The 99 Cents Only stores in the U.S., which became a retail phenomenon, have been acquired, reportedly for some $1.6 billion, by a private equity company from Los Angeles.

The success of the retail chain has been extraordinary, capturing substantial market share from big boxes and malls.

The 99 Cents Only outlets, with 289 locations in the U.S., were able to settle in smaller retail spaces, and places that are convenient for consumers to shop.

With a deepening economic crisis not only in the U.S. and Europe but other parts of the globe, the success tale of such "dollar shops" may be a model for medium-size retailers.

Good Model for Medium-Size Retailers

The Los Angeles Times reported that like its competitors, 99 Cents Only may expand its range of food products and add more name-brand items to attract customers who want a one-stop shop. More than half of the chain's sales already come from food and beverages.

99 Cents Only was established in 1982 and was a pioneer of the single-price retail concept, with everything priced at 99 cents. Three years ago, the retailer raised the top price of its goods to 99.99 cents, citing inflation and higher costs.

The takeover has been approved by the company's board and a special committee set up to review all buyout proposals.

Analysts expect shareholders to approve, and the transaction is expected to close in the first quarter of 2012, the LA Times said.

How They Keep Prices Low

"A 99 Cents Only store is capable of offering low prices because of a business model that is not based on having every single variety of every commodity out there," said President Jeff Gold.

"The chain often buys closeout or overstock items from suppliers and changes its offerings to reflect market prices and availability," he added.