Ninety-nine cents just doesn't go as far as it used to, and that's a problem for the 99 Cents Only Stores chain.
Faced with fast-rising inflation and soaring food prices, the retailer -- known for never selling anything for more than 99 cents -- is reevaluating its pricing strategy. And that could mean breaking the $1 barrier for the first time in the company's 26-year history.
"There's no question we're going to need to do something," Chief Executive Eric Schiffer said to analysts this month after the company reported its second consecutive quarterly loss. "When you are part of a family that comes up with a concept, sometimes you're the last to admit that it needs to be changed."
Not surprisingly, many customers disagree.
"That's just crazy. Maybe they should start calling it the 99 Cents and Up store," said Kleshia Pittmon, 23, while buying groceries recently at a 99 Cents Only near USC. "I would not shop here anymore."
99 Cents Only, founded in 1982 by Chairman David Gold, pioneered the single-price retail concept. The City of Commerce-based chain opened its first store in Los Angeles and has since expanded to 277 locations, mostly in California but also in Nevada, Arizona and Texas.
The deep-discount retailer sells groceries, household supplies and health and beauty products, and remains one of the few true "dollar" stores.
At discount chain Dollar General of Goodlettsville, Tenn., for instance, current promotions include $8 backpacks and $2 for a box of Ziploc sandwich bags. Family Dollar Stores, a chain of more than 6,500 discount stores, is advertising Glad trash bags for $4.99 and Huggies diapers for $9.99.
In fact, keeping prices at a buck or less was never part of the overall pricing scheme at Family Dollar, said Josh Braverman, a spokesman for the Matthews, N.C.-based company.
"We try to keep our prices as low as possible," he said. But "it's hard to imagine getting anything for a dollar."
99 Cents Only is able to offer such low prices because of a business model that is "not based on having every single variety of every product out there," said President Jeff Gold, who is the chairman's son and the CEO's brother-in-law. The chain often buys closeout or overstock items from suppliers and changes its offerings to reflect market prices and availability, he said.
