Value fashion retailer Pep&Co is to open a further 50 Poundland shop-in-shops during the second part of the year, in addition to the 50 currently being rolled out over the next few months.
Both Pep&Co and Poundland are backed by South African retail billionaire Christo Wiese under the Pepkor UK holding company, which is run by former Asda chief executive Andy Bond. Pepkor UK is a subsidiary of South African group Steinhoff, which bought Poundland for £597m in June last year.
Pep&Co began trialling select products in Poundland stores in Enfield and Chilwell in October last year, offering core lower-priced products such as a £1 babygrow.
The firm now has 23 shop-in-shops in Poundland stores and will have 50 by 26 May, followed by a further 50 this autumn.
“Our customers are used to shopping for clothes in Poundland locations too, because around half of that first 50 are former Woolworths or Marks & Spencer stores,” said Pep&Co managing director Adrian Mountford at the Poundland store in Woolwich Arsenal today. “The ones open so far are trading ahead of expectations.”
Pep&Co has opened a 3,700 sq ft shop-in-shop within the store, which was a former Marks & Spencer. Typical shop-in-shops will be around 3,000 sq ft.
He said additional spend is incremental and that the clothing offer is enticing market share from supermarkets like George at Asda and F&F at Tesco, as well as Matalan and Peacocks.
Pep&Co will also launch a selection of its products in an additional 577 Poundland stores.
“The big opportunity here is that it is a very symbiotic relationship with Poundland and Pep & Co,” said Mountford. “We don’t want to take any business away and so far we haven’t.
“Poundland has reorganised its space more effectively, using warehouse space or removing duplicate bays or wide aisles.”
He said the expanded scale has offset any adverse currency effects for sourcing.
“Before, we were planning to open 30-40 stores this year and now with the Poundland deal we are opening 100 shop-in-shops and 577 bays this year, so the scale is taken up a gear,” he said.
To put it into perspective, he said in Pep&Co’s first year of trading in 2015 the firm bought eight million items for the whole chain, while “in the next 12 months, we’ll buy five million pairs of black leggings alone.”
Mountford added that customers compare Pep&Co to Primark on price, while it is around 25-30% cheaper than George or Matalan. The sales split in Pep&Co stores is around 50% womenswear, 40% kids and 10% menswear, rising to around 18% menswear in Poundland shop-in-shops.