Backed by Christo Wiese, former Asda boss Andy’s Bond’s new discount variety chain will launch in an already competitive market.

When Christo Wiese declared in September that value shopping is “here to stay”, what people did not know then was that the South African retail tycoon was preparing to put even more of his money where his mouth was.

Christo Wiese

Christo Wiese

South African retail tycoon Christo Wiese is funding the launch of a discount variety chain in the UK, run by Andy Bond

This week Retail-week.com broke the news that his recently launched Pep & Co fashion chain – run and part-owned by former Asda boss Andy Bond and Mark Elliot through Pepkor UK – is to be followed by an as yet unnamed value variety store business.

The imminent arrival of another brand in the competitive value market has prompted much interest, not least because it is not the first attempt by Wiese in the UK.

He might not want to be reminded of the names Your More Store and What Everyone Wants as he heads out down the value general merchandise road again.

Poundstretcher

Poundstretcher

Wiese previously controlled Poundstretcher before selling the chain off

The fascias of yore, both part of the the Brown & Jackson stable controlled by Pepkor, ultimately failed to cut the mustard while the Poundstretcher chain, a relative success story, was sold.

The ups and downs of Brown & Jackson were no doubt a bruising experience, as well as a lesson that low-price retailing is not just a question of selling at low prices.

So what’s changed to give Wiese and Bond renewed confidence in a value business, especially in light of the rise of big value variety store players such as Poundland – which has also just bought counterpart 99p Stores – and B&M?

And can the new team succeed with a fashion and general merchandise offer where Brown & Jackson failed?

Timing issues

Retail consultant Richard Hyman observes: “The timing is intriguing. The easy spoils of the value market have already been shared out and there’s already some consolidation.

“The timing is intriguing. They are going to find it harder now than they would have done some years ago”

Richard Hyman, Richardtalksretail.co.uk

“Back in 2009 Wiese already had a material share of market, albeit with an underperforming asset.

“Back then the value general merchandise market was growing very fast. I don’t think there’s the rate of growth that people have become accustomed to any more”.

“They are going to find it harder now than they would have done some years ago”.

However value retail is now a bigger business than it ever has been, estimated to be worth about £6bn annually and still rising.

Strong foundation

James McGregor, managing partner of consultancy Retail Remedy, says that Wiese and Bond’s latest enterprise is likely in a stronger position than many that have gone before it, including those in the Brown & Jackson stable.

An impressive looking team, including executives with experience from Asda and Poundstretcher, has been assembled for the launch.

“There are companies that have failed in this area but with the people and the financial backing they have, I think they will be in a very strong position”

James McGregor, Retail Remedy

McGregor says: “There are companies that have failed in this area but with the people they [Bond and Wiese] have recruited and with the financial backing they have I think they will be in a very strong position”.

The success of the new business will be dependent on how well it is positioned and how well it can take on established players.

McGregor says Bond’s venture sounds more akin to Original Factory Shop than B&M, carrying “a whole range of general merchandise, edibles and clothing”, although there are similarities with both.

He says: “I think if they can get this proposition right they could do very well. If they can make the stores easy to navigate and get the look right they could really take on people like Original Factory Shop and B&M”.

Conflict of interest?

Among the questions some have asked since news of the planned launch, was where it would leave the Pep & Co chain and whether the launch of a chain of stores that also sold clothing was a sign of a rethink.

But Nick Gray, managing director of retail and shopper agency Live & Breathe, says: “Bond and Wiese will have thought very carefully about how a new discount chain will fit under the wider group.

“At this stage it is less about cannibalisation and more about broadening the footprint of some of the group’s brands on the high street.

“We can expect some cross over in Pep & Co’s ranges with the new discount chain. This would be a clever brand awareness tactic”

Nick Gray, Live & Breathe

“If both estates were huge, having two large discount brands on the high street would be a problem.

“This currently isn’t the case and instead gives the group a chance to get in front of more shoppers, more of the time and at more locations.

“We can expect some cross over in Pep & Co’s ranges with the new discount chain. This would be a clever brand awareness tactic both commercially and as a brand building exercise.”

Bond’s experience of value retail at Asda and Wiese ‘s financial fire-power are likely to be a force to be reckoned with.

And no doubt the pair will heed the lessons of Brown & Jackson.