Poundland


Poundland

Infobox Company
company_name = Poundland
company_
company_type = Private limited company
foundation = April 1990
founder = Dave Dodd and Stephen Smith
slogan = Yes! Everything's £1
location = flagicon|UK Willenhall, England, UK
locations = 190 (October 2008)
key_people = David Dodd (Co-Founder) Colin Smith (Chairman) James "Jim" McCarthy (Chief Executive)
industry = Retail
products = Groceries, Consumer goods, DIY, electrical
revenue = increase£310.7 million (2007)
operating_income = increase£16 million (2008) [http://www.guardian.co.uk/business/2008/oct/07/retail.highstreetretailers Poundland's profits up] ]
net_income = increase£8 million (2008)
owner = Advent International
num_employees = 4540 (2007)
subsid =
homepage = [http://www.poundland.co.uk www.poundland.co.uk]
footnotes =
intl = yes

Poundland is a United Kingdom-based variety store chain which sells every item in its stores for £1. [http://icbirmingham.icnetwork.co.uk/0100news/features/page.cfm?objectid=15075416&siteid=50002&method=full Poundland buy-out puts Dodd on cloud nine] ] Although price-point retailing was invented in the United States during the 1870s, the chain claims to have introduced this concept to Europe [http://www.fasttrack.co.uk/fasttrack2002/migration/dbDetails.asp?siteID=5&compID=474&yr=2007 Poundland financial figures and facts - FastTrack] ] and is the largest single-price retailer in Europe. [cite web |url=http://www.theretailbulletin.com/news/poundland_profits_rocket_07-10-08/ |title=Poundland profits rocket |accessdate=2008-10-11 |publisher=Retail Bulletin |date=8 October 2008] Established in April 1990 by Dave Dodd and Stephen Smith, Poundland stock a variety of items such as home and kitchen-ware, gifts and healthcare products, many of which are brand name and clearance products. Like many of its rivals, Poundland operates a constantly rotating product line of cheaply-bought bulk products which, on several occasions, have been recalled by the retailer as some have failed health and safety regulations.

Poundland have enjoyed strong sales growth and have maintained steady profit growth against increasing inflation, aided by a strong customer base of predominantly female shoppers every week in the C1, C2, D and E categories. The chain employs 4,600 staff and their company union is the Union of Shop, Distributive and Allied Workers (USDAW).

It was announced in September 2008 that Poundland's owners, Advent International, are said to be cashing in on the resurgence in value retailers by putting the chain up for sale. The report comes as figures show that value retailers are seeing business boom in the current economic climate.cite web |url=http://www.expressandstar.com/2008/09/15/poundland-owners-put-stores-on-market/ |title=Poundland owners put stores on market |accessdate=2008-10-11 |publisher=Express and Star |date=15 September 2008]

History

Formation

The retail chain was founded in April 1990 by Dave Dodd and Stephen Smith with a starting capital of just £50,000 [http://www.realbusiness.co.uk/4771541/coining-it-in.thtml Coining it in] ] , claiming to have introduced the concept of single-price retailing.

The first pilot store opened in December 1990 in the Octagon Centre, Burton upon Trent, after countless turndowns by big landlords who had reservations about allowing such a store to operate, given they could easily undercut every retailer in sight. It was soon followed by other stores, most notably on The High Street, Meadowhall. Growth continued throughout the early 1990s, with 6 stores by December 1990 and a further 7 a year later. A difficult year was during 1995, when Smith failed to plan for additional warehouse capacity, and it soon became apparent their retail growth was pushing the capacity of their warehouse past its limits, with stock theft reaching unacceptable high levels. In response, a new convert|130000|sqft|m2|lk=in|sigfig=2 warehouse was constructed, although at a cost of heavy profit losses, from £850,000 in 1994, to £400,000 in 1995. The retailer managed to resolve their operational difficulties throughout 1996 when their new warehouse site became fully operational.

2000s

Although enduring a troubled first few years, Poundland has since become a multi-million pound business, with its 150th store opening in Northampton in mid-2006 and a gross turnover of £311 million in 2007, up from £281m the previous year.cite web |url=http://www.marketingweek.co.uk/cgi-bin/item.cgi?id=59916&d=342&h=297&f=3 |title=Poundland seeks to widen appeal as consumers tighten belts |accessdate=2008-04-16 |publisher=Marketing Week |date=6 March 2008 ] Following a management buy-out in 2002, the company has continued to grow with annual profit growth of 23.44% (2007) and aims to open 60 new stores throughout 2008 and 2009 under the leadership of James McCarthy.

Poundland have recently launched a recycling initiative where they will give money for old mobile phones, whilst at the same time making charitable contributions and helping the environment. [ [http://www.poundlandrecycles.com/ Poundland - Make money from your old mobile] ]

Management

In 2002, Dave Dodd, co-founder of the chain, led a management buy-out by Advent International worth £47.5m for 78% of the company, which allowed for the company's accelerated growth, expanding the store portfolio to well over 150 throughout the UK. [http://www.allbusiness.com/retail-trade/4295150-1.html Advent Intl. Funds Poundland Buyout] ] He became chief executive with a 12% share in the business, and brought in Colin Smith as chairman, former chief executive of Safeway.

James McCarthy took over from Dave Dodd as chief executive of the value retailer in September 2006. He joined Poundland having been lured away as managing director at Sainsbury's, [http://finance.google.com/finance?cid=1399656 Poundland Limited - Google Finance] ] with the offer of an "attractive equity incentive" that he will be able to cash in when the group's US owner, Advent International, sells out.cite web |url=http://findarticles.com/p/articles/mi_qn4158/is_20060518/ai_n16368343 |title=Poundland poaches Sainsbury's chief |accessdate=2008-09-23 |publisher=The Independent |date=18 May 2006]

Business practice

DHL Exel Supply Chain announced in March 2008 that it won a new three year contract worth £9 million with Poundland for transporting and supplying stock.cite web |url=http://www.hellmail.co.uk/postalnews/templates/postal_industry_news.asp?articleid=398&zoneid=3 |title=DHL Secures 9 Million Contract With Poundland |accessdate=2008-04-16 |publisher=HellMail.co.uk |date=21 March 2008 ] DHL will be importing consumer products from overseas countries such as China, to transport them to Poundland stores throughout the UK. DHL will transport a variety of products for Poundland from UK outbases in Billingham, Hatfield and Belshill.

ales strategy

Poundland's biggest sales advantage is their price consistency across all products. Whilst other retailers must decide upon the price of each individual product and have this clearly displayed to their customers, Poundland may simply move stock onto its shelves from their warehouses, so customers always know how much a product costs. Poundland promote this strategy through their slogan, "Yes, Everything's £1!".

Since November 2003, all of Poundland's stores have been using an advanced point of sale solution ­developed in-house ­running on Epson's touchscreen Intelligent Registers (IRs). [http://www.pos.epson.co.uk/news-and-events/retail-update-august2004/case-studies/august/poundland.htm Poundland knows value of Epson] pos.epson.co.uk] The primary purpose is to track and understand which products customers are buying, allowing for up-to-date tracking of the most popular products, helping to ensure constant stock via automated ordering.

Products offered

Until recently, all unbranded products stocked by Poundland, which account for roughly 70% of Poundland's total stock, would carry the Poundland branding and logo. However, the retailer has been able to increase sales by removing the Poundland branding and creating more than 40 sub-brands, such as "Toolbox" for its value line of DIY products. In total, the retailer stocks more than 800 brands, the majority being food and drink. Poundland often sell large quantities of their stock to other retailers off-the-shelf, where it is cheaper for these retailers to pay £1 each for a bulk purchase than it would be to pay a discounted bulk-purchase rate elsewhere.

As well as their own brand line of products, the retailer also sells hundreds of products from other top brands such as Colgate, Walkers and Cadburys to name a few. [ [http://www.prestoncitizen.co.uk/news/3612297.Champagne_corks_to_pop_for_Preston_Poundland_/ Champagne corks to pop for Preston Poundland ] ] Some of the products offered by Poundland which carry their branding are in fact supplied by manufacturers whom are fussier about the retail positioning of their products and would rather allow their products to sell without their own branding attached.

tore expansion

Poundland have a keen interest to expand their store portfolio by 30 new stores every year, [http://www.poundland.co.uk/pages/stores/new_stores.aspx Poundland - New Stores] ] whilst also increasing its optimum store size to around convert|7000|sqft|m2|lk=in|sigfig=2, comprising around convert|5000|sqft|m2|lk=in|sigfig=2 of sales space, which is a 25% increase.cite web |url=http://www.propertyweek.com/story.asp?storyCode=3116697 |title=Penny drops for Poundland expansion |accessdate=2008-09-21 |publisher=Propertyweek.com |date=26 June 2008 ] Poundland's property director Craig Bales is responsible for store expansion, saying that "although the economy was suffering, this had not resulted in a ready supply of suitable stores for expansion."

In 2007, Chief Executive Jim McCarthy said that the retailer would consider expanding operations into Europe and the far east once it has extended its UK portfolio to 650 stores, which as of October 2008, currently stands at 190. [http://www.retail-week.com/News/poundland_unveils_plan_for_international_debut.html Poundland unveils plan for international debut] Retail Week, 25 October 2007]

Customer base

Poundland boast a loyal customer base, with roughly 2 million predominantly female shoppers every week in the C1, C2, D and E categories. However, it claims 10% of its customers are in the A/B group, with the retailer seeing a 22% rise in the number of shoppers in this group over the 2007/2008 period.cite web |url=http://www.mirror.co.uk/news/top-stories/2008/10/08/the-story-of-poundland-the-land-the-credit-crunch-forgot-115875-20786261/ |title=The story of Poundland - the land the credit crunch forgot |accessdate=2008-10-11 |publisher=The Mirror |date=8 October 2008] Poundland also attract students and the elderly, both of which watch their budgets and look for bargains.

The retailer has been keen in recent years to move away from their reputation of only appealing to low-income households, as they continue to expand into mainstream shopping centres and districts, with an increasing number of higher earning consumers in the market for a bargain. Poundland's ability to fight inflation by guaranteeing their prices will remain consistent is just one factor in their appeal to a larger customer base. [ [http://www.poundlandblog.co.uk/?p=978 Poundland Blog - Fight Inflation] ]

An increasing number of households are seeing Poundland as a means to purchase their regular household necessities at a time of financial struggle. Whilst some high street shops have reported a downturn in profits, Poundland, a member of the bargain shop retail sector, have seen strong growth attributed to rapid price inflation of many of the household necessities,cite web |url=http://news.bbc.co.uk/1/hi/business/7438315.stm |title=The Profits of Gloom |accessdate=2008-08-31 |publisher=BBC News |date=6 June 2008 ] with an increasing number of hard-pressed customers visiting its stores for bargains, bulk buying items such as toothpaste and tinned food. [cite web |url=http://findarticles.com/p/articles/mi_qn4158/is_20080701/ai_n27884550 |title=Crisis? What Crisis? - The 10 retailers defying the gloom |accessdate=2008-08-31 |publisher=The Independent |date=1 July 2008 ]

Financial performance

Poundland have seen strong increases in turnover year on year [http://www.researchandmarkets.com/feats/download_sample.asp?report_id=360340&file_name=Toy%20and%20Model%20Shops%20UK%20-%20Portfolio%20Analysis%20-%20Poundland%20Ltd&file_ext=pdf Toy and Model Shops UK - Poundland Portfolio Analysis] ] , helped by an increase of store openings.

Criticism

Environmental concerns

In 2008, Poundland infuriated green campaigners by flying Polo peppermints 7,300 miles into the UK from Indonesia, rather than sourcing them locally. Despite Poundland being close to the Nestle Rowntree factory in York, which has made the mint since 1948, Poundland insists it is cheaper for them to source the product from overseas, even taking in to account transport costs, to ensure it can continue to provide its customers with value for money. [http://www.mirror.co.uk/news/topstories/2008/03/07/row-over-poundland-polo-mint-imports-89520-20342568/ Row over Poundland Polo mint imports] ]

Health and safety

Although Poundland claim stride to provide its customers with good quality products whilst keeping the cost low, there are occasionally some products which fail to meet health and safety standards, and in some cases pose a health threat to the consumer. One such example occurred in February 2006, when dangerous car jump leads were withdrawn from sale across all stores. Although the cable gave the appearance of being heavy duty, it was found to only have a 3 amp wire in the centre following tests by council officers which, if used, could quickly overheat, melt and possibly catch fire.cite web |url=http://www.newham.gov.uk/News/2006/February/jumplead.htm |title=Dangerous jump lead withdrawn from sale |accessdate= |publisher=Newham.gov.uk |date=20 February 2006]

Aside from potentially unsafe products, Poundland has also been found guilty of blocking fire exits at a cost to the company of £3000 [ [http://www.highfield.co.uk/docs/articles/hasnews3280206.htm Blocked fire exits a, recurring problem in your workplace?] ] , as well as also being fined £13,000 in 2005 for unsafe racking in its warehouse. [ [http://www.sess.co.uk/news/sept_2005_unsafe_racking.html Unsafe Racking And Blocked Access Routes Cost Retailer] SHP Magazine, September 2005]

Customer perception

Reviewers tend to speak positively about the store on many online review sites, however, criticism about poor store layout, design and overcrowding, as well as inadequate customer service and staff knowledge is what tends to be the most criticised by many. [ [http://www.ciao.co.uk/Reviews/Poundland_Shop__5114946 Poundland Online Reviews] ] Regardless of this, in a survey the retailer conducted in July 2007, 99% of respondents said they would recommend the chain.

References

ee also

*Variety store
*Advent International

External links

* [http://www.poundland.com Poundland's official website]
* [http://www.poundlandrecycles.com Poundland Recycles Initiative]
* [http://www.realbusiness.co.uk/4771541/coining-it-in.thtml Company history and formation]
* [http://www.dooyoo.co.uk/offline-shopping-misc/poundland/reviews/ Reviews at DooYoo]


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