How Poundstretcher can learn a thing or two from its acquired UGO stores

Poundstretcher and UGO, Nuneaton (7 Feb 2012). Photograph by Graham Soult

Poundstretcher and UGO, Nuneaton (7 Feb 2012)

After I first revealed that UGO, the fledgling supermarket chain, was set to be sold, there was understandably plenty of speculation about who the buyer was. Now that we know it’s the expanding variety retailer Poundstretcher, what exactly can we make of the acquisition?

Just to recap, the pre-pack administration deal as finally announced sees all of UGO’s store staff transfer to Poundstretcher – saving 300 jobs – but only 18 of the actual stores, rather than all 20 as had been initially claimed.

UGO Eton Street, Hull (11 Oct 2011). Photograph by Graham Soult

UGO Eton Street, Hull (11 Oct 2011)

I understand that the two stores not being acquired are those in Nuneaton and Eton Street (Hull), both of which will, I believe, revert back to the landlord. Meanwhile, the rest will reportedly be rebranded as Poundstretcher as soon as possible.

Neither of those two stores’ omission from the deal is entirely surprising, however. The Eton Street store, which I visited back in October, is close to an existing Poundstretcher in Hessle Road, while the Nuneaton store is right next door to an established Poundstretcher Extra. Clearly the ‘closed for restocking’ sign that I spotted in the Nuneaton UGO on 7 February – two days before the Poundstretcher news was confirmed – was a red herring as far as that particular shop was concerned.

Nuneaton UGO 'closed for restocking' (7 Feb 2012). Photograph by Graham Soult

Nuneaton UGO 'closed for restocking' (7 Feb 2012)

The deal is good news for the four North East UGO stores and their staff, located in Ashington, Eston, Hartlepool and Stanley. Both Ashington and Eston are new locations for Poundstretcher, while the UGO Hartlepool site complements the existing Tees Bay Retail Park Poundstretcher at the opposite end of the town.

UGO store, Hartlepool (4 May 2011). Photograph by Graham Soult

UGO store, Hartlepool (4 May 2011)

Stanley’s a more interesting case, however, given that the town’s established Poundstretcher in Front Street and the UGO in Scott Street sit just across a car park from each other. Coincidentally, in taking a shot of the Stanley UGO store’s setting back in December, I just captured the signage at the back of Poundstretcher as well (below).

Existing Poundstretcher (left) and UGO (right), Stanley (2 Dec 2011). Photograph by Graham Soult

Existing Poundstretcher (left) and UGO (right), Stanley (2 Dec 2011)

I’m curious to see whether, in the longer term, Poundstretcher retains both sites, and, indeed, the extent to which it maintains a significant grocery offer within its acquired UGO estate.

Existing Poundstretcher, Stanley (2 Dec 2011). Photograph by Graham Soult

Existing Poundstretcher, Stanley (2 Dec 2011)

Rescuing UGO is Poundstretcher’s second retail good deed in recent months, having already acquired the bulk of the Alworths estate – following the collapse of the ‘son-of-Woolworths’ chain – back in May last year. Usefully, those ex-Alworths locations, mainly in Scotland and the south of England (such as Tiverton and Didcot, below), complement UGO’s store base in the North West, North East and Yorkshire.

Poundstretcher (formerly Woolworths and Alworths), Tiverton (9 Sep 2011). Photograph by Graham Soult

Poundstretcher (formerly Woolworths and Alworths), Tiverton (9 Sep 2011)

Poundstretcher (former Alworths), Didcot (11 Nov 2011). Photograph by Graham Soult

Poundstretcher (former Alworths), Didcot (11 Nov 2011)

Additionally, Poundstretcher has bought up quite a number of former Woolworths sites in its own right, in town-centre locations such as Camborne, North Berwick and Melksham. In a challenging economic climate, Poundstretcher’s growth through both organic store openings and acquisitions is clearly to be welcomed; indeed, the UGO purchase has taken the chain’s store count above 400 for the first time.

Poundstretcher (former Woolworths), Melksham (9 Oct 2011). Photograph by Graham Soult

Poundstretcher (former Woolworths), Melksham (9 Oct 2011)

As it integrates the UGO stores into its estate, however, I hope Poundstretcher doesn’t lose sight of those elements that did work within the UGO chain.

Clearly, the very fact that UGO had to be rescued demonstrates that there were significant flaws in the model – most obviously in the product offer and pricing. In other respects, though, UGO had some very positive features, notably in terms of its consistent and effective brand implementation (e.g. instore signage and offers leaflets), and the stores’ cleanliness, tidiness and uncluttered aisles.

Signage at UGO Lundwood (11 Oct 2011). Photograph by Graham Soult

Signage at UGO Lundwood (11 Oct 2011)

At Poundstretcher, in contrast, the product offer is really strong – more so than many people realise – but is let down, as I’ve argued previously, by the poor-quality and cluttered store environment and a general lack of attention to detail, even in its newly opened stores. As the chain gets bigger, the window display that I spotted in Wombwell and the advertising board seen at Newcastle simply don’t cut it against slicker competitors such as Wilkinson, Home Bargains or Discount UK.

Advertising board at Poundstretcher, Newcastle (4 Nov 2011). Photograph by Graham Soult

Advertising board at Poundstretcher, Newcastle (4 Nov 2011)

The potential is clear – if Poundstretcher can combine its own strengths with the complementary ones of UGO, this could be an acquisition that helps transform the business for the better, rather than one that merely expands it.

Graham Soult

Retail consultant, writer, blogger; helping retailers via and Say hello on Twitter at @soult!

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8 Responses

  1. It is a shame that such a strong retail brand image is lost. You have consistently supported the in-store theatre within UGO and on message promotions, sadly the offer rarely matched the quality of the graphics. I am aware of a stunning Academy Store that was put together for the Poundstretchers board back in 2009. Clearly they did not share that vision as little appears to have changed at store level. Keep up the great work, I follow your retail intelligence with interest.

  2. Retrogadget says:

    I never did manage a visit to the UGO store in Nuneaton, even though it’s less than 20 miles from me. Indeed, until last week when I drove by the shuttered UGO store my last shopping trip to Nuneaton was just as Netto was closing. As reported earlier I have visited the UGO stores in Eston and Stanley.

  3. Graham Soult says:

    I haven’t actually been to Tees Bay, Jonny, but on Google Street View it looks very much as you describe! :)

  4. Jonny says:

    Tees Bay Retail Park… the place looked decrepit and forlorn the last time I visited (oh, probably a mere 10 or so years ago). I trust it’s still going for that abandoned greenhouse feel?

    Poundstretcher/£-Stretcher/£-Pound Stretcher must have the most inconsistent branding of any major national chain. It’s as woefully inadequate as that sad advertising board suggests, easily outclassed by Wilkinson and Discount UK at the top end of the “discounters” but also, worryingly, by the likes of Poundland and Home Bargains too.

    Your photos suggest each site has its own take on the tacky orange-red fascia, with no real success. Instore as a name didn’t work but at least its branding was cohesive and respectable. With 18 new stores about to be added, now is as good a time as any to get somebody who knows what they’re doing in and trial something new.

    The Newcastle store really is an unpleasant place to be, a gloomy maze of dead ends and disorganisation. Not sure how it can hope to compete with Discount UK literally over the road.

  5. michael lockie says:

    There is talk that TESCO is planning to acquire empty stores on clifford road in stanley to build a large store on former land occupied by 2 supermarkets and 2 furniture stores dont know for sure if its true but the derwentside planners will know.

  6. michael lockie says:

    On the 16th of february the stanley ugo was still shut.I cant see poundstretcher keeping
    both stores open, the ugo store is bigger than poundsretcher but not on the front street which is more convenient and close to the bus station for discount shoppers It will be hard to recover the trade lost as a result of the ugo management one of the staff was told the stock had to be paid for in cash from nisa and as the shelves got empty the customers disappeared. at the moment the poundstetcher has only one isle of food.Iknow it might sound trivial but netto used to sell veg and flower seeds country value brand probably at a loss at 19p but stanley has a high proportion of allotments and gardens and many customers went in for them and as a result bought other goods.netto also put out offer leaflets in local free papers and in store to boost
    trade there is still a stigma attached in some peoples eyes to discount stores. regards mick.

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