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David Gold founder and CEO says the 99 Cent strategy is to create the shortest path possible between the customer and the sale Rae-Dupree 2004 This is important in deep discount retail in order to purchase close-out and other special-situation merchandise at prices substantially below wholesale that sell at prices significantly below regular retail Symplicity 2005 Over the past two years the company has suffered a 1700share loss on its stock from 30 to 1300 mainly due to declining operating margins Domash 2004 caused by over-optimism in the Texas market Competitors were more deeply entrenched than their research had shown and reduced earnings forecasts combined with declining operating margins were the sell signal for many investors in the company Also the need to upgrade their IT infrastructure to support expansion in its California base market was the second company downfall The following is a summary of the company strategy 1 Focus on brand name consumables 2 Broad selection of regularly available merchandise 3 Attractive and well-maintained stores 4 Strong supplier relationships 5 Focus on larger stores and wider demographic of value-conscious customers 6 Welcoming and Flexible Store Hours and Policies The Role of IT Infrastructure in Operations and Business Strategy CEO DISCONNECT WITH TECHNOLOGY 99 Cents Only strategy is supported by various technologies that must always fall into line with David Golds theorem that the company will not spend money on technology to gather information it will not utilize Symplicity 2005 Golds comments that he does not even have a computer in his office seems to make him technologically reluctant The psychology of the CEO is certain to permeate the thinking of those under his leadership His attitude may have contributed to the companys policy of writing its own software and its reticence to upgrade technology sooner The operations failure in the California distribution center and the bad entry into the Texas market were both likely the end
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