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By Janet Rae-Dupree  |  Posted 01-01-2004 Print Email

Low-Cost Growth
Like its competitors, however, 99 Cents Only Stores has a simple, two-pronged strategy for maintaining its stellar growth rates: Open more stores quickly and push same-store sales increases hard. The 38 new stores the company opened last year brought its total to 189, and same-store sales were up 6.4 percent in the first nine months of 2003 over 2002. That, of course, is the point of the company's move into Texas from its home markets of California, Nevada and Arizona, and of its growing effort to sell food items, which made up fully 45 percent of its sales in 2003.

It's a mix that cries out for computerization. Fortunately for 99 Cents, however, everything at the company revolves around one central imperative: Create and follow the most efficient path between the customer and the sale. So choosing which IT projects to implement is relatively straightforward. Whatever decision the company faces, the final action boils down to getting those 99-cent items into the customer's shopping bag. That has been David Gold's driving principle from the moment he opened his first store, in Los Angeles, in 1982. A year or two earlier, he and his wife, who still live in the modest house in the Fairfax neighborhood of Los Angeles they bought 40 years ago, sold the family liquor store to pursue an idea that Gold, then 50, had been noodling with for nearly a decade. Was it possible, he wondered, to operate a profitable store—or even a chain of stores—if every item you sold was tagged at just 99 cents? By focusing initially on inventory close-out sales and "distressed" product lots, Gold soon discovered the lucrative answer: Yes. Gold, now 71, still arrives for work every day at 4 a.m. According to Forbes magazine, he has amassed a personal fortune of $860 million.

In the early days, the operation was simple. Everything from inventory to sales records to warehouse-management was done on paper. Cashiers tallied up the number of items in a purchase, multiplied that total by 99 cents and collected the cash. Credit cards? Forget about it. But then Gold, ever the wheeler and dealer, picked up some aging Radio Shack TRS-80 computers for a debt payment in the mid-1980s. His son Jeff, still in high school but working part-time for the half-dozen stores then up and running, taught himself BASIC and created the chain's first order-entry program. He then used the TRS-80s to sort and categorize the company's warehouse inventory. Jeff Gold is now senior vice president for real estate and information systems; his brother, Howard, is the company's senior vice president for distribution. Their brother-in-law, Eric Schiffer, serves as the company's president, while David Gold remains its chairman and CEO.

Despite the efficiencies computers have brought to his company, David Gold remains leery of them. A dusty PC sits forgotten beneath stacks of paper in his chaotic office. There is no secretary to encourage him to turn it on, either; no one at the company, not even Gold, has a secretary. So what's he got against computers? "I'm not against computers," he insists. "I am against spending a lot of money and not utilizing the information you get." He's also annoyed with the average "not very personable" IT professional holding himself apart from the non-technical masses. But Adams is a different story, Gold insists. "I don't know much about technology, but I do know Robert is terrific," he says. "He's very, very bright. He wrote the entire point-of-sale system himself, and I've seen him bring in a lot of innovation. He has been a perfect fit for us."



 

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