Even Poundland, the ubiquitous one-price retailer, has managed to dodge administration so far this year. They did so through introducing their own turnaround strategy, having experienced a deeply difficult period of their own making. The owners of Pepco Group, which is listed on the Warsaw stock exchange, have come under fire from consumers. Shoppers were outraged by the move to bring Pepco clothing into Poundland stores. Residents of Peckham in south London recently received a major victory. They lost their popular Poundland store, a mainstay in the high street that served the community for 11 years.
Poundland’s long-term response will see the retailer implement a three-year restructuring plan, which is expected to halve its store estate. By the end of this process, the company hopes to be left with a fleet of 650-700 shops. That’s down from the nearly 800 sites it operated at the start of the year. Poundland is currently helping this process along by shuttering 57 loss-making shops. In addition, they are negotiating major rent cuts with landlords as much as they can.
Since the summer, over a third of Poundland’s stores are closed or have been marked for closure. On balance, and in spite of these challenges, Chris Edwards, Poundland’s UK representative, is bullish on the template and its North American variant. He thinks it’s still a valuable piece. Success is based on time, tenacity, negotiation savvy and delivering the perfect bundle of products at the right time to the appropriate clients.
Poundland has proven to be very bold in its innovation. Then they opened a completely different chain, OneBelow, where they sold everything for £1 or under. The company was forced to scrap its strategy only three years into this effort. The grocer’s expansion has largely been done in its typical out-of-town, retail park locations. That trend has quickly ramped up due to the pandemic.
On a recent weekend visit to Poundland’s Croydon store, shoppers lined up at the tills, drawn by a vibrant Christmas aisle stocked with mouthwash, washing-up liquid, sweets, and batteries. The retailer’s focus now will be on making sure it gets the best possible Christmas trading period under fraught circumstances. This focus is more critical than ever in light of recent setbacks.
“We can break even all year if we have a good Halloween and a good Christmas.” – Chris Edwards
Edwards wants to be real clear here—the company isn’t rolling in massive profits. Still, as it sails through these stormy seas, it is doing so while successfully balancing its budget. He recognizes that every period poses unique challenges, stating, “Every period has its own challenges… and we just have to do our own thing.”
Indeed, the competitive landscape for discount retailers has gotten especially crowded in recent months. According to retail expert Catherine Shuttleworth, we’re entering a phase where only the strongest will survive, and businesses need to be the best in their segments. She observes that “We’ve got to be the best of the best in whichever segment,” highlighting the fierce competition among discount retailers.
Shuttleworth further notes that many players in the sector may struggle to adapt, stating, “I think what will happen in this sector is that there has to be some consolidation, and the stronger players will win out.” She explains that this reflects a broader shift in consumer behavior. Now, shoppers are more price-sensitive and time-sensitive than ever and willing to go anyplace to get it.
“As long as they [shoppers] can get it at the right price, the right place and at the right time, they will go anywhere to do that.” – Catherine Shuttleworth
This rapidly shifting consumer mindset will be key to discount retailers such as Poundland. Edwards urges his listeners to realize that knowing how your customers buy is critical to your success. He claims that “You know what the customer is going to buy before the customer knows they’re going to buy it,” underscoring the importance of anticipating market demands.
Yet when Poundland tried to muscle into clothing with Pepco, they were roasted for just not doing it properly. Edwards observed that the retailers that tried and failed at such pursuits just didn’t understand how to run a discount business. He stated, “They just didn’t understand the discount business,” explaining that successful retailers must maintain control over how they diversify their offerings.
Edwards is optimistic when it comes to Poundland’s fortunes regardless of these hurdles. The brand is still learning and shifting their techniques, but looking forward to the next retail time of year. The team’s attention now turns to executing the plan made for Christmas trading. This strategy has the power to significantly impact their fiscal wellbeing for the remainder of the year.