Poundland is to put value fashion into more than 100 stores by the end of the year as it tries to step into the gap on the high street once filled by Woolworths.
The chain, which was bought by the South African group Steinhoff International for Â£610m in September, expects to put Pep&Co clothing outlets in up to 200 of its 850 stores over the longer term. Pep&Co is also also owned by Steinhoff.
The introduction of clothing into Poundland is part of a broader strategy to sell items priced more than Â£1. A small range of low-price clothing items, such as socks, leggings and babygrows will also be available in 577 Poundland stores by the end of April.
Andy Bond, the former Asda boss who heads the European arm of Steinhoff, said: âWe are putting clothing into big Poundlands. We are bringing back to high streets the kind of clothing that was once loved.â
He said many of the stores had been Woolworths or Marks & Spencer outlets.
Pep&Co was founded by Bond, who once ran Asdaâs George clothing label, with backing from the South African tycoon and Steinhoff shareholder Christo Wiese. The first shop opened in Kettering, Northamptonshire, in July 2015 and the chain opened its first 50 stores in less than two months. It now has nearly 60 standalone stores and nearly 30 outlets in Poundland as well as six in GHM! outlets, a discount chain also launched by Bond that is now being folded into Poundland. There will be 103 Poundland Pep&Cos by the autumn, taking the total Pep&Co chain to about 170 outlets in less than three years.
Adrian Mountford, managing director of Pep&Co, said the brand was struggling to restock womenswear to keep up with demand. âWeâre absolutely delighted,â he said.
He said the chain was likely to be taking market share from rivals such as George and Peacocks because it was more than 25% cheaper. Mountford said the massive increase in the volume of clothing Pep&Co was now buying from suppliers meant it had been able to offset rising costs as a result of the fall in the value of the pound.
Less than 4% of Poundlandâs sales are currently above Â£1 and the company wants to expand that with deals on non-clothing items at Â£2 or Â£5, but the retailer said more than 90% of the chainâs range would always be sold at Â£1.
Bond added that the higher price points were intended to enable Poundland to move into new product areas such as bedding and toys that were difficult to sell for Â£1. âThis is not to shuffle in inflation but about new items,â he said.
Barry Williams, the former Asda director who joined Poundland as trading director in November, said: âInflation is running through the industry as we speak and it is a massive concern for our customers. For us itâs really simple. We are committed to the pound.â
Williams said Poundland would also be fighting against so-called âshrinkflationâ â in which prices were held while products dropped in size â by cutting costs, pushing for better deals with suppliers and replacing third party brands with own label. The retailer has already dropped After Eights in favour of its own Mint Nights and Cadburyâs Egg ânâ Spoon chocolate eggs in favour the own-label Spoon it Out.
Bond said: âWe have got a lot of opportunity to take cost out of our business and doing so allows us to invest in our product offer and not make shortcuts for customers in either size or quality.â He said shrinkflation would be âvery much the exception rather than the ruleâ.
He admitted, however, that the group might have to accept lower profit margins by the end of the year as it fought to keep inflation off the shop floor.
Since taking over Poundland, the new management team has sold off unwanted stock and cut unprofitable stores. This week it put the remainder of its 99p Stores business, which was taken over by Poundland in late 2015, into administration and offloading 60 stores, most of which had already closed. About 170 99p outlets have been converted to Poundland since the takeover. About 13 of the outlets put into administration this week will controversially be taken back and converted by Poundland in future.
The business also runs the Dealz chain in Ireland and Spain. The future of its Spanish chain, which has just 11 outlets, is currently under review.