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Should the 99 Cents Only Stores Retail Chain Be Saved?
The discount retail chain 99 Cents Only Stores LLC, commonly known as “99 Cents,” has announced its intention to gradually cease its operations. This decision follows discussions and an agreement with Hilco Global, an asset disposition firm, to liquidate all merchandise and assets across its 371 store locations. The liquidation sales were scheduled to start on April 5. Hilco Real Estate (HRE) will handle the sale of the company’s real estate assets in key states.
Chris Wells from Alvarez & Marsal has been appointed as the chief restructuring officer to oversee this process, while the interim CEO, Mike Simoncic, is stepping down. Simoncic explained that the decision was difficult but necessary due to enduring challenges in the retail sector, including the impact of the COVID-19 pandemic, shifting consumer preferences, increased shrinkage, inflation, and broader economic difficulties. Despite exploring various alternatives, the company concluded that a systematic wind-down was the best approach to maximize asset value.
In response to the announcement of the 99 Cents Only Store closures, communities have flooded locations to stock up on what the retailer has to offer at low prices. With 143 locations in Southern California facing closure, there’s a push to salvage what’s left of this discount haven.
Mark J. Miller, CEO of Pic ‘N’ Save Bargains and former Big Lots president, is spearheading efforts to rescue the chain after the company announced it was closing all stores and winding down its business operations in California, Texas, Arizona, and Nevada. He’s gathered a consortium of investors, including former 99 Cents Store executives, in hopes of acquiring the Southern California stores and maintaining their community service.
“This group of customers is priced out of other chains. It stretches their buying power. Especially today. That’s why this is a passion for me.”
Mark J. Miller via Westside Current
The bustling parking lots and endless checkout queues at 99 Cents Only Stores highlight their significance for budget-conscious shoppers. For many, these stores are essential for stretching tight finances.
Miller remains optimistic, envisioning a revitalized future for the stores. He emphasizes a return to the fundamentals, promising an enhanced shopping experience with a broader range of quality goods at unbeatable prices. Ultimately, he is aiming to “try to [acquire] the Southern California stores, close them for about 90 days after the going-out-of-business sales end and then reopen with an emphasis on the ‘treasure hunt’ style that [made] the stores popular in the first place.”
“It’s a match, that we hope, made in heaven. What I want to make sure is that yes, there’s a big food business at the 99 Cents stores, and that we continue as far as great goods, great prices… great bargains, great treasure hunt items. I want more branded goods at great prices.”
Mark J. Miller via ABC 7 Eyewitness News
The urgency to secure a deal is palpable, both for the business’s survival and the communities it serves. Alongside efforts to reopen stores, local officials are stepping in to support affected employees.
Los Angeles City Councilman Tim McOsker is coordinating with the city’s Economic Workforce Development Department to provide aid, including assistance with unemployment benefits and job placement services.
Los Angeles County Supervisor Janice Hahn is also taking action, proposing measures during the next board meeting to aid displaced workers. She seeks a comprehensive report outlining strategies to assist employees in transitioning to new employment opportunities.
Furthermore, Discount retailer 99 Cents Only has announced bankruptcy as it gets ready to close its doors. The company filed for Chapter 11 bankruptcy on Monday. This decision follows the recent announcement of the closure of all its locations in the region. While the stores remain open for now, 99 Cents Only is conducting going-out-of-business sales with significantly reduced prices.
Discussion Questions
How can efforts led by Mark J. Miller ensure the long-term viability and community impact of 99 Cents Only Stores amidst evolving retail dynamics?
What broader implications does the bankruptcy and liquidation of 99 Cents Only Stores hold for the discount retail sector, and how can stakeholders collaborate to address systemic challenges?
What ethical considerations should be prioritized in supporting displaced employees and fostering economic resilience in communities affected by the closure of 99 Cents Only Stores?
Poll
Loading …BrainTrust
Gary Sankary
Retail Industry Strategy, Esri
Kai Clarke
CEO, President- American Retail Consultants
Please spare us all the histrionics: it’s a business that didn’t work, certainly no more than that. There may be a lot of storied retailers that deserve a reprieve from the Grim Reaper of retail darwinism, this ain’t one of ’em! Indeed, while their business acumen is perhaps to be criticized, their decision to avoid the all-too-common melodrama of serial bankruptcy is to be commended.
I wish anyone wanting to save a retailer well. However, at the end of the day success relies on the cold, hard economics stacking up. And the truth is, they simply didn’t for 99 Cents Only – which, with the scale that value retail requires, was too small to compete. I don’t see much in the rescue plan that resolves that issue. As for the wider discount sector, there are certainly pressures but other chains like Dollar General, Aldi, and Grocery Outlet are firmly on the front foot and will continue to grow.
It’s odd to read of a retailer going bankrupt when they have “bustling parking lots and endless checkout queues”. If it wasn’t a sales problem, was it a margin problem? A supply problem? Demand is certainly not evaporating, so what happened on the supply side? Brands reigning in over-runs? Brands doing a better job managing their own inventory? Sounds like the apparel business could take a lesson.
The story is great fodder for local news and local politians. But this chain has had difficulties for years and has come to the end of the road. The business model is not viable. The loans will keep them out of Chapter 7 for a while so they can have a reasonable wind-down. The DIP financing providers wi ll get the prime scraps. Everyone else will wait in line.
Regarding other interested saviors…WHY?
With small scale relative to the competitors and a failure to make a go of it with their business model, nope. Unfortunately, this is how it goes for some businesses.
This business model would work, but not here, in this upside down world of heavy regulation, loose fiscal policy resulting in inflation, and mandated high wages. To paraphrase the end of King Kong: “Twas goverment that killed this chain”.
When the margin equation doesn’t work, it doesn’t work. Given their model and their history, I would recommend a “do not resuscitate” directive on their liquidation.
There are two big dynamics working against 99 Cents Only Stores – oversaturation of dollar stores and a lack of economies of scale. There has been an aggressive expansion in the number of dollar stores in the past few years and, in many markets, there are huge competitive pressures. The size of 99 Cents Only Stores, from a store count perspective, is only 2 percent of the size of Dollar General. The economies of scale from a buying and distribution perspective for 99 Cents Only Store is a fraction of its large competitors. One other point that may have lead to the demise of 99 Cents Only Stores is the struggle to staff stores and keep them organized. Even with the large dollar store chains, the store appearance varies greatly and it can have a negative impact on customer perception and loyalty.
Unfortunately, like catalog stores, the concept is no longer a viable option. They looked at the market, understood the economics of staying open and it just did not all up. They could have reinvented themselves, but at what cost?
This is a business model that is trying to survive despite the basic rule of business “it has to make money”. The golden rule of adapt or perish (remember the dinosaurs?) will always override all others. In this case, the business is desparately trying to cling to an old business model that no longer works. They need to let go of this and move on.
This is a business model that is trying to survive despite the basic rule of business “it has to make money”. The golden rule of adapt or perish (remember the dinosaurs?) will always override all others. In this case, the business is desparately trying to cling to an old business model that no longer works. They need to let go of this and move on.
No, the current economic climate, supply chain disruptions, and intense competition make saving the 99 Cents Only Stores unlikely. The evolving retail environment demands more than low prices—consumers seek convenience, quality, and digital options. Maintaining a low-price model has also become more challenging with increased supply chain costs. Competing effectively requires significant adaptation and innovation beyond the traditional discount retail model, posing a steep challenge for the 99 Cents Only Stores’ survival in its existing form.
Clearly 99 Cents Only could not make it work under the current model and financial burdens. If Mark J. Miller can restructure, it will serve a population of shoppers that needs proximity to low priced goods. Getting back to basics in this format (in their markets) requires a fresh look at how to serve the underserved. These low income, multicultural communities look for a dignified shopping experience with trusted brands and a touch of discovery.