On the Closure of 99 Cents Only Stores and Market Dropout

This paper examines the closure of 99 Cents Only Stores in 2024 as a symptom of a deeper structural failure in contemporary consumer markets. While existing explanations—such as shoplifting, the COVID-19 pandemic, and inflation—account for short-term pressures, they do not adequately explain why a low-price daily-goods retailer became economically unsustainable. The paper advances a key premise: the products themselves were not defective, nor were their prices excessive. Instead, the failure can be understood as the simultaneous occurrence of two structural shifts: a downward shift in consumers’ budget constraints among low-income workers, and an upward shift in suppliers’ minimum viable prices due to rising costs. When these shifts occur together, no equilibrium point exists—even for essential goods priced at 99 cents. This paper introduces the concept of “market dropout” to describe situations in which consumers are unable to participate in a market at all, not because of preference or substitution, but because the budget constraint falls entirely below the minimum supply price. While market dropout has long existed in markets for luxury or durable goods (such as automobiles or jewelry), it has not been treated as a central problem in mainstream economics. The novelty of the current situation lies in the fact that market dropout is now occurring in the market for daily necessities. This implies that even employed individuals may be structurally unable to maintain a minimally sufficient standard of living. The paper argues that the absence of a widely recognized term for this phenomenon has hindered proper analysis and policy discussion. By naming and clarifying “market dropout,” this paper seeks to highlight a critical but under-theorized social problem: the collapse of consumer participation in essential-goods markets under conditions of low wages and rising costs. Recognizing this phenomenon is a necessary first step toward addressing the structural instability facing low-income livelihoods in advanced economies.