Assuming this is Apache 2 (since 1 is almost not used anymore),you need to drop the leading slash:
RewriteRule ^category/merchants/123inkjets/?$ stores/123inkjets/ [R=301,NC,L]
I assume you have RewriteEngine On in your .htaccess too somewhere above that RewriteRule?
Also, since this is pretty simple redirect, I'd use mod_alias instead of mod_rewrite. Simply
Redirect 301 /category/merchants/123inkjets http://yourdomain.com/stores/123inkjets/