MT isn't a regular visitor to Redhill, one of London's more anonymous commuter towns. But you need to come this far out of the capital to visit a branch of Pep&Co, the new discount clothes chain being rolled out by former Asda boss Andy Bond.
In an effort to keep costs low and carve out a niche, the retailer is opening its stores on neglected high streets in places like Hartlepool, Scunthorpe and Coventry. There's no Primark in Redhill, let alone a Pret a Manger.
Bond has launched the company with the help of South African retail giant Pepkor, which is apparently keen to capitalise on the increasing popularity of discount retailing that has been so bountiful for the likes of Aldi and Poundland. To offer extremely low prices you need to buy in bulk, which means having a lot of shops. That explains why Bond is currently in the process of rolling out 50 stores in a little more than 50 days – a 'mammoth task' that hasn't been without its challenges.
Pep&Co's store in Hull
'Everything from unexpected costs for the fit-out of stores, to products not arriving on time, to in some areas struggling with recruitment - all the things you would expect of a project like this,' Bond tells MT. He neglects to mention the disabled pensioner who got stuck in Pep&Co's Hartlepool store for half an hour last month after it was evacuated because of a fire alarm.
Still, things seem to be going pretty well so far ('We're very, very pleased,' says Bond) and there's no sign of any problems (or any trapped elderly folk) in Redhill. The store is bright and clean and while it's not exactly packed to the gills, a steady stream of customers comes and goes, enticed by banners out front touting £5 dresses and £4 pairs of shoes.
'Sales have been very promising,' says Bond. 'Certainly footfall has been very strong. One of our stores didn’t hit its first day sales plan, but only just, so overall [it has been] very strong.'
Pepkor has poured around £20m into the venture and Bond has some skin in the game too; he won't say how much except that it's a 'pretty life-changing' amount. Day-to-day management of the chain will fall to Adrian Mountford, the former commercial director of Matalan, who is Pep&Co's MD. Bond says he has a foot in both camps, advising the management team while making sure investors get a decent return.
He may be something of a retail veteran, but running a fast-growing startup isn't the same as being a supermarket chief exec. 'In a smaller business you’ve got to have the willingness and ability to roll your sleeves up and get on with things in a way that you rarely do with a big business,' he says.
It's not his first foray into fashion though. Before he took charge of Asda he ran George, the supermarket's clothing line, a role he describes as, 'possibly the most enjoyable job I've ever done.' This new venture puts him in direct competition with George, along with the likes of Peacocks, but Bond says he doesn't see Primark, one of the High Street's recent low-price successes, in the same light as Pep&Co.
'I think the Primark shopper is younger,' he says. 'Typically their stores are much bigger and in much more prime locations. Our objective is to be serving a value-seeking mum with kids who’s shopping very locally on their local High Street.'
The £1 kids polo shirts, £2 jumpers and £3 trousers it's currently offering are certainly likely to be attractive to cash-strapped parents as their children go back to school.
While he was at Asda, Bond worked under the legendary Archie Norman, whose cohort of protégés includes the likes of respected former Sainsbury's boss Justin King and former Alliance Boots chief exec Andy Hornby. Norman's fingerprints are all over Pep&Co.
'I've learned a hell of a lot from him,' says Bond. 'I worked with him and under him for many years during my formative retail career so I guess to a degree my whole belief and model of retail comes somewhat from that school of thinking, so you know, low-price, low-cost retailing is in my blood - and he and those around him taught me a lot about that.'
Most disruptive businesses of the last few years (think Uber, Just Eat, Zopa) have been all about using digital tech to trim the fat and/or make the customer's experience easier. Discount retail is the exception to the rule. Like Primark, Aldi and until recently Poundland, Pep&Co has decided against letting its customers shop online.
'It’s harder for [discount retailers] to get disrupted by online because of the average unit price of goods in a discount business and the average basket size,' says Bond. 'If you go into a discount business, whether it’s Aldi or Pep&Co, your overall basket size is going to be £10-£15. The cost, whoever incurs it be it the retailer or the customer, of getting it to someone’s door is £3-£4. And the maths of that just don’t work.'
What does work, it seems, is stacking things high and selling them cheap. Aldi's UK sales rocketed from around £2bn in 2009 to £5.27bn in 2014. So how big can Pep&Co get? 'We’ve got to prove that the 50 [stores] will work before we’ll seek any further funding from Pepkor, so there’s certainly no commitment to anything more than 50 right now,' says Bond. 'However if it’s a success I’m confident that we’ll continue to fund the business to grow.
'You’ve only got to look at similar retailers like Poundland, Poundworld and B&M Bargains and look at their stated ambitions of anything up to 800 stores to imagine that there’s a lot of towns that Pep&Co could be in that it’s not in today.'