Value retailers believe that they are still able to differentiate themselves from mid-market retailers who are discounting heavily and increasing their promotional activity.
In the Retail Week Conference panel session on value in a downturn, Original Factory Shop’s new chief executive Angela Spindler said that the company’s differentiated location strategy - focusing on small towns - sets it apart from competitors.
Spindler said that customer numbers at Original Factory Shop stores are up 10 per cent “week in, week out” and when customers come to their stores, 90 per cent of them buy. In comparison, she says M&S has a 50 per cent footfall to customer conversion in stores, and Debenhams, where Spindler used to work, is even lower than this.
TJ Morris trades as Home Bargains. Its operations director Joe Morris, a third-generation retailer, says that while his company is focused on offering branded products at competitive prices, customers expect a nice shopping environment and great customer service too.
Morris was dismissive of the mid-market’s move to value: “You are either a value retailer or you are not. Doing promotions is not being a value retailer. Don’t kid yourself that you can be what you are, and a value retailer.”
Hussein Lalani, commercial director of 99p Stores said that his fixed-price model was proving attractive to customers, especially at stores positioned close to supermarkets such as Tesco.
Lalani said that company has found shoppers come to his stores first, to buy bargains before going next door to the supermarket and completing the rest of their shopping.
Lalani said 99p Stores ensures that it remains price-competitive against these retailers: “We are pitted against the likes of the multiples and thanks to the internet we can check our prices.”
N Brown Group chief executive Alan White said that his customers are interested in value for money rather than purely price, and that it also has a unique product proposition, supplying consumers with products which they find it hard to buy on the high street.
White remains committed to offering customers credit at a time when they are finding it increasingly difficult to get elsewhere. He says that he can’t be sure that the company is getting the risk and reward balance right when it comes to bad debt, and he won’t know for sure until next year.
All the speakers have tight control on their costs. Spindler said that she believes that you can make a store look great through clever merchandising, rather than splashing the cash on expensive fixtures and fittings.
Similarly, Lalani said that he has seen the average cost of a shop fit fall by more than 20 per cent in the past year or so. He is also re-engineering products, and shopping around among suppliers more, to ensure that his fixed-price model still works.