The announcement of the closure of all 371 locations of 99 Cents Only Stores has sent shockwaves through the retail industry. The discount chain, which has been in business for over 40 years, cited various factors for its decision, including the impact of the COVID-19 pandemic, shifting consumer demands, rising levels of shrink, persistent inflationary pressures, and other macroeconomic headwinds.
The closure of 99 Cents Only Stores comes as part of an “orderly wind-down” process that the company believes is the best way to maximize the value of its assets. After conducting extensive analysis with financial and legal advisors, it was determined that closing all locations was the most viable option. Mike Simoncic, interim CEO of 99 Cents, expressed the difficulty and unexpected nature of this decision, acknowledging the support received from employees, customers, partners, and communities over the years.
To facilitate the wind-down process, 99 Cents Only Stores has entered into an agreement with Hilco Global, a financial services firm specializing in liquidation. Starting on April 5, sales will commence at all 371 locations, allowing customers an opportunity to purchase merchandise at discounted prices. Additionally, Hilco Real Estate will manage the sale of the company’s real estate assets in Arizona, California, Nevada, and Texas.
The closure of 99 Cents Only Stores is not an isolated event in the retail industry. Just last month, Dollar Tree announced plans to close around 600 Family Dollar stores in an effort to improve profitability and operational efficiency. This move is part of a comprehensive strategy to focus on stores under the Dollar Tree umbrella that perform better than the underperforming Family Dollar portfolio.
Both 99 Cents Only Stores and Dollar Tree have experienced challenges related to “shrink,” a term used to describe lost inventory that can include theft. Dollar Tree reported an increase in shrink throughout 2023, further highlighting the need for restructuring within the discount retail sector.
As the retail landscape continues to evolve, it is evident that discount chains are facing significant hurdles. The COVID-19 pandemic has disrupted consumer behavior and preferences, forcing retailers to adapt or face closure. Inflationary pressures and macroeconomic headwinds further compound the challenges faced by discount chains, making it difficult to sustain operations.
The closure of 99 Cents Only Stores serves as a reminder of the volatility in the retail industry and the importance of constantly reassessing strategies to remain competitive. As consumers continue to shift their preferences, retailers must be agile and responsive to changing demands. While it is unfortunate to see such an established discount chain close its doors, it also presents an opportunity for other retailers to fill the void and provide innovative solutions that meet the evolving needs of consumers.
