Opened under the name Bargain Buys, 45 new Poundstretcher stores since September have struck a chord with customers, helping turn around an alarming sales slump
Poundstretcher might be expanding at a rate of knots, but you wouldn’t know it from the name above the door.
Of some 45 stores opened by the retailer since September none bear the Poundstretcher brand. Instead they’re all Bargain Buys, a name adopted to keep shoppers from assuming they’re walking into a pound shop rather than a ‘multi-price variety discounter’. The name has been rather passed around (it did belong to a chain of 50 stores owned by Poundworld, before these were sold to TPG Capital in 2015, then businessman Manni Hussain bought the name in October 2018 following Poundworld’s collapse) but “we’d been looking at it for about 12 months”, says Poundstretcher’s property director Gerry Loughran. “We opened in Paisley, Scotland. It was a Bargain Buys and I left the sign up to monitor customer reaction.” And that was that.
Adding slightly to the confusion is that the latest opening is in a former Poundworld store in Rivergate, an indoor shopping centre in Peterborough. Not that this worries the queue of shoppers waiting for the doors to open at 9.30am on a rainy Wednesday.
Once inside, the store doesn’t look much different to a typical Poundstretcher. There are homewares, toys, everyday essentials like slippers and blankets, a pet range and aisles of ambient fmcg. Unlike other Poundstretchers though it’s on a single trading floor rather than two and it’s bigger, at 10,000 sq ft, with some Poundstretchers only 4,000 sq ft. In this way it’s more of a reboot than a reinvention, but the tweaks seem to have had an impact. Refitted branches under the new name have seen a dramatic sales uplift, Loughran says. Its Banbury store “nearly tripled” sales after a Bargain Buys makeover and extension in November. “It’s given us the confidence to relook at the estate,” he says, with plans to convert the entire estate as it expands from 439 stores to 800 by 2022, as well as moving into Europe.
Lease renewals at a rate of about 80 per year will be used as an opportunity to assess locations, move if necessary, and convert to Bargain Buys. More immediately, Loughran has been tasked with looking at the bigger stores. “The feeling is, do them all like Banbury for us please, Gerry. Because the results are good.”
There is no intention to wait until ownership is settled either. An application from Poundworld to trademark the ‘Bargain Buys’ name, filed last October, remains under examination by the Intellectual Property Office. Meanwhile, Poundstretcher’s application for ‘Bargain buys big brands, big discounts’, filed a month later, has been accepted and published in the IPO’s Trade Marks Journal for opposition purposes. The Grocer understands Poundworld had not trademarked the name before October as ‘Bargain Buys’ alone was considered too generic. Hussain, who bought the name, has not responded to The Grocer’s enquiries.
It’s not the first time Poundstretcher has rebranded. In the early 2000s, the estate began converting to the name ‘Instore’ but the rebrand was deemed a failure and ditched in 2009. Then last year a Channel 4 documentary painted an unflattering, chaotic image of the chain as it followed then-CEO Chris Edwards’ efforts to turn around sales. It made another rebrand inevitable. So, can it work this time?
Latest full-year results showed Poundstretcher’s sales dropped 2.5%, from £397m to £387m, despite expanding the estate by nine stores to 394. That was for the period ending 31 March 2018, some months before the Bargain Buys name was adopted. A trading statement issued on 16 January 2019 told a different story though, with like-for-like sales up 1.2% in the period from 30 September to 29 December.
“The name has instant traction with customers,” says Loughran. And as we stand in a corner to escape the throng, I’m inclined to believe him. Despite rows of fully staffed checkouts, queues to pay stretch down the aisles. It’s in stark contrast with other Poundstretcher stores recently visted by The Grocer, some of which have been shabby, confusingly laid out and far from busy. Success will surely depend both on the business’ ability to maintain the standards of this fresh, well-staffed Peterborough store and to keep up with the constant stream of innovation of some of its discount rivals. It isn’t all in the name, after all.