99p Stores
Encyclopedia
99p Stores Ltd is a family run business founded in January 2001 by entrepreneur
Nadir Lalani, who opened the first store in the chain in Holloway, London
, with a further three stores opening later that year. In 2002, Lalani decided to expand the business throughout the UK and has rapidly developed 99p Stores, operating a total of 129 stores as of March 2010 and serving around 1.5 million customers each week, undercutting their main rival Poundland
by a penny. As of mid-2009 the company offered more than 3,500 different product lines throughout its stores.
Most of their stores are based in the south of the UK, although there are stores as far north as Liverpool
and Hartlepool. The chain saw accelerated store expansion upon the collapse of Woolworths Group
, where they took the opportunity to acquire 15 of these former stores, increasing their estate to 79 at that time. Landlords are now regarding 99p Stores as an anchor tenant due to the significant number of customers one of their stores can bring to a location.
Although the retailer made a pre-tax loss of £1.14 million in the year to 31 January 2007, they claim that, since then, consumers have become more cautious with their money and where they spend it, in response to the current economic conditions. The retailer has noticed an increase of customers from the wealthier AB social grade
(a system of demographic classification
used in the United Kingdom) during the recession. Customers tend to speak positively about 99p Stores, with most reviewers noting customer and product overcrowding as their biggest criticisms, yet still rate the chain 4.5/5 on average.
Nadir Lalani came to the UK in 1972 from Tanzania
, having owned a cash and carry store in Mwanza
. Since moving to the UK he built up and sold two convenience store
chains (including buying Whistlestop Discount Stores, a 27-strong chain which he sold in 2005) before moving in to discount retailing, with intentions of handing the business over to his two sons, who also work for the company, in due course. Lalani was inspired to start 99p Stores after stumbling upon a bustling Poundland
shop whilst wandering around a shopping centre. His first store opened on 18 January 2001, with over 3,500 customers visiting the store in the first day of trading. As of mid-2009, the company offered more than 3,500 different product lines throughout its stores.
in 2007, giving them capacity to go to 120 stores with existing infrastructure. Discount shops, including 99p Stores, have seen store numbers increase by 60% during the economic downturn, with two discount stores opening for every one store that has closed. The retailer took advantage of the tough economic climate of the late 2000s, having doubled the number of their stores during the period August 2008 - August 2009, and have further plans to double existing store numbers and current market share
within the 18 months following October 2009.
In August 2009, Retail Week
reported that the retailer is to review its ownership structure, potentially resulting in a sale as early as summer 2010 or a flotation
within the next three years. The retailer has said they would want 150 shops before considering any offers to buy a stake in the business, mentioning the advantages of a flotation to include further investment, as well as the Lalani family being able to retain a stake and an element of control in the business.
pushes up prices beyond what the company is able to pay, this is often easily worked around by reducing the quantity supplied in each item, for example by reducing the amount of tape on reels of selotape, or selling eggs
by the dozen instead of 18s. Nadir's son and buying director, Faisal, who takes care of the day-to-day running, notes that the lowest margin he will work with is 20 percent. In response to the planned VAT
rise to 20% in January 2011, the budget chain said it would not change its prices but would stop selling goods that did not make a profit.
Towards the end of 2009, 99p Stores replaced their Torex electronic point of sale
system with one provided by Futura to operate their touchscreen
Intelligent Registers (IRs). As well as allowing the retailer to understand which products customers are buying, through up-to-date tracking of the most popular products, it will also allow stock to be moved around the business quickly. Other functionality includes its allocation and replenishment capabilities, helping to ensure constant stock
via automated ordering. Following a successful pilot (in which the company tested the new system in a select number of stores before committing to it), Futura scheduled an ambitious roll-out programme at the end of 2009 to change both software and platform, reducing the normal roll-out period from six months to two months. The Futura team installed the system with Digipos touch-screen tills each evening after trading, enabling the store to start trading the very next day. Simultaneously, new chip-and-pin capability is being introduced, to ensure the company is PCI compliant, with contactless payments to follow.
The retailer offers a large range of products in its 3,500 lines, from "Do it yourself" (DIY)
and electrical to toys and stationery products, with around 60% of their products consisting of well-known brands such as Colgate
, Pepsi
and Pringles
. Plans have been announced to extend its grocery offerings, which currently make up 35% of its 3,500 lines. Food products have been a strong performer for the retailer, accounting for 40% of total sales in April 2008, which itself was an increase of 5% from the start of 2008. The retailer provides its own line of grocery products, branded 'Deli Fresh', which was launched at the start of 2007. As of 2006, the retailer was making a profit margin of 40% on the produce it sold, which included its most popular food lines at that time such as potatoes, onions and eggs. Some products have sold for less than 99p, such as branded cake
s for 69p and 2 litres (1.8 imp qt) bottles of soft drinks for 89p. The best seller is the 250 grams (8.8 oz) Galaxy chocolate bar.
The business sources a third of its products from the Far East
, allowing for gross margin
s of up to 50%.
In April 2006, the retailer secured an £8 million cash injection from its venture capital
backers Barclays Ventures and Lloyds TSB
to open up to 45 new stores by early 2008. More than two years later, in September 2008, its 59th store was opened in Bracknell
, Berkshire
and by the end of 2008 there were 65 stores open, with plans for 20 stores each year over the next three years.
As can be seen in the graph to the right, the retailer has seen rapid growth since the end of 2008, doubling the number of their stores from 61 in November 2008 to 123 in December 2009. Company owner Lalani said that finding sites was getting easier because of the new empty rate tax on commercial property. Whereas, previously, landlord
s would decline to have a discount shop filling their empty stores, they are now less reluctant to fill them with discount stores, as they are now being charged for stores which lie empty. Stuart Donnelly, head of property at 99p Stores, notes that landlords are now being much more proactive, inviting potential retailers to come and have a look at their locations with the hope of them taking up a lease, as the property market has been badly affected by the recession, allowing the company to drive competitive deals to further expand their portfolio of stores with less expenditure, something that wouldn't have been possible just a few years ago. Landlords are now regarding 99p Stores as an anchor tenant due to the significant number of customers one of their stores can bring to a location.
Upon the collapse of the former Woolworths Group
, 99p Stores took the opportunity to acquire 15 of the vacant stores, increasing their estate to 79. They reached 100 stores in August 2009 and, as of December 2009, the retail chain had acquired and reopened 52 former Woolworths stores. New store openings prove so popular that bosses have recently been requesting friendly police presence for crowd control
purposes for desperate shoppers who queue from 5am to be the first to get hold of first-customer bargains.
, Wales
. The new chain is intended to operate from larger store sites, such as retail parks, and aims to sell a wider range of products, with the benefit of not being tied to a single price-point as in the 99p Stores.
in their stores, expecting this trend to continue even after the economy recovers.
Some stores, such as one located in the seaside town of Clacton
, are well positioned to attract a lot of passing tourists. In August 2009, the Clacton store was reporting more than 5000 customers per day, with sometimes as many as 400 customers passing through their doors every hour, and often clearing out most of the store's stock daily.
es and smaller price-point retail chains such as Poundworld, 99p Stores' closest and largest rival in the sector is Poundland
. The retailer has cited one of their main aims is to catch up with Poundland and their 223 stores as of August 2009. The retailer makes it a point of honour to undercut rival Poundland, whose £1 pack of 100 white plastic cups contained 20 less (and cost a penny more) than the pack of 120 available at 99p Stores as of late 2007.
A similar situation arose in June 2009, when a traditional sweet shop in Petersfield
came under serious threat of closure following the opening of a 99p Store, with takings going down by as much as 60 percent a day. They are struggling to attract customers as the 99p Store is able to sell a similar range of sweets from its confectionery
counter at a fraction of the price, as being a multi-million pound concern it is able to increase its lines and buy larger quantities at cheaper prices. The commercial manager of 99p Stores, Gerry Loughran, noted that "she was obviously trading when Woolworths was open, and they had the biggest pick and mix operation in the UK at the time, so she has faced competition before and she was able to manage then."
In December 2009, Eastleigh
news reported that a new discount shop had established itself next door to a 99p Stores outlet, but instead selling all its products for 89p, undercutting the retailer by 10p. This will be a new experience for the 99p Stores outlet in Eastleigh, as, when they first opened, they succeeded in undercutting the two existing discount stores, "The Stockmarket" and "T.M Stores", to the extent that both shops closed down within months. The manager of the new 89p shop disagrees that this a business model which can only succeed in a recession, stating "this is a business for any time, people love value for money". The 89p shop was the 2nd branch to be opened, the first being in Poole, Dorset.
also ranked them 11th in their Top 50 list of independent grocery retailers.
s. A unit purchased by trading standards
and informally tested was found to fail on the handle strength and it became too hot to touch. The company immediately displayed recall
notices upon learning of the dangerous product.
The company again were fined on 17 October 2005, after pleading guilty at Kingston Magistrates Court to selling hair removal cream, which had no instructions in English and caused burning to the consumers’ skin when applied. The company were fined £2,500 and had to pay Kingston Council's costs of £500. They were criticised for not having procedures in place to ensure the safety of items, however agreed to introduce procedures to ensure that such instances could not occur again.
and West Ealing
stores were caught selling adult-rated DVD films to a 15-year-old boy during a council sting operation
. Ealing Trading Standards
Officers sent in the boy to establish whether the retailer would sell to youths trying to purchase age-restricted goods. Mr Rosewarne, the health and safety officer for the company, gave evidence on how seriously the company had taken the matter and gave details on new procedures for staff training and in store publicity to avoid any reoccurrences.
, customers were commenting how they had wanted a shop like 99p Stores for some time, with very strong sales reported for their first day of trading.
However, there is noticeable opposition to the planned opening of stores; such is the case in Stroud, Gloucestershire
, where more than 1000 people have joined a Facebook
group which opposes the planned 99p Store in the Cotswold
market town. Some older shoppers have also expressed concerns over the retail chain's expansion plans, with one citing the need to have "a shop that will give the high street a bit of oomph, not something that lowers the tone". Whilst another agreed with not wanting discount retailers filling up the high street
, it was generally accepted that the alternative of having shops lie empty hurts other businesses. Co-founder Hussein Lalani branded the critic
s as snob
s, but that people vote with their feet and during the credit crunch, budget-conscious shoppers want a place where they can get bargains.
t
Entrepreneur
An entrepreneur is an owner or manager of a business enterprise who makes money through risk and initiative.The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to...
Nadir Lalani, who opened the first store in the chain in Holloway, London
Holloway, London
Holloway is an inner-city district in the London Borough of Islington located north of Charing Cross and follows for the most part, the line of the Holloway Road . At the centre of Holloway is the Nag's Head area...
, with a further three stores opening later that year. In 2002, Lalani decided to expand the business throughout the UK and has rapidly developed 99p Stores, operating a total of 129 stores as of March 2010 and serving around 1.5 million customers each week, undercutting their main rival Poundland
Poundland
Poundland is a British-based variety store chain which sells every item in its stores for £1. Established in April 1990 by Dave Dodd and Stephen Smith, Poundland stock a variety of around 3,000 home and kitchen-ware, gifts, healthcare and other products, across 16 categories many of which are brand...
by a penny. As of mid-2009 the company offered more than 3,500 different product lines throughout its stores.
Most of their stores are based in the south of the UK, although there are stores as far north as Liverpool
Liverpool
Liverpool is a city and metropolitan borough of Merseyside, England, along the eastern side of the Mersey Estuary. It was founded as a borough in 1207 and was granted city status in 1880...
and Hartlepool. The chain saw accelerated store expansion upon the collapse of Woolworths Group
Woolworths Group
Woolworths Group plc was a listed British company that owned the high-street retail chain, Woolworths, as well as other brands such as the entertainment distributor Entertainment UK and book and resource distributor Bertram Books...
, where they took the opportunity to acquire 15 of these former stores, increasing their estate to 79 at that time. Landlords are now regarding 99p Stores as an anchor tenant due to the significant number of customers one of their stores can bring to a location.
Although the retailer made a pre-tax loss of £1.14 million in the year to 31 January 2007, they claim that, since then, consumers have become more cautious with their money and where they spend it, in response to the current economic conditions. The retailer has noticed an increase of customers from the wealthier AB social grade
NRS social grade
The NRS social grades are a system of demographic classification used in the United Kingdom. They were originally developed by the National Readership Survey in order to classify readers, but are now used by many other organisations for wider applications and have become a standard for market...
(a system of demographic classification
Demography
Demography is the statistical study of human population. It can be a very general science that can be applied to any kind of dynamic human population, that is, one that changes over time or space...
used in the United Kingdom) during the recession. Customers tend to speak positively about 99p Stores, with most reviewers noting customer and product overcrowding as their biggest criticisms, yet still rate the chain 4.5/5 on average.
Foundation
Tanzania
The United Republic of Tanzania is a country in East Africa bordered by Kenya and Uganda to the north, Rwanda, Burundi, and the Democratic Republic of the Congo to the west, and Zambia, Malawi, and Mozambique to the south. The country's eastern borders lie on the Indian Ocean.Tanzania is a state...
, having owned a cash and carry store in Mwanza
Mwanza
Mwanza is a mid-sized port city on the southern shores of Lake Victoria in northwestern Tanzania. With an urban population of 1.2 million and a metropolitan population of 2 million, it is Tanzania's second largest city, following Dar es Salaam and ahead of other major Tanzanian cities of Arusha,...
. Since moving to the UK he built up and sold two convenience store
Convenience store
A convenience store, corner store, corner shop, commonly called a bodega in Spanish-speaking areas of the United States, is a small store or shop in a built up area that stocks a range of everyday items such as groceries, toiletries, alcoholic and soft drinks, and may also offer money order and...
chains (including buying Whistlestop Discount Stores, a 27-strong chain which he sold in 2005) before moving in to discount retailing, with intentions of handing the business over to his two sons, who also work for the company, in due course. Lalani was inspired to start 99p Stores after stumbling upon a bustling Poundland
Poundland
Poundland is a British-based variety store chain which sells every item in its stores for £1. Established in April 1990 by Dave Dodd and Stephen Smith, Poundland stock a variety of around 3,000 home and kitchen-ware, gifts, healthcare and other products, across 16 categories many of which are brand...
shop whilst wandering around a shopping centre. His first store opened on 18 January 2001, with over 3,500 customers visiting the store in the first day of trading. As of mid-2009, the company offered more than 3,500 different product lines throughout its stores.
Growth
The company relocated their headquarters to a new, 150000 square feet (13,935.5 m²) base in DaventryDaventry
Daventry is a market town in Northamptonshire, England, with a population of 22,367 .-Geography:The town is also the administrative centre of the larger Daventry district, which has a population of 71,838. The town is 77 miles north-northwest of London, 13.9 miles west of Northampton and 10.2...
in 2007, giving them capacity to go to 120 stores with existing infrastructure. Discount shops, including 99p Stores, have seen store numbers increase by 60% during the economic downturn, with two discount stores opening for every one store that has closed. The retailer took advantage of the tough economic climate of the late 2000s, having doubled the number of their stores during the period August 2008 - August 2009, and have further plans to double existing store numbers and current market share
Market share
Market share is the percentage of a market accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful.Marketers need to be able to...
within the 18 months following October 2009.
In August 2009, Retail Week
Retail Week
Retail Week is a UK-based news magazine covering the retail industry.Founded in 1988 by financial journalist Patience Wheatcroft and her husband Tony Salter, it is now owned by the business magazine publisher EMAP.The magazine is published every Friday...
reported that the retailer is to review its ownership structure, potentially resulting in a sale as early as summer 2010 or a flotation
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
within the next three years. The retailer has said they would want 150 shops before considering any offers to buy a stake in the business, mentioning the advantages of a flotation to include further investment, as well as the Lalani family being able to retain a stake and an element of control in the business.
Management
In October 2009, the retailer appointed Gordon Brown as their new chairman, who took up the position on 1 October 2009, taking over from Peter Gent. Brown, having previously served as managing director at Wilkinson between 1991–2007, joined the company at a time when it is embarking on aggressive expansion and assessing its long-term options.Sales strategy
When inflationInflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
pushes up prices beyond what the company is able to pay, this is often easily worked around by reducing the quantity supplied in each item, for example by reducing the amount of tape on reels of selotape, or selling eggs
Egg (food)
Eggs are laid by females of many different species, including birds, reptiles, amphibians, and fish, and have probably been eaten by mankind for millennia. Bird and reptile eggs consist of a protective eggshell, albumen , and vitellus , contained within various thin membranes...
by the dozen instead of 18s. Nadir's son and buying director, Faisal, who takes care of the day-to-day running, notes that the lowest margin he will work with is 20 percent. In response to the planned VAT
Vat
Vat or VAT may refer to:* A type of container such as a barrel, storage tank, or tub, often constructed of welded sheet stainless steel, and used for holding, storing, and processing liquids such as milk, wine, and beer...
rise to 20% in January 2011, the budget chain said it would not change its prices but would stop selling goods that did not make a profit.
Towards the end of 2009, 99p Stores replaced their Torex electronic point of sale
Point of sale
Point of sale or checkout is the location where a transaction occurs...
system with one provided by Futura to operate their touchscreen
Touchscreen
A touchscreen is an electronic visual display that can detect the presence and location of a touch within the display area. The term generally refers to touching the display of the device with a finger or hand. Touchscreens can also sense other passive objects, such as a stylus...
Intelligent Registers (IRs). As well as allowing the retailer to understand which products customers are buying, through up-to-date tracking of the most popular products, it will also allow stock to be moved around the business quickly. Other functionality includes its allocation and replenishment capabilities, helping to ensure constant stock
Stock management
Stock management is the function of understanding the stock mix of a company and the different demands on that stock. The demands are influenced by both external and internal factors and are balanced by the creation of Purchase order requests to keep supplies at a reasonable or prescribed...
via automated ordering. Following a successful pilot (in which the company tested the new system in a select number of stores before committing to it), Futura scheduled an ambitious roll-out programme at the end of 2009 to change both software and platform, reducing the normal roll-out period from six months to two months. The Futura team installed the system with Digipos touch-screen tills each evening after trading, enabling the store to start trading the very next day. Simultaneously, new chip-and-pin capability is being introduced, to ensure the company is PCI compliant, with contactless payments to follow.
Products offered
Do it yourself
Do it yourself is a term used to describe building, modifying, or repairing of something without the aid of experts or professionals...
and electrical to toys and stationery products, with around 60% of their products consisting of well-known brands such as Colgate
Colgate (toothpaste)
Colgate is an oral hygiene product line of toothpastes, toothbrushes, mouthwashes and dental floss.-Duraphat:Duraphat is a professional strength paste intended for the treatment and prevention of dental caries....
, Pepsi
Pepsi
Pepsi is a carbonated soft drink that is produced and manufactured by PepsiCo...
and Pringles
Pringles
Pringles is a brand of potato and wheat based snacks originally developed by Procter & Gamble. Pringles are sold in more than 140 countries and have yearly sales of more than...
. Plans have been announced to extend its grocery offerings, which currently make up 35% of its 3,500 lines. Food products have been a strong performer for the retailer, accounting for 40% of total sales in April 2008, which itself was an increase of 5% from the start of 2008. The retailer provides its own line of grocery products, branded 'Deli Fresh', which was launched at the start of 2007. As of 2006, the retailer was making a profit margin of 40% on the produce it sold, which included its most popular food lines at that time such as potatoes, onions and eggs. Some products have sold for less than 99p, such as branded cake
Cake
Cake is a form of bread or bread-like food. In its modern forms, it is typically a sweet and enriched baked dessert. In its oldest forms, cakes were normally fried breads or cheesecakes, and normally had a disk shape...
s for 69p and 2 litres (1.8 imp qt) bottles of soft drinks for 89p. The best seller is the 250 grams (8.8 oz) Galaxy chocolate bar.
The business sources a third of its products from the Far East
Far East
The Far East is an English term mostly describing East Asia and Southeast Asia, with South Asia sometimes also included for economic and cultural reasons.The term came into use in European geopolitical discourse in the 19th century,...
, allowing for gross margin
Gross margin
Gross margin is the difference between revenue and cost before accounting for certain other costs...
s of up to 50%.
Store expansion
Financial capital
Financial capital can refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e. retail, corporate, investment banking, etc....
backers Barclays Ventures and Lloyds TSB
Lloyds TSB
Lloyds TSB Bank Plc is a retail bank in the United Kingdom. It was established in 1995 by the merger of Lloyds Bank, established in Birmingham, England in 1765 and traditionally considered one of the Big Four clearing banks, with the TSB Group which traces its origins to 1810...
to open up to 45 new stores by early 2008. More than two years later, in September 2008, its 59th store was opened in Bracknell
Bracknell
Bracknell is a town and civil parish in the Borough of Bracknell Forest in Berkshire, England. It lies to the south-east of Reading, southwest of Windsor and west of central London...
, Berkshire
Berkshire
Berkshire is a historic county in the South of England. It is also often referred to as the Royal County of Berkshire because of the presence of the royal residence of Windsor Castle in the county; this usage, which dates to the 19th century at least, was recognised by the Queen in 1957, and...
and by the end of 2008 there were 65 stores open, with plans for 20 stores each year over the next three years.
As can be seen in the graph to the right, the retailer has seen rapid growth since the end of 2008, doubling the number of their stores from 61 in November 2008 to 123 in December 2009. Company owner Lalani said that finding sites was getting easier because of the new empty rate tax on commercial property. Whereas, previously, landlord
Landlord
A landlord is the owner of a house, apartment, condominium, or real estate which is rented or leased to an individual or business, who is called a tenant . When a juristic person is in this position, the term landlord is used. Other terms include lessor and owner...
s would decline to have a discount shop filling their empty stores, they are now less reluctant to fill them with discount stores, as they are now being charged for stores which lie empty. Stuart Donnelly, head of property at 99p Stores, notes that landlords are now being much more proactive, inviting potential retailers to come and have a look at their locations with the hope of them taking up a lease, as the property market has been badly affected by the recession, allowing the company to drive competitive deals to further expand their portfolio of stores with less expenditure, something that wouldn't have been possible just a few years ago. Landlords are now regarding 99p Stores as an anchor tenant due to the significant number of customers one of their stores can bring to a location.
Upon the collapse of the former Woolworths Group
Woolworths Group
Woolworths Group plc was a listed British company that owned the high-street retail chain, Woolworths, as well as other brands such as the entertainment distributor Entertainment UK and book and resource distributor Bertram Books...
, 99p Stores took the opportunity to acquire 15 of the vacant stores, increasing their estate to 79. They reached 100 stores in August 2009 and, as of December 2009, the retail chain had acquired and reopened 52 former Woolworths stores. New store openings prove so popular that bosses have recently been requesting friendly police presence for crowd control
Crowd control
Crowd control is the controlling of a crowd, to prevent the outbreak of disorder and prevention of possible riot. Examples are at soccer matches, when a sale of goods has attracted an excess of customers, refugee control, or mass decontamination and mass quarantine situations . It calls for gentler...
purposes for desperate shoppers who queue from 5am to be the first to get hold of first-customer bargains.
Family Bargains
In 2010, the owners of 99p Stores launched a subsidiary chain, Family Bargains. The first store opened in CarmarthenCarmarthen
Carmarthen is a community in, and the county town of, Carmarthenshire, Wales. It is sited on the River Towy north of its mouth at Carmarthen Bay. In 2001, the population was 14,648....
, Wales
Wales
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...
. The new chain is intended to operate from larger store sites, such as retail parks, and aims to sell a wider range of products, with the benefit of not being tied to a single price-point as in the 99p Stores.
Customer base
A survey by the store reveals some of its 600,000 weekly customers are stockbrokers, solicitors, accountants and doctors, as opposed to an overwhelming majority of hard-up and poorly-paid people. The retailer has noticed a lot more consumers from the AB social gradeNRS social grade
The NRS social grades are a system of demographic classification used in the United Kingdom. They were originally developed by the National Readership Survey in order to classify readers, but are now used by many other organisations for wider applications and have become a standard for market...
in their stores, expecting this trend to continue even after the economy recovers.
Some stores, such as one located in the seaside town of Clacton
Clacton-on-Sea
Clacton-on-Sea is the largest town on the Tendring peninsula, in Essex, England and was founded in 1871. It is a seaside resort that attracted many tourists in the summer months between the 1950s and 1970s, but which like many other British sea-side resorts went into decline as a holiday...
, are well positioned to attract a lot of passing tourists. In August 2009, the Clacton store was reporting more than 5000 customers per day, with sometimes as many as 400 customers passing through their doors every hour, and often clearing out most of the store's stock daily.
Competition
Competitive strategy
Value and discount retailers have seen a boom in sales since the recession at the start of 2009. Although there are several retailers with the same strategy as 99p Stores, such as independent businessIndependent business
In business, an independent business as a term of distinction generally refers to privately owned companies . Independent businesses most commonly take the form of sole-proprietorships...
es and smaller price-point retail chains such as Poundworld, 99p Stores' closest and largest rival in the sector is Poundland
Poundland
Poundland is a British-based variety store chain which sells every item in its stores for £1. Established in April 1990 by Dave Dodd and Stephen Smith, Poundland stock a variety of around 3,000 home and kitchen-ware, gifts, healthcare and other products, across 16 categories many of which are brand...
. The retailer has cited one of their main aims is to catch up with Poundland and their 223 stores as of August 2009. The retailer makes it a point of honour to undercut rival Poundland, whose £1 pack of 100 white plastic cups contained 20 less (and cost a penny more) than the pack of 120 available at 99p Stores as of late 2007.
Direct competition
On several occasions 99p Stores has been criticised for its handling of situations in which smaller, independent retailers face threat of closure following the opening of branches of 99p Stores. In January 2009, an independent pound shop in Poole, Dorset was forced to close after a branch of 99p Stores opened directly opposite, offering a similar range of items and undercutting their competitor by a penny, causing the pound shop's turnover to drop by 70 percent. Commercial director Nadir Lalani claimed that "we never try to directly affect anyone but it's all healthy competition".A similar situation arose in June 2009, when a traditional sweet shop in Petersfield
Petersfield
Petersfield can refer to any of the following places:*Petersfield, Hampshire, a market town in England*Petersfield, Jamaica, a small town in the parish of Westmoreland*Petersfield, Manitoba, in Canada*Petersfield, an area of Cambridge, England...
came under serious threat of closure following the opening of a 99p Store, with takings going down by as much as 60 percent a day. They are struggling to attract customers as the 99p Store is able to sell a similar range of sweets from its confectionery
Confectionery
Confectionery is the set of food items that are rich in sugar, any one or type of which is called a confection. Modern usage may include substances rich in artificial sweeteners as well...
counter at a fraction of the price, as being a multi-million pound concern it is able to increase its lines and buy larger quantities at cheaper prices. The commercial manager of 99p Stores, Gerry Loughran, noted that "she was obviously trading when Woolworths was open, and they had the biggest pick and mix operation in the UK at the time, so she has faced competition before and she was able to manage then."
In December 2009, Eastleigh
Eastleigh
Eastleigh is a railway town in Hampshire, England, and the main town in the Eastleigh borough which is part of Southampton Urban Area. The town lies between Southampton and Winchester, and is part of the South Hampshire conurbation...
news reported that a new discount shop had established itself next door to a 99p Stores outlet, but instead selling all its products for 89p, undercutting the retailer by 10p. This will be a new experience for the 99p Stores outlet in Eastleigh, as, when they first opened, they succeeded in undercutting the two existing discount stores, "The Stockmarket" and "T.M Stores", to the extent that both shops closed down within months. The manager of the new 89p shop disagrees that this a business model which can only succeed in a recession, stating "this is a business for any time, people love value for money". The 89p shop was the 2nd branch to be opened, the first being in Poole, Dorset.
Financial performance
The retailer has boasted rapid growth since interception which it attributes to their strong sales growth. As a result of their growth, they were rated in the Sunday Times Fast Track 100 in December 2006 as the 19th fastest growing company in the country. The GrocerThe Grocer
The Grocer is a British market leading magazine devoted to grocery sales, published by William Reed Business Media. It has been published since 1862. Its readership encompasses every aspect of the industry, from directors of the large multiples to independent retailers...
also ranked them 11th in their Top 50 list of independent grocery retailers.
| Week ending | Turnover (£m) | Gross profit Gross profit In accounting, gross profit or sales profit is the difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation, and interest payments... (£m) |
Profit/(loss) before tax (£m) |
|---|---|---|---|
| 31 January 2010 | 183.5 | 1.79 | |
| 31 January 2009 | 113 | 0.333 | |
| 31 January 2008 | 94 | 18.9 | 0.143 |
| 31 January 2007 | 80.8 | 16 | (1.14) |
Health and safety
In June 2005, the retailer received fines and costs totalling almost £4,400 after pleading guilty at Barnsley Magistrates Court of supplying dangerous frying panFrying pan
A frying pan, frypan, or skillet is a flat-bottomed pan used for frying, searing, and browning foods. It is typically in diameter with relatively low sides that flare outwards, a long handle, and no lid. Larger pans may have a small grab handle opposite the main handle...
s. A unit purchased by trading standards
Trading Standards
Trading Standards is the name given to local authority departments in the UK formerly known as Weights and Measures. These departments investigate commercial organisations that carry out trade in unethical ways or outside the scope of the law.-History:...
and informally tested was found to fail on the handle strength and it became too hot to touch. The company immediately displayed recall
Product recall
A product recall is a request to return to the maker a batch or an entire production run of a product, usually due to the discovery of safety issues. The recall is an effort to limit liability for corporate negligence and to improve or avoid damage to publicity...
notices upon learning of the dangerous product.
The company again were fined on 17 October 2005, after pleading guilty at Kingston Magistrates Court to selling hair removal cream, which had no instructions in English and caused burning to the consumers’ skin when applied. The company were fined £2,500 and had to pay Kingston Council's costs of £500. They were criticised for not having procedures in place to ensure the safety of items, however agreed to introduce procedures to ensure that such instances could not occur again.
Product sale to underaged customer
The company were also fined £3,000 in February 2006, after staff in their ActonActon, London
Acton is a district of west London, England, located in the London Borough of Ealing. It is situated west of Charing Cross.At the time of the 2001 census, Acton, comprising the wards of East Acton, Acton Central, South Acton and Southfield, had a population of 53,689 people...
and West Ealing
West Ealing
West Ealing is a place in the London Borough of Ealing in west London.-History:West Ealing in its present form is less than 100 years old....
stores were caught selling adult-rated DVD films to a 15-year-old boy during a council sting operation
Sting operation
In law enforcement, a sting operation is a deceptive operation designed to catch a person committing a crime. A typical sting will have a law-enforcement officer or cooperative member of the public play a role as criminal partner or potential victim and go along with a suspect's actions to gather...
. Ealing Trading Standards
Trading Standards
Trading Standards is the name given to local authority departments in the UK formerly known as Weights and Measures. These departments investigate commercial organisations that carry out trade in unethical ways or outside the scope of the law.-History:...
Officers sent in the boy to establish whether the retailer would sell to youths trying to purchase age-restricted goods. Mr Rosewarne, the health and safety officer for the company, gave evidence on how seriously the company had taken the matter and gave details on new procedures for staff training and in store publicity to avoid any reoccurrences.
Customer perception
Generally, customers speak positively about 99p Stores, with most reviewers only criticising customer and product overcrowding, as well as a lack of cleanliness in many of their stores. Some reviewers note that they have seen several items cheaper from other retailers; however mostly the products on offer at 99p Stores are of good value. Reviews on dooyoo.co.uk (a shopping advice and review site) show an average rating of 4/5. Upon opening one of their stores at Muswell HillMuswell Hill
Muswell Hill is a suburb of north London, mostly in the London Borough of Haringey. It is situated about north of Charing Cross and around from the City of London. Muswell Hill is in the N10 postal district and mostly in the Hornsey and Wood Green parliamentary constituency.- History :The...
, customers were commenting how they had wanted a shop like 99p Stores for some time, with very strong sales reported for their first day of trading.
However, there is noticeable opposition to the planned opening of stores; such is the case in Stroud, Gloucestershire
Stroud, Gloucestershire
Stroud is a market town and civil parish in the county of Gloucestershire, England. It is the main town in Stroud District.Situated below the western escarpment of the Cotswold Hills at the meeting point of the Five Valleys, the town is noted for its steep streets and cafe culture...
, where more than 1000 people have joined a Facebook
Facebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
group which opposes the planned 99p Store in the Cotswold
Cotswold
The Cotswolds are a range of hills in central England that give their name to:*Cotswold *Cotswold *Cotswold Chase, a horse race*Cotswold Games, annual games in Chipping Campden, Gloucestershire...
market town. Some older shoppers have also expressed concerns over the retail chain's expansion plans, with one citing the need to have "a shop that will give the high street a bit of oomph, not something that lowers the tone". Whilst another agreed with not wanting discount retailers filling up the high street
High Street
High Street, or the High Street, is a metonym for the generic name of the primary business street of towns or cities, especially in the United Kingdom. It is usually a focal point for shops and retailers in city centres, and is most often used in reference to retailing...
, it was generally accepted that the alternative of having shops lie empty hurts other businesses. Co-founder Hussein Lalani branded the critic
Critic
A critic is anyone who expresses a value judgement. Informally, criticism is a common aspect of all human expression and need not necessarily imply skilled or accurate expressions of judgement. Critical judgements, good or bad, may be positive , negative , or balanced...
s as snob
Snob
A snob is someone who believes that some people are inherently inferior to him or her for any one of a variety of reasons, including real or supposed intellect, wealth, education, ancestry, taste, beauty, nationality, et cetera. Often, the form of snobbery reflects the snob's personal attributes...
s, but that people vote with their feet and during the credit crunch, budget-conscious shoppers want a place where they can get bargains.
External links
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