Where do the 99 percent shop? 99 Cents Only

The sale of a pioneering deep-discount chain for $1.6 billion tells us what Occupy Wall Street is really about

Published October 11, 2011 5:50PM (EDT)

A price sign is displayed at a Dollar General store in Arvada, Colorado (Rick Wilking / Reuters)
A price sign is displayed at a Dollar General store in Arvada, Colorado (Rick Wilking / Reuters)

Anyone still trying to understand what the Occupy Wall Street protests are all about should take a close look at this news item: The deep-discount retail chain 99 Cents Only just sold itself to a private equity firm and the Canada Pension Plan Investment Board for $1.6 billion -- at a price-per-share marking a hefty premium over the chain's Monday close.

That's great news for the founding family of the Commerce, Calif., headquartered  chain -- which, unlike several of its big-name competitors (Dollar General, Family Dollar), still rigorously adheres to the dollar-limit price tag rule -- but it is a little less encouraging for what it tells us about the state of the U.S. economy.

Simply put, deep discount stores do great when the economy sucks. And as the middle class gets squeezed, the dollar stores have prospered.

These are stores that are capitalizing on the need for pure survival: food and drink purchases account for more than half the sales of 99 Cents Only. So while the top 1 percent of Americans do better and better, sneering down from their skyscraper windows at the protesters gathering in cities across the nation, the 99 percent are lining up at 99 Cents Only, looking for the cheapest possible milk and eggs.

A quote captured by the Wall Street Journal is particularly illuminating:

"The economy has taught people there are alternatives from the mainstream that are providing products of quality and value," said Robert Passikoff, founder of retail consulting firm Brand Keys Inc.

The use of the word "taught" here is in the sense that a sledgehammer "teaches" a concrete wall to crumble. Americans get no option to fail this course. Wonder where all those record amounts of food stamps are getting spent? Check the dollar store.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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Occupy Wall Street U.s. Economy