Retailers offering more for less are becoming supremely popular tenants. Current trends withstanding, Americans still want a big bang for their buck. How else can you explain the increasing popularity of dollar stores — even among those capable of spending much more? The truth is, these retail concepts appeal across many demographic and income levels. Some value stores are among the top companies in the country. You can find them everywhere from urban malls to suburban neighborhood centers as they continue to expand and prosper. In the following pages five such value stores — Great Clips, Save-A-Lot, 99 Cents Only, Dollar Tree, One Price Clothing — share stories of success.
More than 2000 people stood in line for nearly three days awaiting the opening of 99¢ Only stores' Pasadena location last year. The Pasadena customers were vying for a chance to pay just 99 cents for one of nine 19-inch color TV sets. Generating that kind of excitement is unusual for most value retailers, but not for this City of Commerce, Calif.-based chain. The company has become famous for spectacular promotions centered on its name.
“Lots of companies have raffles for grand openings,” says Jeff Gold, senior vice president, real estate and information systems. “Instead of raffling something off and giving it away free, we sell it for 99 cents to really pound home the concept that everything in the store is 99 cents,” says Gold. The company has even sold 99 silver scooters for 99 cents as well as 99 two dollar bills for 99 cents.
David Gold founded the chain in 1982 with a single location. Today the company has gone public with 98 stores in Southern California and two in the Las Vegas market. Twenty-five new stores are slated for completion in 2001, including Las Vegas and expansion into Phoenix.
While older stores cover 10,000 to 12,000 sq. ft., the new stores average more than 18,000 sq. ft. There are some locations in former grocery stores more than 30,000 sq. ft. in size.
This value leader has racked up $452 million in sales last year by making the “bang for your…99 cents” concept of value stores appealing to a wide range of income levels. For instance, the highest grossing 99¢ Only store is the Wiltshire Boulevard location near Beverly Hills. It generated more than $9 million last year — $500-per-sq.-ft. average. The National Enquirer even reported Richard Gere and Vanna White have shopped there.
With no item costing more than 99 cents — including thousands of food products, beverages, health and beauty aids, etc. — most customers don't make large purchases. So the stores rely on repeat business generated by stocking a large number of items that move quickly.
The average store generates $4.5 million in sales per year with an average transaction of just $9 per customer, for half a million transactions per year or 10,000 per week.
“The most challenging part of our business is getting people into our stores for the first time,” says Gold. “Especially when you have more educated, affluent people who assume ‘What am I going to buy in a store that's 99 cents? It's got to be a bunch of crap.’”
In fact, customers usually have the opposite reaction. The most common customer complaint is they find so many good items they end up spending far more than the one or two dollars they had planned. That's one complaint the store doesn't plan to do anything about.
Contact: Jeff Gold, senior vice president, real estate and information systems, 99¢ Only Stores, 4000 Union Pacific Ave., City of Commerce, Calif. 90023; 323.881.9980.