99p Stores

Foundation

Nadir Lalani came to the UK in 1973 from Tanzania, having owned a cash and carry store in Mwanza. Since moving to the UK, he built up and sold two convenience store chains (including buying Whistlestop Discount Stores, a 27-strong chain which he sold in 2005) before moving into discount retailing, with intentions of handing the business over to his two sons, who also worked for the company, in due course. Lalani was inspired to start 99p Stores after stumbling upon a bustling Poundland shop whilst wandering around a shopping centre. His first store opened on 18 January 2001, with over 3,500 customers visiting the store in the first day of trading. As of mid-2009, the company offered more than 3,500 different product lines throughout its stores.

Growth

The company relocated their headquarters to a new, 150,000 square feet (14,000 m2) base in Daventry in 2007, giving them capacity to go to 120 stores with existing infrastructure. Discount shops, including 99p Stores, had seen store numbers increase by 60% during the economic downturn, with two discount stores opening for every one store that has closed. The retailer took advantage of the tough economic climate of the late 2000s, having doubled the number of their stores during the period August 2008 - August 2009, and had further plans to double existing store numbers and current market share within the 18 months following October 2009.

In August 2009, Retail Week reported that the retailer was to review its ownership structure, potentially resulting in a sale as early as summer 2010 or a flotation within the next three years. The retailer had said they would want 150 shops before considering any offers to buy a stake in the business, mentioning the advantages of a flotation to include further investment, as well as the Lalani family being able to retain a stake and an element of control in the business.

Management

In October 2009, the retailer appointed Gordon Brown as their new chairman, who took up the position on 1 October 2009, taking over from Peter Gent. Brown, having previously served as managing director at Wilkinson between 1991 and 2007, joined the company at a time when it was embarking on aggressive expansion and assessing its long-term options.

Sales strategy

When inflation pushes up prices beyond what the company is willing to pay, this is often easily worked around by reducing the quantity supplied in each item, for example by reducing the amount of tape on reels of selotape, or selling eggs by the dozen instead of 18s. Nadir's son and buying director, Faisal, who took care of the day-to-day running, noted that the lowest margin he could work with was 20 percent. In response to the planned VAT rise to 20% in January 2011, the budget chain said it would not change its prices but would stop selling goods that did not make a profit.

Products offered

The retailer offered a large range of products in its 3,500 lines, from "do it yourself" (DIY) and electrical to toys and stationery products, with around 60% of their products consisting of well-known brands such as Colgate, Pepsi and Pringles. Plans had been announced to extend its grocery offerings, which made up 35% of its 3,500 lines. Food products had been a strong performer for the retailer, accounting for 40% of total sales in April 2008, which itself was an increase of 5% from the start of 2008. The retailer provided its own line of grocery products, branded 'Deli Fresh', which were launched at the start of 2007. As of 2006, the retailer was making a profit margin of 40% on the produce it sold, which included its most popular food lines at that time such as potatoes, onions, and eggs. Some products had sold for less than 99p, such as branded cakes for 69p and 2-litre (1.8 imp qt) bottles of soft drinks for 89p. The best seller was the 250-gram (8.8 oz) Galaxy chocolate bar.

The business sourced a third of its products from the Far East, allowing for gross margins of up to 50%.

Store expansion

In April 2006, the retailer secured an £8 million cash injection from its venture capital backers Barclays Ventures and Lloyds TSB to open up to 45 new stores by early 2008. More than two years later, in September 2008, its 59th store was opened in Bracknell, Berkshire and by the end of 2008, there were 65 stores open, with plans for 20 stores each year over the next three years.

Litigation

Health and safety

In June 2005, the retailer received fines and costs totalling almost £4,400 after pleading guilty at Barnsley Magistrates' Court of supplying dangerous frying pans. A unit purchased by trading standards and informally tested was found to fail on the handle strength and it became too hot to touch. The company immediately displayed recall notices upon learning of the dangerous product.

The company again were fined on 17 October 2005, after pleading guilty at Kingston Magistrates' Court to selling hair removal cream, which had no instructions in English and caused burning to the consumers' skin when applied. The company were fined £2,500 and had to pay Kingston Council's costs of £500. They were criticised for not having procedures in place to ensure the safety of items, however, agreed to introduce procedures to ensure that such instances could not occur again.

Product sale to underaged customer

The company were also fined £3,000 in February 2006, after staff in their Acton and West Ealing stores were caught selling adult-rated DVD films to a 15-year-old boy during a council sting operation. Ealing Trading Standards Officers sent in the boy to establish whether the retailer would sell to youths trying to purchase age-restricted goods. Mr Rosewarne, the health and safety officer for the company, gave evidence on how seriously the company had taken the matter and gave details on new procedures for staff training and in store publicity to avoid any reoccurrences.

Harassment on the grounds of race, discrimination on the grounds of gender

In July 2015, a Polish woman in the Dublin branch was awarded €55,000 after a judgement by the Equality Tribunal. She had been expected to work 70 hours a week while heavily pregnant, and had been promoted to a 'trainee manager' position, meaning she was not paid overtime. The tribunal found that she was the de facto manager of the store.