When a retail chain liquidates, it creates problems on a local level. Many U.S. markets have more available retail space than they need.
Malls have lost anchor stores with nothing to replace them. And strip-mall tenants have been hurt by losing national brands like Tuesday Morning and Christmas Tree Shops, which drive traffic to locally owned businesses.
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Think of it this way: Most shopping-center tenants aren’t a draw. Few people, for example, leave the house, park and navigate a mall to get an Auntie Annie’s pretzel or a cookie from Mrs. Fields or Great American Cookie. But if they happen to be there, those are purchases they might make.
That’s why shopping center owners fight over stores like Marshalls, Ross Dress for Less, and other treasure-hunt chains that drive repeat business. When a strip mall or larger mall loses a store like that, it can drag down other businesses and lead to other closures.
99 Cents Only, was one of those stores. It wasn’t exactly a dollar store, more of a value-based chain, but its abrupt Chapter 7 bankruptcy and ongoing liquidation sales will leave a hole in many shopping centers.
After a clearance or liquidation sale, some retail locations can sit for years without a tenant.
Image source: TheStreet
Ollie’s wins a bankruptcy auction
99 Cents Only saw its stores as destination shopping.
“We are an exciting shopping destination — often the first stop — for price-sensitive consumers, and a fun treasure-hunt shopping experience for other value conscious consumers,” the company said on its website.
“The stores date back to the 1960s when the company’s founder, Dave Gold, inherited a tiny liquor store in downtown Los Angeles and decided to run a test by selling bottles of wine at a fixed price-point of 99 cents.”
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The popular concept had a loyal following — and it was driven into bankruptcy and liquidation by financial woes from the covid pandemic. At the time of its Chapter 7 bankruptcy filing, the chain had more than 370 stores in four states and two distribution centers in California and Texas.
Ollie’s Bargain Outlet (OLLI) , a discount chain that also has a devoted following, has won a bankruptcy option for 11 locations of 99 Cents Only in Texas. That’s good news for those communities because the Ollie’s Army, the chain’s loyal fan base, flocks to new store openings and helps spread the word about the new locations.
Ollie’s has big expansion plans
Ollie’s operates 560 stores in 30 states. The company’s chief executive, John Swygert, has said that the retailer could more than double that number. It won the 11 Texas locations as part of 99 Cents Only’s bankruptcy filing.
“The locations were acquired through the auction process held in connection with Only Stores’ bankruptcy proceedings,” Ollie’s said in a news release. “The bankruptcy court approved the sale of the 11 stores to the company … with appropriate court orders to follow.
“Of the 11 store locations, three of these are owned properties and eight are leased properties with attractive rents and leasing structures, located in key markets. … The acquisition is expected to close in early June,”
Swygert called Texas a market with great growth potential.
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“We are focused on getting these stores up and running as quickly as possible, given the occupancy expenses we will begin incurring at closing,” he added.
“We are maintaining our target of 50 new stores, less two planned closures, for fiscal 2024 and are in the early stages of evaluating the impact on our new store-opening cadence this year.”
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The fate of the remaining 99 Cents Only stores, which are currently being liquidated, remains in doubt. In addition, the company’s name and intellectual property are likely to be sold at a future auction and that buyer could attempt to reopen some locations.
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