Poundstretcher guns to be the 'branded Aldi' as it ramps up FMCG offer

The multi-price point value retailer revealed it wants to double the space alotted to its food and toiletries categories to cover more than half its in-store offer. The remaining offer will centre on homewares and pet products.

In a rare interview, Poundstretcher executive chairman Aziz Tayub told Retail Week that most stores have 70 bays dedicated to FMCG out of an average of 250 bays. Poundstretcher is in the process of increasing this to 105 bays in all 402 stores and by 2016 it wants to dedicate 140 bays to the category.

Tayub said: “We’re aiming to be the branded Aldi. Currently, we are competing with the supermarkets. We are a lot smaller than them, but we feel we can beat them on price. Nine out of 10 of our branded groceries are cheaper than our competitors and the supermarkets.

“We want to establish to the public that we have the right offer at the right price.”

Tayub added that 95% of its branded products are sourced from UK manufacturers. He said Poundstretcher works on lower margins than its value rivals, and claims prices tend to be up to 7% cheaper.

Tayub, who owns Poundstretcher’s parent company and supplier Crown Crest, added that his good relationships with suppliers helps him to land favourable deals.

Food discounters Aldi and Lidl have surged in popularity among British consumers due to their inexpensive yet good quality products. They keep prices low by selling largely non-branded products and leveraging their large economies of scale; both retailers have large, global parent companies.

Poundstretcher plans to open a further 200 in the next “few” years, while it is aiming to grow its 100-store pet offer Pet Hut to 265 in-store locations.

Poundstretcher is among just a handful of value retailers to have launched an online proposition in recent years, however Tayub said bricks and mortar will remain the focus. At present online sales account for just 0.8% of total sales. The retailer realaunched its eccomerce website last year.

Tayub said he does not expect online to be a huge part of the business. “If we get to 2% of the business online, I will be happy,” he said.

He added that in the long-term Poundstretcher may consider an IPO or seek private equity investment, but the current focus is on creating the right public perception around its pricing differential