Did you know that The first 13 customers who walked into “99 Cents Only” at its Grand Opening in 1982 got televisions worth 99 cents, as part of its promotions.

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99 Cents was founded in 1982 by Dave Gold, with the vision of providing consumers with a wide selection of everyday items at a single, low price point.
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He identified a gap in the market for a discount retail concept that offered convenience, affordability, and value to budget-conscious shoppers.
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What was so special about these stores?
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• Fixed Pricing: 99 Cents differentiated itself by adopting a fixed pricing strategy, offering all items in-store at a price of 99 cents or less.

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• Wide Product Range: The company stocked a diverse range of products, including household essentials, groceries, toys, and seasonal items, catering to a broad customer base.​
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Did you know that Dave Gold decided to first run a test by selling bottles of wine at a fixed price-point of 99 cents. He did this in the liquor shop that he inherited from his father in downtown LA.

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99 Cents rapidly expanded its store footprint, opening new locations in high-traffic areas and densely populated neighbourhoods.

The brand employed 3 strategies to effectively scale with growing business operations.
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1. Community Engagement: 99 Cents actively engaged with local communities through charitable initiatives, sponsorships, and partnerships, fostering goodwill and loyalty among customers.
2. Supply Chain Efficiency: The company optimized its supply chain and logistics operations to ensure a steady flow of inventory and minimise out-of-stock situations, enabling it to meet customer demand effectively.
3. Innovation: 99 Cents continuously innovated its product offerings and store layouts to remain relevant in a competitive market, introducing new categories and seasonal promotions to drive sales.​

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With over 370 stores in four states and two distribution centers in California and Texas, 99 Cents Only Stores became the leading extreme value retail chain in the Western United States.​
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Despite the low price point, the company offered a wide range of items to meet customers' everyday needs.
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From household essentials to kitchenware, toys, and party supplies, the store was a one-stop-shop for consumers on a tight budget.​
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Growth of 99 cent stores peaked in early 2000s.

Pivotal Moment for the Brand:

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As a natural next step in its growth, 99 cent stores expanded to Mexico in 2013, a strategy that misfired badly for the enterprise and set up a cascade of events that triggered the downfall of retail giant.
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1. Rising Costs:
   • Increasing costs of goods, coupled with rising labor and overhead expenses, significantly squeezed profit margins.
   • Between 2017 and 2019, 99 Cents saw a 15% increase in operating expenses due to rising wages and rent costs.
   • Despite efforts to mitigate these costs through operational efficiencies, the margin pressure eroded profitability over time.
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2. Intense Competition:
   • The discount retail landscape became oversaturated, with larger chains and online retailers aggressively competing for market share.
   • Competitors like Dollar Tree and Walmart intensified their discount offerings.
   • Increased competition led to pricing wars and reduced profit margins, making it challenging for 99 Cents.
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3. Declining Foot Traffic:
   • Changing consumer preferences, including the rise of online shopping and the decline of brick-and-mortar retail, resulted in declining foot traffic at 99 Cents stores.
   • Between 2018 and 2020, foot traffic at 99 Cents locations declined by 20%, reflecting broader industry trends.
   • Decreased foot traffic translated to lower sales volumes and reduced store profitability.

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Lessons for Startups to Avoid Losing $1 Billion in Revenue​

• Agility: Respond swiftly to market changes and consumer demands by adapting business strategies and offerings.
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• Value Proposition: Offer customers compelling value propositions through competitive pricing, quality products, and superior service.
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• Customer Centric Approach: Cultivate strong relationships with customers by prioritizing their needs and preferences.
  Startups should focus on understanding their customers’ pain points.
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• Operational Efficiency: Streamline processes, optimize supply chain efficiency, and reduce overhead costs to improve profitability.
  Startups should prioritize operational efficiency ensuring sustainable growth and resilience.|

• Digital Transformation: Leverage technology and digital channels to enhance customer experiences, streamline operations, and drive growth.
  Startups should invest in digital capabilities to capitalize on emerging opportunities in the digital economy.

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