99 Cents Only Stores

99 cents only stores is a sizable West Coast retail chain of about 370 locations that Just the company is in a lot of debt more than they can handle, so they are essentially selling off everyt As I make the chain originated in Southern California in 1982 and grew to around 75 locations before expanding outside of the state for the first time in 1999. That year, they opened a store in Las Vegas, Nevada. Two years later, they opened one in Arizona, and then after another two years, they made a big push into Texas that never seemed to go all that well. They bought the 741,000 square foot warehouse with plans to open a bunch of them in Houston and Dallas, but had overestimated the demand for that type of store in the area and even came close to leaving the area after only a few years. But they did end up staying, I guess until now, 99 cents only stores are easily identified by their unique colors, bright lighting, and signature layout that has made them an attractive setting for certain creative works. Notably in the movie Punch Drunk Love where Adam Sandler is dancing around the store, Jimmy Kimmel live aired a comedy bit where rapper 50 Cent had a back to school sale at the 50 Cent store. In 1999, Andreas Gursky took a famous photo from over the aisles that was exhibited at the Muse So even though these stores have only ever operated wit Many of those viewers, by the way, have asked me to make a video about the subject and that is why I'm here today. Starting off the list with the pandemic and honestly, I don't want to spend too much time on their CEO even identified it as a main reason be That's a sad statement, but I really have to question how unexpected any of their most recently reported figures from 2016 well before the pandemic were showing giant losses. In 2017 and 2019, they made these debt restructuring deals where I believe they traded partial owners And in 2021, Moody's downgraded their credit ratings, saying that they were less So t Yes, the pandemic certainly complicated the next reason on my list goes a little deeper and that is competition. I should mention here that 99 cent stores have always done a great job in differentiating themselves from the other competing dollar stores. The average location is much larger, averaging around 16,000 square feet or so, w And the main reason for that extra space is because they sell so much more food. I would describe it as a blend between a dollar store and a supermarket that still carries most of the popular name brands. Aside from that, they're known for being cleaner, more organized, I would say maybe even a little classier? If that's a fitting word, they never specifically open them in low income areas In fact, their most successful location is near Beverly Generally, the more you buy somet And being confined to four states means that 99 cents only stores are simply not operating at the same scale as these other national dollar store chains. Dollar general, for example, has over 20,000 locations, and by that measure alone, they are more than 50 times larger. Plus, considering their emphasis on food products, they are also competing with larger discount grocery stores Not to mention the online retailers, so it's tough. My next reason be Inflation becomes a very complicated issue when you have an exact price point in the name of the store. See, the chain was started by Dave Gold, He worked at that store from a young age, and in the 1960s, when That is when he noticed that items would sell much better when he priced them at exactly 99 cents. He went so far as to call it a magic n It's a psychological thing where the nines make it appear cheaper to the customers, almost everybody prices items When he was 50 years old in 1982, he believed in that idea so much that he opened the first 99 cents only store, and over the years, there has been so much emphasis on the n Whenever they opened a new location, it became tradition to offer a 19 inch television to the first 9 customers for 99 cents. Typical store hours would be 9 in the morning to 9 at night. Most of their advertising over the years has featured nines in creative ways. They had a public stock offering in 1996, I t I mean, they claimed to be the first ever chain to sell all their merchandise at the same price point. Everyt So you can see how t By 2008, profits were down, and they were really feeling the pressure to make a change. So that year, for the first time in 26 years, they raised the price of their items to 99. 99 cents. Yeah, it doesn't even really make sense. I there was even a class action lawsuit about it, but it effectively meant that the items now cost $1. I they offered to return it, but the customer decided to keep it, saying that it was still a good deal. And you're probably t Well, it was a 1% price increase, and with $1. 2 billion in sales that should theoretically translate to an extra $12 million a year. And combined with the economic factors in their favor, t But I still have to put it on my list here, because over time, they were forced to price items above $1. So the 99 cents gimmick in the entire theme of the store hasn't been nearly as impactful. It's to a point where it can be debated that the name itself qualifies as false advertising. The next reason on my list is the buyout. In 2011, it was announced that 99 cents only stores was going to be acquired by a private equity firm in the Canada Pension Plan Investment Board, and a deal valued at $1. 6 billion. It was partially leveraged, meaning it added hundreds of millions of dollars of debt to the company. Dave Gold had famously avoided debt. Having said, I have a theory about credit. I t He said he was once advised to borrow money so he can establish credit, but he didn't feel good doing it and ended up paying it back after only a few days. So throughout In the early days, he would open new locations by reinvesting profits, and then that IPO in 1996 sold a t I t My point here is that there was zero debt going into today, they are filing for bankruptcy and liquidating their stores to pay their debt, most of w So I t My final reason goes along closely with the previous one, but I have to put a lot of blame on the new owners. Before the sale, t A founder Dave Gold was still very much involved, approac I have to believe that there was a lot of pride involved, and they were running t Utilizing the relations However, about a year later, in early 2013, all of them left. I believe they were forced out of there. The chairman at the time said that the changes were meant to accelerate the company's growth strategy. So to me, this seems They kept naming new CEOs. First it was a former executive from Food Lion, then it was someone from Dollarama, and then it was Kroger. Right away, they started opening dozens of new locations that were smaller than the previous one, seemingly because it required a lower investment. There was a controversial $20 million cash dividend being distributed to the owners each year, pulling money out of the company that was clearly very much needed. I don't know, it was privately owned and hard to tell exactly what was happening during their profits went down w I should also mention that founder David Gold passed away suddenly from a heart attack only a few months after the new managers took control, so I guess that just sort of made the changes seem a little more final. Let me know in the comments, what do you t For those of you who have been there and grew up with them in the area, how do they compare to the other dollar stores, and are you going to miss them? Unless there is some kind of major development, these stores are not going to be there for much longer, so it's kind of looking You might want to make that happen if it's not too inconvenient. I t Let me know if you agree with that, and any other thoughts. You have about 99 cents only stores, leave them in the comments. I'd