Dirt Cheap warehouse shut its doors in October, two weeks earlier than anticipated, leaving employees scrambling. The Blue Mountain Civic Association organized Angel Tree services to assist children of displaced workers.

“Within a week, we had 35 kids on the Angel Tree,” said Julia Kelly, the association’s president. “Just a few days later, we had to cut submissions off at 55 so that our funds could cover them all. It broke our hearts not to help all the kids.”

Trends

The Dirt Cheap closures spotlight economic vulnerabilities in Mississippi, where unemployment was at 3.1% in October — compared to the national average of 3.9%.

More people in George County, where a Lucedale location closed, were unemployed than in other southeastern portions of the state, according to the Mississippi Department of Employement Security.

RHCJC staffers were not able to confirm how much the closure impacted the county’s unemployment rate, but Dirt Cheap hiring websites report 11-50 employees worked at each store location. Mississippi unemployment statistics for the end of the year will shed more light on how closures like Dirt Cheap’s affect the state’s economy.

Mississippi, part of the Fifth Circuit, has seen a sharp increase in Chapter 11 bankruptcy filings across the state since a drastic drop in 2022, following a 2021 surge due to the COVID pandemic, but, according to United States Courts, during a 12-month period ending Sept. 30, five fewer cases were filed in 2024 than the year prior.

Mississippi reported an average increase of 2.4% in all bankruptcy filings in 2024, while the national rate of filed bankruptcies increased by 16.2% over the same period, according to U.S. Bankruptcy Courts.