First trialled in 2008, value fashion retail format Store Twenty One is proving a hit. John Ryan visits Retford to assess its progress
Visit a pilot store and the chances are good that you’ll see the best that a retailer can offer. Pilots are aimed at gauging markets, testing new formats and, well, just seeing whether doing things a little differently from the way they were done previously will have an impact on the bottom line.
As such, there can be a tendency to include a fair amount of flimflam that will get left out if a pilot proves successful and is then taken to the roll-out stage. It is always interesting therefore to see what happens when a roll-out does take place and to note what has been included and what has been ditched. And occasionally, just occasionally, most of what was in the original makes it through the operational filter.
It’s now a little over 18 months since the first Store Twenty One was revealed to the world: in Pitsea, Essex. This was a pilot store par excellence. Although there was no sign of it, for those in the know, Store Twenty One was a remodelled version of a familiar face: value fashion retailer QS. And it looked very good indeed.
It also had the considerable benefit of being different from QS stores, which as Dilip Jiwrajka, chairman of Alok Industries, the Mumbai-based owner of QS, notes, was a real positive. “When we took over the company [in 2007] we consulted our customers and they said they didn’t really want to be in QS, particularly my daughter’s friends,” he says.
A nail in the QS coffin - especially so when it is considered that a profit had not been made by any of the several owners of the company for a decade.
Anupam Jhunjhunwala, chief executive of QS and Store Twenty One in the UK, says that when the books are closed on the financial year 2009/10, at the end of March, this will have changed and an £18m loss for the prior year will have been turned into a modest profit.
The question is what has changed and can some of this be laid at the door of the new Store Twenty One format? Jiwrajka says that initially buying QS was a “small investment in an almost bankrupt company to learn the ropes”. He adds: “If we’d known the scale of the challenge, we might not have undertaken it.”
Nevertheless, standing with Jhunjhunwala just inside the door of the newest Store Twenty One, on the main square in the small Nottinghamshire market town of Retford, it is apparent that something is going right.
Stepping off the train at Retford and walking towards the centre of town, it is obvious that this is not the UK’s most affluent location. On one of the streets leading to The Square, you can tick off the value fashion retailers - starting with Ethel Austin, moving on to Yours, a discount plus-size value retailer, and then on to M&Co and Bonmarché. This is Value Town and the red banners announcing amazing savings are everywhere to be seen.
A classier proposition
However, arriving at Store Twenty One, things are different. The storefront is clean and while there is a modest decal on the window informing shoppers that there are in-store reductions, there is not a hint of the red fest that characterises all the other value operators in town.
There are, in fact, reductions in this 6,000 sq ft shop, but the overall impression is of full-price new season merchandise, principally owing to the fact that the reductions have been located towards the rear. There is also the matter of in-store point of sale. Almost without exception, windows notwithstanding, every other retailer in town - with Ethel Austin being the worst offender - has vast amounts of overhead signage, all of it red, all of it intended to pull at the purse strings of passing shoppers.
Jhunjhunwala notes that one of the real challenges for any discount retailer is resisting the siren call of the red reduction banner. “You have to differentiate and when things are difficult, the first impulse is to put out the Sale signs. This won’t work if everyone else is doing it.” He adds that the plan with Store Twenty One stores is to be “the best in the sector wherever we happen to open”.
Practically, this means that new Store Twenty Ones are going to be found in secondary towns, rather than prime locations. “If we opened a store on Oxford Street, we’d be lost. People would say: ‘who is this?’,” says Jhunjhunwala. He has a point and the value-engineered former Woolworths store in Retford - which follows the Dalziel + Pow design for the Pitsea prototype - is by a considerable stretch the best looking shop in the town.
There have, of course, been a number of refinements and additions since Pitsea. Jhunjhunwala highlights the lingerie department where a bra and suspenders-clad mannequin reclines on a shelf above the stock and the improvements in the graphics package. All of which may not be revolutionary stuff, but is symptomatic of a number of features that are about taking a decent pilot and improving upon it.
It is also worth noting that the modular nature of the design that has been created means that store flexibility is a given. Jhunjhunwala says that homewares, which has been one of the more profitable parts of the operation, will be given more space in the autumn, to the point where it occupies about 25% of the available space, up from the current 20%. This is possible because much of the mid-floor equipment is not constrained by the merchandise category that is displayed on it.
But has all of this effort been worth it? Jhunjhunwala observes that if you’ve paid a fair amount of money to create a format that works, and the incremental increase for Store Twenty Ones against similarly sized QS stores is between 20% and 50%, then you have to make it work. This means that if you change things too much, then “roll-outs become difficult”.
By any standards, double-digit uplifts of this kind would be regarded as a success and it is hardly surprising that Jiwrajka is bullish about prospects for the UK saying that 500 stores, from the current 211, within two-and-a-half years is what he is aiming at. All of them will be Store Twenty Ones and by the end of 2011 all the outstanding QS stores will have been rebadged and refitted. Jhunjhunwala says he has a hit list of further locations where he would like to open stores and both he and Jiwrajka are confident the Store Twenty One format means more profits to come.
There have, naturally, been a number of other factors that have contributed to the turnaround that appears to be on the verge of taking place, not least of which is the £10m operational saving that Jhunjhunwala says has been the outcome of close scrutiny of the retailer’s processes.
It is also a measure of the confidence that is placed in the Store Twenty One format that Jiwrajka says that about 100 branches will open in India within the next 12 to 18 months and that he sees the potential for a 1,000-strong chain in the country within five years.
Pilot stores need not be about things that are unrealisable on a grander scale, but they frequently are. With Store Twenty One, Alok Industries looks to have set up a winner.
Size 6,000 sq ft
Location Retford, Nottinghamshire
Target market CDEs
Retford competitors Yours, Bonmarché, M&Co, Ethel Austin and Peacocks
Store twenty one facts
Head officeSolihull, West Midlands
Pilot location in 2008 Pitsea, Essex
Current store portfolio - QS and Store Twenty One 211
Roll out plans 500 stores by 2012
Overseas activity Up to 1,000 stores to be opened across India - 100 within the next 12 to 18 months