Why 99cents Only Stores is flourishing under Eric Schiffer
How would you as a businessperson make astronomical amounts of profits from selling products worth 99cents? It is only possible through innovative and genius ideas like is the case for company CEO Eric Schiffer. After joining the company in 1991, he managed to make a series of successes in various managerial positions in the store. This also made him become the CEO in 1995, and since then, the store has been on the spotlight, as it records various strong figures in an economy that is undergoing many uncertainties. After clearing his first Degree in electrical Design Engineering and a Master’s Degree in Business from HBS, it never occurred to him that business was his path.
However, after making a statement on seeing the company’s balance sheet, the then CEO offered to take him in and train him on retail sales business. The CEO then was his father –in-law, and from here grew a relationship that would take 99 Cents Only Stores to another level. The whole idea about retail business, according to Eric Schiffer, is to sell in bulk. Some customers are a bit reserved in getting into their stores for the first time. They have the mindset that things that come cheap are of lower quality. Nevertheless, after confirming the authenticity of the products in their stores, they will come back a second and third time – since the prices offered are nothing but amazing.
Eric Schiffer (99 Cents Only Stores) quotes that in one year, there are 1.5billion products that come in and leave the stores. Such massive moves translate to revenues of $30 billion. The average cost of products in his chains is $20, and yet, he makes astounding profits with a very small profit margin per product. He says that the secret with pricing is to be creative. A 1-cent rise in pricing to him translates to 1% profit for his business. It cannot do the same for any other business.
The chains of stores sell consumables and general home merchandise. It does well at offering discount prices for consumer goods, ranging from perishable goods, to kitchenware and toys. In fact, 50% of its merchandise makes up perishable goods. Eric Schiffer has done so well, that in 2011, he managed to open 11 new stores spread around California, Arizona and Texas. His exceptional business leadership skill has made the company grow bigger and better by the day, and in the end, new creative and dynamic ideas that he has always make the best for chain stores like these ones.
I came to the conclusion that you make 40 cents on the dollar, in the dollar store business. We used to sell food, toys, cleaning products, jewelry, sunglasses, and so on.