Last Updated Mar 16, 2010 1:26 PM EDT
The bad thing?
You have to sell more than a billion items to make a profit.
"Yes, that's right -- we have to sell a huge number of items to generate that figure," reports 99 Cents Only CEO Eric Schiffer. "Our average price works out to be about 80 cents because we also price many items at well under a buck, so we sell around 1.5 billion items annually. It really is a transaction-intensive business, and our systems have to be able to deal with that."Anyone involved in retail will have a blast reading this interview, which is in the current issue of Harvard Business School's Alumni Bulletin.
Some other highlights.
Every penny counts. Literally. "If I add a penny of cost to an item, that's 1 percent of my profit... So we try to eliminate waste and increase productivity in every aspect, whether it's compliance, shipping, handling, distribution, storage -- we strive to find ways to deal with costs creatively."
Don't confuse your taste for the customer's. Schiffer's purchase of shrimp deveiners and clam knives sat on the shelves for years. "I would always walk by the section to remind myself that it doesn't matter if I like something."
Curious. Have you shopped 99 Cents Only? What was your experience? Why are they successful?
Related Reading About Strategic Pricing
Be a Price Maker, Not a Price Taker (HBS Working Knowledge)
Seven steps toward naming your own price.