Retailers are told that the key to success is buying as low as possible and selling as high as the market will bear. The founder of a west coast chain ignores that advice and is finding success by keeping all of his prices under $1.
Dave Gold is CEO of the 99 Cents Only Stores, the oldest of the discount chains that sell at a fixed, low price. Mr. Gold opened his first outlet in 1982, and using his winning formula of selling for under a dollar, has expanded to 166 stores in three western states and Texas. Mr. Gold and his family own 40 percent of the company, which had sales last year of $700 million and is listed on the New York Stock Exchange.
He says it started with an idea, buy low and sell low, giving customers their merchandise, and a penny back, for every dollar. "The first 99 Cents Only store started on Friday the 13th of August of 1982," he says. "And we sold 13 TVs because it was on Friday the 13th."
The first few shoppers at newly opened stores can still buy televisions for just 99 cents, but more often they purchase books, soda, T-shirts, toys, food and detergents.
Mr. Gold says he buys merchandise only if manufacturers will sell at a deep discount. "When the company, it's at the end of the quarter when they need sales, or there's a change in the packaging, or the UPC number changes, that's the number that you scan and if it changes, they want to close out," he says.
In his early years in the business, Mr. Gold sought out distributors. Today, they come to him. Two mornings a week, long lines of vendors appear at his corporate office in Commerce, California. People like William A. Ostroff, 91. He has been selling since 1932, and his best customer these days is Mr. Gold and his chain of 99-cent stores. "I sell food items from around the world. I'm with four different importers, two Persian and two Chinese," he says.
Mr. Ostroff sells candy, vinegar, soy sauce, rice, canned sardines and pineapple.
Mr. Gold has a dozen buyers on staff who negotiate with vendors like Mr. Ostroff.
One buyer, Ngam Ratsamy, is meeting with distributor Tom Dunk, who sells him a variety of items. "I sell him frozen waffles, pizzas, miscellaneous vegetables, chilled juices, pie fillings and apple sauce," says Mr. Dunk.
Mr. Ratsamy says he makes sure the product is good, and that the price is right. "That it's good value to our customer. Outside it retails as a $1.59 or $2 item, that we can retail at 99 cents. That's what we're looking for."
And still make a healthy profit.
The largest U.S. retailer, Walmart, uses advanced computer software to track its inventory and monitor customer preferences. Not so Mr. Gold, who says successful buying and selling are a matter of good judgment. "We have some good computers, but basically when you buy and sell, it's more of a human thing because you're buying goods and you're looking at goods and there's no computer that can be a decent buyer," he says. "But the thing is, there's no one item that we have to handle."
In fact, the chain buys only one of every 15 items offered.
Mr. Gold, 71, oversees it all. He is in his office by 5 AM, commuting in a tiny Toyota Prius, an electric-gasoline hybrid that is inexpensive to drive. He is a millionaire and could buy any car he wants, but he says a small car that is good for the environment is good for transportation.
On the job, he is informal and is always on the move, greeting employees and vendors, and is constantly being asked for his opinion.
Towels, bottled water, plastic ornaments - if the quality's good and the price is right, he'll buy them.
Mr. Gold's stores are clean, well stocked and organized. Some customers come by bus and some drive their Mercedes. The retailer says the wealthy are hard to attract, but once they come to his stores, they become regular customers.
After all, he says, well-to-do shoppers appreciate good value. That's how they became wealthy in the first place.