Poundland

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Poundland

Type	Private limited company
Founded	April 1990
Founder	Dave Dodd and Stephen Smith
Headquarters	Willenhall, England, UK
No. of locations	167 (March 2008)
Key people	David Dodd (Co-Founder) Colin Smith (Chairman) James "Jim" McCarthy (Chief Executive)
Industry	Retail
Products	Groceries, Consumer goods, DIY, electrical
Revenue	▲£310.7 million (2007)
Net income	▲£5 million (2007)^[1]
Owner	Advent International
Employees	4540
Website	www.poundland.co.uk

The Poundland store in Peterborough, England

Poundland is a United Kingdom-based variety store chain which sells every item in its stores for £1. Established in April 1990 by Dave Dodd and Stephen Smith^[2], the chain claims^{[citation needed]} to have introduced the concept of single-price retailing to Europe and is the largest single-price retailer in Europe (price-point retailing was invented in the United States in the 1870s). They 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.

Poundland now employs roughly 4,500 staff, the majority working in "front line" positions in the stores. The company union is USDAW.

1 History
- 1.1 Formation
- 1.2 Management
2 Business Practice
- 2.1 Sales Strategy
3 Criticism
4 References
5 See also
6 External links

[edit] History

[edit] Formation

The retail chain was founded in April 1990 by Dave Dodd and Stephen Smith^[2] with a starting capital of just £50,000.^[3], 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^[3], 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. Problems occurred in 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. The costly solution was a 130,000sq ft warehouse 15 miles away, which resulted in heavy profit loss, from £850,000 in 1994, to £400,000 in 1995.^[3] The retailer managed to resolve their operational difficulties throughout 1996 when the new warehouse site became fully operational.

Since then, Poundland has 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.^[4] Following a management buy-out in 2002, the company has continued to grow with annual profit growth of 23.44% (2007)^[1] and aims to open 60 new stores throughout 2008 and 2009.

[edit] Management

In 2002, Dave Dodd, co-founder of the chain, led a management buy-out by Advent International Private Equity Group worth £47.5m for 78% of the company^[1], which allowed for the company's accelerated growth, expanding the store portfolio to well over 150 throughout the UK.^[5] 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 managing director at Sainsbury's.^[6] His plans for expansion could see an additional 30 stores opening throughout 2008, and an equal number in 2009.

[edit] 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. 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.^[7]

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 March 2008, currently stands at 164.^[8]

[edit] Sales Strategy

Poundland's biggest sales advantage is their price consistancy 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, and customers instantly know how much a product will cost. 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). 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.^[9]

Until recently, all unbranded products stocked by Poundland, which account for roughly 70% of Poundland's total stock^[4], 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.^[8]

[edit] Criticism

Although the £1 price prevails throughout the stores, it is possible to buy some products cheaper elsewhere; in this case, some products are in fact marked up in price, as the price consistancy across all product ranges creates customer perception of a bargain.^{[citation needed]} These dearer products are in the minority, as the majority of items stocked by Poundland are cheapear than competitors, normally as a result of bulk-purchase of clearance line products.^[10]

Poundland has also been found guilty of blocking fire exits at a cost to the company of £3000^[11], as well as also being fined £13,000 in 2005 for unsafe racking in its warehouse.^[12]

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.^[13]