99 Cents Only Stores’ Transition to a Professionally Managed Organization

Subject: Company Analysis
Pages: 3
Words: 919
Reading time:
4 min
Study level: Bachelor

99 Cents Only Stores are a famous American retail chain offering a wide assortment of consumable and closeout merchandise and domestic and imported products at a significant discount. The company purchases name-branded and private label merchandise from the manufacturers. The new venture transitions from a simple idea to a highly-managed, client-oriented entrepreneurial company through its organizational stages. Successful management, novel concept, and the founder’s consistency helped 99 Cents Only Store to expand its network.

The first organizational stage is accommodated by the personal needs of its founder, Dave Gold. He had been enthusiastic about opening a store with a fixed price for some years, forcing him to experiment to identify a suitable price for the customers (Flamholtz & Randle, 2005). According to his findings, people preferred lower prices, making 99 cents the most efficient price for his stores. It was his first success because Dave was right with the price the clients preferred, laying the foundation for the high sales of the company’s items. However, the first stage was difficult for Dave because he lacked confidence in his venture. His success at that time was renting a 3.000-square-foot building that facilitated the launching on 99 Cents Only Store (Flamholtz & Randle, 2005). The company had no management or staff, but the facility choice was the most necessary step for this stage. Thus, the area of improvement was the understaffed team and no vendor relationships. Dave focused on these weaknesses to move to the stage of expansion.

The need to sell products facilitated the transition to the next stage. Therefore, Dave Gold bought consumer goods for 50 cents in the trade auctions (Flamholtz & Randle, 2005). The fact that they used trucks for shipping items to Los Angeles proves the foundation of the company’s logistics. Highly efficient management forced the company to establish vendor relationships facilitating opportunistic buys (99 Cents Only Stores LLC SWOT Analysis, 2018). To expand its networks at this stage, the company chose the flexible approach of buying many products immediately and paying cash if necessary. Thus, the company enhanced its reputation for manufacturers, allowing it to open more stores that sell better merchandise at lower rates.

One more success for the second stage was the media coverage. The press was interested in putting the company on the front pages of newspapers. The reason is connected to the novelty of the concept of items for 99 Cents. Therefore, Dave Gold did not pay for the promotion, obtaining free publicity that helped him to increase his sales. After going public with IPO, the company needed to maintain its success (Flamholtz & Randle, 2005). At that point, Golds were concerned with management strategies that became the area of improvement. They employed more skillful staff and relied on strategic planning by developing more sophisticated supply chain operations.

The third stage of transitioning to professional management was expected most because the market requirements were changing, and fresh ideas were becoming necessary. Therefore, the founder of the stores, Dave Gold, retired, which caused alterations in the company’s organizational system (Flamholtz & Randle, 2005). His sons and cousins divided the company’s management and created a new position. Considering that company’s new managers have brought the organization to the last stage, their appearance is a success for the stores. For example, they hired Executive Vise President responsible for sales and supply chain operations. The area of improvement was monitoring the compliance of responsibilities with the actions of the management staff. There could be a lot of mistakes because these positions were new to the employees. Such decisions were mandatory to hold the position in NYSE and enhance the ability to offer products at a competitive price.

The final stage of the 99 Cents Only Stores was consolidation under the control of the company’s new owners. Eric Schiffer and Jeff Gold created a culture statement with the values that underlie the stores’ work for many decades (Flamholtz & Randle, 2005). Acknowledging these values was mandatory for improving financial resources and greater market penetration. The area of improvement for this stage was aligning all employees with the created culture statement. Meanwhile, the success was based on the fact that this culture statement identified the company’s codes of conduct, mission, and vision that guided its workers in the right direction. This stage reached its goal of reinforcing each employee’s role in the company by highlighting their priorities in decision-making.

Although the third and the fourth stages were the critical steps for transitioning to the new growth stage, the second stage was the most difficult for the company’s owners. The final stages worked on already organized management systems with the ready-for-purchase items. In contrast, the second stage of planning the whole company’s work and expanding its stores’ work operated under no basis that would have guaranteed its success. The founder had to find manufacturers and build trusting relationships with them to create a strong brand portfolio (99 Cents Only Stores LLC SWOT Analysis, 2018). Especially, a company with low prices was required to enhance consumers’ confidence in goods’ quality to encourage more shopping.

To conclude, 99 Cents Only is a successful company that overcame many difficulties to become an entrepreneurially oriented, professionally managed organization. Eventually, the company created its business orientation and improved strategic planning. When the company succeeded in new organizational systems such as planning, organization, and performance management, Ares Management and Canada Pension Plan Investment Board bought out the company for a high price. The management implemented by the company was thoroughly monitored, bringing more revenues.


99 Cents Only Stores LLC SWOT Analysis. (2018). MarketLine, 1–7. Web.

Flamholtz, E.G., & Randle, Y. (2005). Case example of growth from stages I to IV: 99 Cents Only Stores. Growing pains. Building sustainably successful organizations (5th edition, pp. 65-68). Wiley.