Rising costs put paid to $2 Shop

Nelson's $2 Shop will close tomorrow, with the rise in GST a factor in the decision.

Owner and operator Kate Elliott is giving up the franchise, saying increasing overheads have forced her to rethink how to best market low-cost goods to consumers.

The Bridge St shop will close tomorrow after 10 years.

"We have been the same price, but prices have gone up, wages, rent, freight, everything," Mrs Elliott said.

She said that with GST set to increase from 12.5 to 15 per cent in October, the margins were not there for a fixed-price business, and she had decided not to renew her five-year franchise.

"It's fine for everybody else, but when you are in fixed-price retail, you are stuffed. Other people will put up prices, but you are stuck."

She did not want to say how much the increases had affected her margins.

However, in two weeks the shop will open as a newly refitted and rebranded store, Piggy Bank Busters. Mrs Elliott said the brand was new and would offer high-quality, low-cost goods.

"We are putting a significant investment into it – it is going to be totally new. It is really exciting."

Mrs Elliott and her husband bought the franchise when they arrived in Nelson from England five years ago.

The $2 Shop is a New Plymouth-based business that began in 1994 and has expanded to 23 stores nationwide. However, the business recently rebranded as 2 n' 5 in the wake of increasing costs.

Its website says the rebranding was in response to price increases. Existing stores will be modified to differentiate between the different prices.

The website said that instead of replacing the existing brand, the franchiser and founder, Brian Salmon, had decided to extend it while maintaining the single price point structure that had made the shops successful.

Mr Salmon did not respond to requests for comment about how many stores had continued with the new brand. Mrs Elliott said the $2 Shop in Timaru had gone along with the change, but the shop in Blenheim was holding fast to the old model.

She did not believe that the market was in $5 items, and hoped her new brand would establish itself and potentially expand in the future.

"We will see."

- © Fairfax NZ News