Pound for pound, don’t discount the success of budget stores

A few weeks ago, just around the corner from Harvey Nichols and next door to Waitrose, the latest addition to Leeds city centre opened its doors.

The 99p Store boasted no designer labels or exclusive brand names, but it has attracted a steady stream of customers ever since, most of them after the current bestseller, a family-sized Christmas pudding.

For many, its arrival next to two bastions of high-end shopping is a worrying sign of the times, a symbol of a general decline in the nation’s high streets which are now peppered with charity shops, bookmakers and discount stores.

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Rosemary Owen sees it a little differently. The Leeds-based stress therapist was recently commissioned to carry out a report into the shopping habits of the apparently well-heeled and spent hours trawling the discount aisles looking for case studies.

“A few years ago, the relatively wealthy did occasionally shop in discount stores, but they’d slip whatever they had bought into a designer bag,” she says. “That stigma has pretty much been consigned to history.

“It was the banking crisis that did it, suddenly all certainties went out of the window. People thought, well if an institution like a bank can go bankrupt, so can I. I honestly think that it made people reevaluate their spending habits.

“The idea that you get what you pay for has also been put to one side. In the past, people would think that if they only spent £1 on something that would normally cost double or triple that amount it would be somehow inferior. The thinking has changed completely now, the vast majority of people are proud rather than embarrassed by getting a bargain.”

It also seems that the discount shops have upped their game. A survey by Which? published yesterday showed budget stores Aldi and Lidl outperformed Marks & Spencer for the first time when it comes to supermarket satisfaction.

It wasn’t a complete triumph for the stack it high, sell it cheap philosophy – Waitrose came out on top as it has for the last three years, but the promotion of Aldi and Lidl to the number two and three spots, ahead of the big four supermarkets remains something of a shift in consumer habits.

“The tough economy and rising food prices have seen cash-strapped customers head to the discounters for their low prices and special offers,” says Which? executive director Richard Lloyd. “And this doesn’t mean compromising on tastes, as our test show they sell a range of products that compete with premium brands.”

However, the rise of the discount brand, while good news for customers was probably not the shot in the arm Mary Portas was thinking of when she delivered her damning verdict on the state of the British high street this week. “Which would you rather have, discount stores selling products people actually want to buy or rows of empty shop units?” says Hussein Lalani, commercial director of 99p Stores. “At the moment, the choice really is as stark as that.

“We are already hearing that a lot of well-known retailers are struggling and the usual boost they get at Christmas just hasn’t arrived. Come the end of the month when the next quarter rents are due I would not be surprised if more household names didn’t go out of business.

“Against that backdrop we really should be celebrating the high street success stories and discount stores are undoubtedly one of them.”