It's not all that long ago that the UK high street was awash with single-price discounters, or 'pound stores' in local parlance, with 99p Stores and Poundworld sharing catchment areas with the daddy of them all, Poundland.
But in recent years, this has become a less regular occurrence.
Changing Marketplace
The growth of mainstream discounters like Aldi and Lidl, coupled with industry consolidation (Poundland bought 99p Stores in 2015, before placing the business into administration in 2017), has led to a solo operator, Poundland, now towering over a myriad of fallen contemporaries.
And judging by the half-year figures for the retailer's operator, Pepkor Europe, the business isn't doing that badly.
Poundland, which includes the Dealz banner in Ireland, France, Spain and Poland, posted revenues of €920 million in the period, which was 1.6% higher on the previous year. Store growth at Poundland was up 0.5%.
The business has been strategic with its store portfolio, 'balancing the exit from stores in weaker catchments with carefully selected new store opportunities in stronger locations', Pepkor said in a statement.
This included five relocations to larger stores, where it has been able to extend its range of Pep&Co clothing store-in-stores, as well as the opening of 20 new stores.
It has also branched away from offering 'everything' at £1, with tiered pricing for higher value items.
Expand Ranges
"Pep&Co clothing ‘store-in-stores’ (now present in around 300 Poundland stores) have previously delivered strong l-f-l revenue growth – l-f-ls for the clothing brand were up 9.4% this time last year – but a lack of detail regarding its performance in today’s trading update casts doubt on whether this is still the case," Amy Higginbotham, retail analyst at GlobalData, said of the group's performance.
"It is therefore wise for Poundland to continue expanding its ranges across different sectors such as health and beauty to boost footfall and help it take advantage of low consumer confidence, as well as an increasing desire for convenience," she added. "The introduction of its own-brand beauty range, #6, in August last year is an example of this and helps differentiate Poundland from other value players such as Wilko and B&M."
That Andy Bond is heading up the Pepkor Europe business also provides stability to the business in a time of retail upheaval – Bond worked at Asda for 26 years, commencing a marketing manager under Archie Norman in 1994, before working his way up to chief executive in 2005.
New Arrival
But while Poundland is undisputedly top dog, that hasn't stopped other players from seeking their cut.
In March, the founders of Poundworld (which collapsed last summer) opened a new discount chain, OneBelow, promising everything for '£1 or less', and a range of around 5,000 SKUs.
The new business has also opened a 160,000 square food distribution centre in Barnsley, a sign of its intent, and taken on many of the former Poundworld staff in its growing network of stores.
“We still believe in the British high street and there is a place for convenient stores that work hard to bring stand-out savings to local shoppers, giving them a reason to take advantage of value that they won’t find online,” OneBelow managing director Chris Edwards told Retail Gazette at the group's launch.
Poundland, with its deep pockets, has successfully seen off competition in the single-price market before. Given the bullishness with which OneBelow has entered the market, not to mention its management's pedigree, the battle may be far from finished.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine
