Poundland lays plans for 1,000 UK stores

Updated: 
Are pound shops your guilty secret? You can buy Calvin Klein make-up at Poundland for a quid, not to mention gardening gloves and olive oil. No longer is Poundland a foreign land for the middle classes.

They've helped the discount retailer see a 15.6% climb in earnings to £45.4m. Poundland has 458 stores and is gunning for 1,000 by 2020. Is this realistic - or wanted?

4m shoppers

Don't bet against it. More than 20% of Poundland customers are now from the AB demographic - read middle class - the company acknowledged in its results yesterday. It's also increasingly siphoning off sales from retailers like Tesco (which announced a profits slump this morning).

Part of the sales strategy is to flog branded goods at steep discounts. That's a very different approach from supermarkets increasingly trying to maintain market share through their 'value' brands (Sainsbury's claims its own-brand products are growing at over twice the rate of branded goods).

Shameless

The bruising downturn means shopping at a budget retailer is okay; savvy, even. (Thank 4m weekly shoppers here.) The UK retail market is increasingly seeing its middle ground pinched at the bottom by Aldi and Lidl (and increasingly the pound operators) while Waitrose - like cream - continues to rise higher.

How do businesses like Poundland do it? By, as the Telegraph reported last year, negotiating directly with the manufacturer. But be careful about size. "Back in 2007," the paper reported, "shoppers would have got 10 packs of Quavers in a family bag for £1. This was reduced to seven packs last year, and more recently shrunk further to just five packs."

So check the scales when you're buying. Poundland, meanwhile, doesn't have it all its own way. There's Poundworld and 99p Stores. Last year it was claimed Poundworld saw the fastest growth of the three - 43% year-on-year as opposed to 19% from Poundland.

Size matters

"There are some early but encouraging signs of improvement in the economy," says Poundland boss Jim McCarthy this week, "and in consumer confidence and Poundland is well placed to capitalise on any upturn."

Privately owned Poundland is now mulling a float, which could value the company at £600m. The well-heeled, reports the FT, "have got used to paying less for more." But the well-heeled, in some cases, will need to make sure they're not being taken for a cheap ride.

It's not all about headline price, and the competition is super-aggressive - and just as cheap.

False economies in a recession

False economies in a recession