99 Cents Only Stores Surprise with Organics

Caitlin Tierney, senior director of fresh for 99 Cents Only Stores, is delighted when she can surprise both customers and suppliers with the chain’s organic produce section.

“We carry 25-30 organic SKUs on a regular basis,” she said. “In fact, organics are the fastest growing sector in fresh.”

With 392 outlets in four states (California, Arizona, Nevada and Texas), 99 Cents Only Stores has two distribution centers in California and another in Texas, as the company continues to grow its per store sales with the produce department being a very important traffic driver.

Tierney joined the chain four years ago after spending the previous decade with several other retailers, including Spartan Stores in Michigan, Fresh Direct in New York City and Fresh & Easy in Southern California. The 99 Cents Only chain prides itself on serving the underserved as a deep-discount retailer, carrying name-brand consumable and merchandise, with almost everything in the store priced at 99 cents.

The chain added produce about 14 years ago with a very short list of basics including bananas and tomatoes. About eight to ten years ago it made a greater commitment, adding many more items. Today, it sources about 180-200 SKUs, though it doesn’t have every item, every day, in every store. “Produce drives foot traffic,” Tierney says. “It is our number one department, but we are still ramping up.”

She was hired to build the department, and organic produce was added three years ago. “Of course, we started from scratch, but it is the fastest growing sector in the department. Now it represents 21 percent of produce sales,” Tierney said.

While the 99 Cents Only price tag is the goal throughout the store, produce operates with three different prices – 99 cents, $1.49 and $1.99. Within those perimeters, Tierney said she can operate profitably and bring customers very good produce at very good prices, including organics. 

For example, about 30 weeks of the year, the chain can source a number two organic strawberry pack from Baja California. Organic bananas and organic apples are offered all year round, as well organic packaged salads. Salad kits, she said, is the top produce department seller day in and day out.

Tierney noted that the chain’s typical pricing strategy is to offer the conventional item at the same price as the organic product with the differentiator being the weight or the size of the item. For example, the chain often offers two pounds of conventional avocados for $1.99. The organic price would be the same, but the fruit would be a smaller size, or the pack would contain less weight.

Altering the fruit size is a winning option for 99 Cents Only to offer value to its customers. Tierney said it is very common for growers and packers to offer deep discounts for the least desirable sizes and those are the bargains she jumps on. “We find a way. We adjust the size. We buy them loose. We do what we have to do,” she said.

Tierney admits that some items do present big challenges. In 2019, celery prices shot through the roof for much of the year, and it was very difficult to carry organic or conventional product. She called cauliflower a problem child, as it is also high priced much of the time making it difficult to fit into the chain’s retail pricing constraints. “It says 99 Cents Only on the banner and that’s what customers are expecting to pay,” she quipped.

Looking at the future, Tierney believes she can triple produce sales at 99 Cents Only Stores in the next five years, including sales of organic produce. She notes there is plenty of opportunities as many people do not know the chain carries produce and about half the stores do not have refrigeration units. The produce department is typically in the back of a 99 Cents Only store and it’s a challenge to get that customer coming in for a 99-cent tube of tooth paste to head to the back of the store. 

Produce sales, however, continue to climb and with 21 percent of those being organic, the chain has a good story to tell organic producers. In fact, more and more, the company is working directly with growers establishing direct connections.