Brands That Lost Their Way: 99 Cent Only Store

Earlier this year 99 Cent Only Stores (The 99 Store) filed for Chapter 11 bankruptcy and is now being acquired by Dollar Tree. 99 Stores had a bunch of problems, pointing to “inflation and shoplifting” as paramount to their downfall.

To me this was a story of a brand that lost its way.

Sure shoplifting increased in recent years but just by over 1% from previous years. The total value of US retail “shrinkage” (the euphemism used for stolen and lost merchandise) is just over $100B annually. This is about 1% of US retail sales. 

So, while bad, probably not enough to send a company under.

Inflation is particularly difficult in discount retail, but other value-conscious stores like TJ Maxx have doubled their stock price in the last 5 years. Dollar General reported better than expected profits this month, as they attracted more upper income customers, seeking discounts. 

Of course, 99 Stores didn’t mention brand drift in their filing because they probably didn’t realize their mistakes. 

You see, when your brand is failing you are normally the last one to know.

That’s because you don’t own your brand. The customer does.

In this article we’ll look at:

1. The importance of staying true to your brand proposition
2. The failure of 99 Cents Only Stores to do that
3. How you can have a stable brand promise in changing times

The brand value 

Brands are the confluence of the practical and emotional benefits that rest in the mind of the consumer.

That last part is important. 

The brand is the benefit that the customer thinks about you. Whether you like it or not, the customer holds the brand, not you.

At Kasvaa, we help companies grow and we often do that working from the following framework:

The idea is that each stage of the pyramid builds on the one below it. Your brand is an extension of your company values and your products (or services) are the ways in which your customer experiences your brand. Similarly, your business model should be the logical extension of the lower tiers in the framework. 

All stages of the pyramid need to be coherent with the others.

For example, an incoherent story might be about a company that has environmental values and a brand that stands for sustainability, yet has products that are single-use. Customers would correctly feel that their products are antagonistic to their professed values. 

So let’s look at 99 Cent Only Stores through this Kasvaa Growth Framework.

What were their values? 

It’s hard to say without interviewing company management, but their website describes “fun” and “exciting” shopping experiences for value-conscious consumers. My conjecture is that 99  Stores believed that bargain shopping can bring joy to people. In other words, you might be looking to save money, but that shouldn’t make you feel like a bum.

Their brand experience follows from this. Walking to aisles at 99, you would find bright colors and well-lit, organized shelves. 

Their products were low-priced name and off-brand items. 

Their business model was to purchase items at liquidation at a steep discount and move them at retail.

And everything worked!

Until it didn’t.

Brand Failure at 99

99 Stores drifted from their core brand promise to customers. 

But what was that promise? 

First let’s start with what it wasn’t, because it makes their failure much more predictable. 

For the last several years 99 Stores presented its brand, meaninglessly, around the notion of the number 9. They wanted the number 9 to be core to customers’ perceptions. Their signs would say, “Open 9 days a week” and they encouraged customers to “Do the 99.” They also rebranded from the 99 Cent Only Store to the 99 Store. 

In seeking to own a brand space, companies often reach for a value that may seem undifferentiated or just plain weird. 

For example, Coors Light for over ten years has owned “Cold” among the big three light beers (Miller, Coors and Bud). It might seem silly to push consumers on the concept of a temperature when any beer is as cold as the refrigeration in which you store it. But remember that brands are the combination of practical and emotional benefits. Cold is an idea. Cold beer is a great idea!

So for 99 stores they gravitated from 99 cents to “stuff that has a price that ends in a 9.” 

Whereas “cold” reinforced “beer” and by extension Coors, this 9 business is of no intrinsic value to the customer. 

Okay, so what was the value? 

I aver that the brand promise of a 99 Store was transparency and consistency in pricing. 

Not long ago, you could walk into a store, find any item and know what the price was without checking the tag. 

But of course, you can’t keep everything priced at 99 cents forever. 

However, you can maintain consistency and transparency. 

Instead, pricing at 99 Stores became obfuscated. Aisles were mixed with items of all prices (but they all ended in a 9!) so customers were left with an undifferentiated experience from any other store. 

In an alternate reality, 99 Stores could have created pricing sections. Instead of dividing the items in traditional product category aisles, they could have divided the store by pricing categories. This way a value-conscious shopper could explore various items within a pricing band and have the satisfaction of consistent prices. They could have even maintained their bright colors and gave each pricing section a unique bright color. Also shopping within a fixed pricing tier ought to encourage shoppers to try new items. 

How you can stay true to your brand promise

Times change, but your brand can stay consistent through the passing seasons. 

Here is how to do it:

1. Identify the brand promise with your customers
2. Create a “contingency plan” for change environments
3. Reinforce the brand promise at all possible customer touchpoints

What is your brand promise? Why do customers hire you? 

To answer that, you just need to ask them!

For some business owners this can seem intimidating, but it’s actually a mutually beneficial exercise. 

Think about it this way. Has your husband or wife ever asked them to tell you why you love them? 

This exercise has value to your partner, to be sure. But it’s also valuable to you.

When you talk about the love you have for someone, it reinforces the value you feel and experience. This is why so many have a formal “gratitude practice” like journaling or even a prayer before a meal. 

This virtuous circle is also true with our customers. 

Ask them why they love you! 

Or less creepily, go ahead and ask for a formal testimonial for your website. You need that anyway. 

Next, create a “contingency plan” for how you can stay true to your brand tenets in a totally different environment. Ask yourself, “What happens if…” Then run through different scenarios like technological, economic, political or other changes that could be a challenge to your business. Keep in mind that if they are macro-factors, then they will be a challenge to every business. You just need to answer what you will do in this new setting. 

Finally, reinforce that core brand promise at every possible touchpoint. 

I recently had a call with the Founder of SPRCHRGR, a company that provides back-office bookkeeping services. Their tagline is that they “help you get there faster.” As we ended our call, we agreed to get a coffee and I asked for his cell phone so we could coordinate. He responded saying, “I’ll send you the invite with both of our cell phone numbers. That’s what we do…help you move faster.” 

This was just a small way that my colleague reinforced his brand in our 1:1 touchpoint. 

How else could he do it? Let’s say you call his company's customer service line. Do you think he would have hold music and long wait times? Or would he have that service that allows his team to call me back when someone is available? The latter would be more integrated with his brand promise of efficiency. 

So let’s focus on what we do for our customers and how we can be a stable rock in changing times.

What is your brand value to customers? What would that look like even if big changes shook your market? And how can you drive that value home every time a customer touches your business? 

As always, I’d love your comments and welcome a chance to speak with you about your brand and business. 

Stephen

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