The single price specialist 99p Stores has launched a new retail chain to capitalise on the flight to value among consumers and soft out-of-town property market. The team behind the retailer, where everything is sold for 99p, opened its first Family Bargains shop in Carmarthen, Wales, last Thursday.
Faisal Lalani, the buying director at 99p Stores, said that Family Bargains sells a greater range of general merchandise, including toys and soft furnishings, and is not constrained by the 99p price tag, although most products will be under £10. It also offers bigger pack sizes, such as a 24-pack of crisps and larger bottles of shampoo.
He said: "At the moment, we cannot sell in 99p Stores a lot of the products we will sell in Family Bargains. As good a retailer as I am, I cannot sell garden furniture for 99p. With lots of the furniture guys being in trouble in the past, such as [the defunct chain] MFI, there is a lot of vacant space on the retail parks."
The move by 99p Stores this week to a new warehouse and head office in Pineham, Northampton, which can serve up to 400 stores, is another driver behind it launching Family Bargains.
Faisal's brother Hussein Lalani, who is the co-founder and commercial director of 99p Stores, said he wants to open 10 Family Bargains this year.
But he will wait to see how the new chain's festive sales of products, such as Christmas trees and toys, shape up before deciding on a bigger roll-out.
Family Bargains will initially be targeted at out-of-town retail parks in the Midlands, followed by sites in the North and eventually the South of England.
Hussein Lalani said: "Discounting in my opinion is quite accepted throughout the Midlands and North – and the retail space in the Midlands is cheaper than the South." He added that it chose Carmarthen for its first stores because an attractive site became available. Family Bargains sells brands including Dove, Gillette and Hasbro.
While the big single-price retailers Poundland and 99p Stores were growing before the downturn, the recession and collapse of Woolworths put a turbo-charger under their sales and store expansion. Both chains snapped up scores of former Woolworths stores after the 800-store variety retailer collapsed in November 2008.
For the year to 31 January 2010, 99p Stores delivered pre-tax profits of £1.79m – nearly a sixfold increase on the £333,348 posted the previous year, according to accounts filed at Companies House. Its sales rocketed by 63 per cent to £183.5m over the period, boosted by 54 new stores.
Poundland, which has over 260 stores, was sold to Warburg Pincus for £200m last month.