After Chapter 11 bankruptcy closures, retail stores find new life
The landscape for discounters operating under the dollar-store model has become increasingly challenging. Supply chain issues and rising costs have compelled many companies to move away from the traditional dollar price point, which was often limiting. Instead, numerous chains have shifted to a value-based model, expanding their price ranges to attract budget-conscious consumers.
Competing with Major Retailers
Despite adapting their pricing strategies, these chains are facing stiff competition from retail giants like Walmart and Target, both of which have embraced discounting to cater to financially strained shoppers. This retail scenario mirrors trends in the fast-food industry, where consumers have demanded $5 value meals. While such bundles yield low margins for restaurants, they drive customer traffic, leading to additional purchases.
Economic Pressures and Store Closures
Although the economy is generally healthy, inflation continues to drive prices higher, affecting consumers’ perceptions of costs. This complex environment has resulted in thousands of retailers closing their doors or going out of business entirely.
Abrupt Shutdown of 99 Cents Only Stores
One notable casualty in this retail shift is 99 Cents Only Stores, a chain with deep community roots and a long history. Founded in 1982, the company operated nearly 371 stores across California, Texas, Arizona, and Nevada. It offered a variety of attractively priced merchandise and fresh produce, serving communities where such options were scarce.
However, the chain hit a significant hurdle on April 4, when it announced the closure of all its stores. According to their website, “The company has entered into an agreement with Hilco Global to liquidate all merchandise owned by the company and dispose of certain fixtures, furnishings, and equipment.” Liquidation sales were expected to start on April 5, 2024.
Transition to Dollar Tree
While the 99 Cents Only brand is unlikely to make a meaningful comeback, about half of its leases were acquired by Dollar Tree (DLTR). The company has quickly reopened approximately 85 former 99 Cents Only locations, with plans for more in the coming months. Dollar Tree’s Chief Operating Officer Mike Creedon announced, “We’re very excited about expanding our footprint across California and the Southwest.”
Creedon praised the swift transition, noting that the efforts to convert the stores were completed in less than 100 days. “These locations are proven, high-quality stores in strong markets with great growth potential,” he added.
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