Case Study 99 Cents Only Stores: It Infrastructure on a Budget
Case Study 99 Cents Only Stores: IT Infrastructure on a Budget
99 Cents Only Stores is one of the leading retailers in the deep-discount sales industry. The first 99 Cents Only Store opened in 1982, and the company now operates 194 retail locations, including 150 in California, 19 in Texas, 15 in Arizona, and 10 in Nevada. The stores carry mostly name-brand general merchandise, including food and beverages, health and beauty aids, cleaning supplies, house wares, hardware, stationery, toys, gifts, pet products, and clothing. The chain makes purchases from over a thousand suppliers, including such notables as General Electric, Colgate-Palmolive, General Mills, Johnson & Johnson, Procter & Gamble, Kraft, Nabisco, and Unilever. Stores cover an average of 21,500 square feet, and those stores that were open for the entire year in 2003 averaged $4.9 million in net sales per store. Overall, 99 Cents Only Stores experienced a 21 percent company-wide increase in sales in 2003, totaling $863 million. The majority of products can be restocked regularly. 99 Cents Only Stores also feature close-out merchandise, which is not available for reorder. The deep-discount industry is characterized by the purchase of close-out and special opportunity merchandise at costs below wholesale. Deep-discount retailers pass the savings on wholesale from these purchases to customers, who are able to buy products at prices that are well below retail. There is increasing competition with other deep-discount retailers for this special-situation merchandise, and some competitors have more financial resources and buying power than 99 Cents Only. 99 Cents Only Stores’ recipe for continued growth is to open more stores while expanding same-store sales and trying to wring more out of each dollar to keep profit margins higher than competitors. The company has set a target of expanding its store square footage by 25 percent every year and believes that the states
99 Cents Only Stores is one of the leading retailers in the deep-discount sales industry. The first 99 Cents Only Store opened in 1982, and the company now operates 194 retail locations, including 150 in California, 19 in Texas, 15 in Arizona, and 10 in Nevada. The stores carry mostly name-brand general merchandise, including food and beverages, health and beauty aids, cleaning supplies, house wares, hardware, stationery, toys, gifts, pet products, and clothing. The chain makes purchases from over a thousand suppliers, including such notables as General Electric, Colgate-Palmolive, General Mills, Johnson & Johnson, Procter & Gamble, Kraft, Nabisco, and Unilever. Stores cover an average of 21,500 square feet, and those stores that were open for the entire year in 2003 averaged $4.9 million in net sales per store. Overall, 99 Cents Only Stores experienced a 21 percent company-wide increase in sales in 2003, totaling $863 million. The majority of products can be restocked regularly. 99 Cents Only Stores also feature close-out merchandise, which is not available for reorder. The deep-discount industry is characterized by the purchase of close-out and special opportunity merchandise at costs below wholesale. Deep-discount retailers pass the savings on wholesale from these purchases to customers, who are able to buy products at prices that are well below retail. There is increasing competition with other deep-discount retailers for this special-situation merchandise, and some competitors have more financial resources and buying power than 99 Cents Only. 99 Cents Only Stores’ recipe for continued growth is to open more stores while expanding same-store sales and trying to wring more out of each dollar to keep profit margins higher than competitors. The company has set a target of expanding its store square footage by 25 percent every year and believes that the states