Pep&Co has closed 20 of its standalone stores in favour of Poundland shop-in-shops as the value fashion retailer accelerates its bricks-and-mortar expansion.

The fashion retailer has closed a third of its standalone stores and replaced the majority of them with shop-in-shops in Steinhoff stablemate Poundland stores.

Chief executive Adrian Mountford told Retail Week that the retailer had 40 standalone stores “in round numbers”, down from 60 at the beginning of the year.

“Where there’s been an opportunity to close the stores and move it into an adjacent Poundland, we’ve done that,” he said.

“Poundland doesn’t pay any more rent to put a Pep&Co in and we save the rent in our stores, so from a group perspective it makes no sense to have two stores in the same town where you have a Poundland store that’s big enough to take both.

“We have reduced the standalone estate purely because we make more money trading in a combined location, where possible.”

Mountford added that the shop-in-shops that have been opened to date are driving incremental revenue growth in Poundland and have “exceeded all expectations”.

The fashion retailer will open a tranche of 50 shop-in-shops between this month and October as part of its plan to roll out 100 Poundland outlets this year.

Central locations

To date, Pep&Co has favoured secondary or tertiary towns for its bricks-and-mortar expansion but Mountford said its shop-in-shop format allowed the value fashion retailer to launch in more central locations.

“We’re just taking opportunities where there are big Poundland stores and if there happens to be a Primark or more clothing competition in the locality, we’ve proved in the first 50 we can still make it work in those towns,” he said.

“I’m passionate about giving a value clothing range to shoppers in smaller towns where they haven’t got that choice and the past stores have enabled us to do that, but it doesn’t preclude us from going onto retail parks and bigger town centres where there’s more competition, which allows us to expand much wider and faster than we’d otherwise be able to do.”

Pep&Co is on track to trade out of 170 locations across standalone stores, concessions and shop-in-shops by the end of October, and Mountford said he plans to open “at least 50 shop-in-shops next year, if not more”.

He added that falling consumer confidence was good news for the value sector.

“We and possibly other value retailers are benefiting from the lack of consumer confidence at the moment with shoppers not wanting to spend too much on anything,” he said.

“The value sector should really be one that succeeds in difficult times and that’s certainly what we’re seeing.”