99p Stores cashes in as credit crunch bites

99p Stores chief executive Nadir Lalani said average customer spend rose 30p to£4.20 in the first quarter to the end of March, when shopper numbers climbed 4 per cent on the comparable period last year.

Like-for-like growth was 7.2 per cent for the quarter and total sales soared 21 per cent.

Lalani said: “The combination of new, essential product ranges and tighter consumer budgets has led to this increase.” He added that the business was shifting focus towards branded products, which customers are responding positively to.

Consumers’ desire for value has also helped 99p Stores’ single-price rival, Poundland. Both retailers said food has been a strong performer.

Food has grown to account for 40 per cent of 99p Stores’ business, compared with 35 per cent at the start of the year.

“More people are seeing that going into a discount store is not a bad thing and we are getting more middle-class customers,” said Lalani.

He added that at least nine stores would open before the end of this year. One in Woking, Surrey, would be a good test of whether the business can attract more middle-class shoppers, Lalani said.

Poundland chief executive Jim McCarthy, whose shops attract 2 million customers a week, has also observed more middle-class customers in his stores.

“Savvy shoppers, particularly the middle classes, are seeking value,” he said. “With us, you can shop with certainty and not get a shock at the checkout.” The retailer, which sells various food products, is testing sandwiches and chilled drinks for the first time in six of its stores.

“Poundland is one of the very few stores on the high street that is defying inflation and is known as a real budget-beater. We are uniquely well-placed,” McCarthy said.