BIG NEWS: After Chapter 11 bankruptcy closures, retail stores find new life
It has been a challenging period for retailers using the dollar-store model. Supply-chain issues and rising costs have led many companies relying on the fixed dollar price point to shift away from this approach. Instead of sticking to the restrictive $1 price, many chains have transitioned to a value-based model.
Competing with Major Retailers
Even with a broader range of price points, these discount chains face fierce competition from large retailers like Walmart and Target. Both of these giants have embraced discounts and value propositions in response to budget-conscious consumers.
The retail landscape has begun to reflect the fast-food industry, where consumers have pushed for $5 value meals. Though these bundles offer slim profit margins, they drive foot traffic and often lead to additional purchases.
Impact of Inflation and Economic Pressure
The current economy, despite being relatively healthy, is still impacted by inflation, which drives prices higher. Consumers’ perception of rising costs can be more severe than the actual increase, creating a tough environment for many retailers. This has led to numerous store closures and, in some cases, complete shutdowns.
99 Cents Only Store Closure
A notable casualty in this challenging environment is 99 Cents Only Stores, a chain with a long history and deep community ties. Founded in 1982, the company operated nearly 371 stores across California, Texas, Arizona, and Nevada, offering a broad range of name-brand and attractively priced merchandise.
However, on April 4, 2024, 99 Cents Only Stores announced it would close all its locations. The company entered into an agreement with Hilco Global to liquidate all merchandise and dispose of store fixtures. Liquidation sales began on April 5, 2024, across all 371 locations.
Transition to Dollar Tree
While 99 Cents Only Stores may not return in its previous form, Dollar Tree (DLTR) has acquired about half of the closed chain’s leases. Dollar Tree has swiftly reopened approximately 85 former 99 Cents Only locations and plans to open another 20 stores soon, with the remaining 56 set to reopen by the end of the year.
Dollar Tree Chief Operating Officer Mike Creedon praised the rapid transition, noting that the effort required significant teamwork. The converted stores are expected to continue serving the needs of the former 99 Cents Only customers.
Creedon expressed enthusiasm about the expansion, stating, “These 99 Cents Only locations are proven, high-quality stores in strong markets with great growth potential. We’re excited about expanding our footprint across California and the Southwest and are pleased with the positive reception from the communities.”
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