The proposed £55m acquisition of 99p Stores would see Poundland, which currently has 534 UK stores, take its UK store total to around 785 stores.
Of 99p Stores’ 251 outlets, 27 are run under the multi-price format Family Bargains and it is thought Poundland will convert those into Dealz, its own multi-price offer, which currently only runs in Ireland and Spain.
“99p Stores will go as Poundland is a superior brand with much broader appeal,” McCarthy told Marketing Week. “We have 95% brand recognition, which is up there with Aldi and Lidl, so it makes absolute sense that’s the main fascia to go forward with.”
Poundland’s current brand awareness rating is 92.3, according to YouGov BrandIndex. In comparison, the 99p Stores brand is significantly inferior with a score of 55.1
If the deal goes through, McCarthy predicts it will take just over 12 months to convert each 99p Stores site over to the Poundland brand.
“When that happens, it’s a shortcut which suddenly gives us nearly 800 stores so it would definitely make sense to change the pace on marketing activity, which up until this point has had low ad spend and relied largely on word of mouth, to tie in,” added McCarthy.
“The school of thought says Poundland is still the best kept secret on high street as half the population haven’t tried us yet – we want that to change.”
One way it could perhaps ‘change the pace’ would be through TV sponsorships.
Last month, 99p Stores’ chief operating officer Tony Brown told Marketing Week that ‘a major tv sponsorship deal for a poundshop is less than two years away’.
The Competition and Markets Authority (CMA) could take up to two months to decide on whether the £55m takeover should be allowed to proceed.
Kantar Wordpanel analyst Bryan Roberts has doubts. He adds: “I’m surprised Poundland wants to change brands as there’s high streets where you have a 99p and Poundland within seconds of one another, so lots of duplication – I can’t see regulators being happy with that.”
However, McCarthy hit back: “Even with this deal, the combined business would represent just 0.4% of UK retail.
“In Birmingham we have three stores within 500 metres – all are profitable. I think with our long list of product categories, we compete with everyone and not just the discount sector so it is a very competitive market. I’m optimistic about the outcome of the CMA here. “