The retail landscape is once again shifting as 99 Cents Only Stores announced the closure of all 371 of its locations across California, Arizona, Nevada, and Texas. This decision marks the end of a 42-year journey for the beloved discount chain, leaving many wondering, Why Is 99 Cent Store Closing? The closures will commence with liquidation sales of merchandise, fixtures, and equipment, signaling a complete exit from the market.
Interim CEO Mike Simoncic, who is also stepping down, cited a confluence of challenges that led to this difficult decision. In a public statement, Simoncic pointed to the lingering impacts of the COVID-19 pandemic, evolving consumer shopping habits, persistent inflation, and a significant rise in product shrinkage as key factors undermining the retailer’s profitability. Shrinkage, in the retail context, refers to inventory losses stemming from various sources including employee theft, shoplifting, damage, and administrative discrepancies. These compounding pressures have created an unsustainable operating environment for 99 Cents Only Stores. “This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” Simoncic stated, highlighting the profound challenges the company has faced in recent years.
The news of 99 Cents Only Stores’ demise follows a similar announcement from Dollar Tree just last month, where they declared the closure of 1,000 stores. This back-to-back news underscores a worrying trend in the discount retail sector, prompting questions about the future of brick-and-mortar bargain shopping.
The story of 99 Cents Only Stores began in 1982 with Dave Gold, who at the age of 50, opened his first store in Los Angeles. According to his 2013 obituary in the Los Angeles Times, Gold’s inspiration sparked from his experience at his father’s liquor store. He observed that marking down surplus items to 99 cents resulted in rapid sales, revealing the magnetic appeal of this price point.
“I realized it was a magic number,” Gold told the Times, encapsulating his vision for a store offering quality goods at an unbeatable price. Despite skepticism from his inner circle, Gold pursued his concept relentlessly. His idea resonated strongly with consumers across various income brackets, propelling the company to remarkable growth and a public listing on the New York Stock Exchange in 1996. In 2011, the chain was acquired for approximately $1.6 billion, transforming Gold into a multi-millionaire. Yet, he maintained a modest lifestyle, residing in the same middle-class home for nearly 50 years and driving the same Toyota Prius for over a decade, as recounted by his family.
While the “99 Cents Only” moniker became iconic, the reality of maintaining that single price point became increasingly challenging over time. External economic pressures and rising costs made it difficult to adhere strictly to the original pricing model. Despite price adjustments over the years, the brand retained its identity, built on the foundation of providing value and affordability. The closure signifies more than just the loss of a retail chain; it represents the potential end of an era in discount shopping as economic headwinds continue to reshape the retail industry.
