On Friday, the California-based 99 Cents Only Stores said that they will close all their 371 of its outlets running across the US in various locations of California, Arizona, Nevada and Texas, ending the era of discounted stores running nearly for more than 45 years now.
99 Cents Only Stores: Why its Closing?
The temporary CEO, Mike Simoncic, said that the store has struggled for years because of the COVID-19 pandemic, changes in what customers want, prices going up, and more things being stolen from the store.
He said that it was a hard decision to make and not what they wanted. He explained that the past few years have been tough for stores like theirs. As a result, he will be leaving his position.
The 99 Cents Only Stores are closing down because another discount store, Dollar Tree, said it was closing 1,000 of its stores last month.
The first Store was opened in 1982 by Dave Gold in Los Angeles. He was 50 years old at the time and had previously worked in his father’s liquor store. Gold found that selling items for 99 cents made them sell out fast. This success motivated him to create a different kind of dollar store.
Why are Dollar Stores Closing?
- Popular Concept: Dollar stores like Dollar General and Dollar Tree have grown in popularity over the past decade, offering low-cost options for customers.
- Changing Economic Conditions: Dollar stores are facing challenges from factors such as inflation, reduced government benefits for programs like SNAP, and losses due to stolen inventory.
- Management Issues: Some stores have faced mismanagement problems, including safety violations and storage issues.
- Corporate Response: Dollar Tree, which owns Family Dollar, is closing nearly 6% of its total stores to address unprofitable locations and adapt to changing market conditions. CEO Rick Dreiling emphasized the need to focus on stores with a sustainable future.
Why Dollar General is Thriving
- Rural Focus: Dollar General concentrates on opening stores in rural areas, where there’s less competition and lower costs for property. CEO Todd Vasos stated that over 80% of their new stores this year will be in rural communities.
- Strategic Growth: Despite challenges in the retail industry, Dollar General has announced plans to open 800 new stores this year, showing a commitment to expansion and adaptability.
- Efficient Operations: Experts believe Dollar General’s success is attributed to effective logistics and maintaining well-kept stores. This sets them apart from some competitors and contributes to their strong performance.
- Long-term Viability: Analysts suggest that the dollar store format remains resilient, with Dollar General’s growth serving as evidence. Despite closures by other players, the overall trend indicates continued expansion for dollar stores in the market.
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