Poundland

1990s: Formation and early history

Pound Land Limited was co-founded by Dave Dodd and father and son team Keith and Steven Smith on 25 April 1990 with a starting capital of just £50,000 and an office in Sedgley. The firm was funded by a loan from Keith Smith, who had set up the wholesaler and discount store Hooty's in 1963. The first pilot shop opened in December 1990 in Burton upon Trent and managed a turnover of £13,000 on its first day of trading. Previous attempts at opening pilot shops had failed after being turned down by landlords who had reservations about allowing such a shop to operate and doubted the single-price concept would be successful in the UK.

By the end of the first year, Poundland was operating from several shops and had turned over £1 million, with a profit of £6,000. Growth continued throughout the early 1990s, with six shops by December 1991 and a further seven a year later. In 1995, Steven Smith failed to plan for more warehouse space and retail growth pushed their storage capacity past its limits. In response to unacceptably high stock theft, a new 130,000-square-foot (12,000 m2) warehouse was built, although it reduced profits from £850,000 in 1994 to £400,000 in 1995. Operational difficulties were resolved throughout 1996, when a new office in Hong Kong opened to support product sourcing and operations in the UK.

Early to mid-2000s: Expansion and management buyout

Although enduring a troubled first few years, by the 2000s Poundland had become a multi-million-pound business, opening their 150th shop in Northampton in mid-2006 with steady increases in gross turnover throughout the decade. Following a management buy-out in 2002 by Advent International for £50 million, the company continued to grow with annual profit growth of 46% a year from £4.1 million in 2006 to £12.7 million in 2009. Chairman Colin Smith, speaking in April 2005 as Poundland revealed it had invested £20–25 million in building a 300,000 square feet (28,000 m2) distribution centre, suggested there was great scope for further growth, saying "We can clearly conceive this chain having 400-plus stores in future"; this target was reached in 2012 with the opening of their Haringey store.

Late-2000s: Economic recession

Poundland reported strong sales during the 2008 financial crisis, with 2008–2009 revenue just short of £400 million, up from £330 million the previous year. Despite this, Poundland closed stores not financially viable, even if well-positioned, such as in West Ealing where it was believed that high rental costs were one of the reasons why the company pulled out of the area. Former CEO Jim McCarthy suggested there is a misconception that Poundland is a better business in a recession, saying that they are better during normal economic conditions, but robust enough to manage well under any economic conditions.

When the rate of VAT was reduced in November 2008 from 17.5% to 15%, Poundland's prices remained fixed at £1, having kept the single price of £1 for 18 years while absorbing duty and increased supplier costs, saying that savings would be passed on in other ways. Reports emerged in September 2008 that Poundland's owners, Advent International, were to put the retail chain up for sale, with figures showing that value retailers were seeing business boom during the economic recession, noting that value-conscious customers were switching from traditional larger supermarket retailers for everyday necessities. The retailer announced in 2010 a surge in sales by nearly 35% over the 2009–2010 festive period.

2010s

In early 2010, Poundland's owners Advent International were planning on cashing in on the resurgence in discount retailers by preparing to put the chain up for sale. The report came as figures showed that value retailers were seeing a business boom in the 2008 financial crisis, with Barclays Private Equity expressing an interest in a potential take-over of Poundland for about £200 million. On 4 May 2010, it was announced that Poundland had been sold to US private equity firm Warburg Pincus for £200 million and was the subject of an initial public offering in March 2014.

The company acquired 99p Stores in 2015, which was followed by a drop in its share price from 350p to 150p. In May 2016, it launched a new brand of shops to replace the 99p Stores brand called Poundland & More, selling at a range of different prices. In August 2016, the now-struggling Poundland was sold to the South African company Steinhoff International for £610 million. Poundland's shareholders approved the takeover in September 2016.

In November 2017, Poundland signed a deal with British online shopping retailer musicMagpie to receive supplies of used CDs, DVDs and Blu-Rays, which are then sold for £1 as part of Poundland's Replay range. In July 2019, it was reported that Poundland expected to sell 24 million physical media copies over four years by the end of 2019.

Business operations

Sales strategy

For much of its history, Poundland promoted their sales strategy through the slogan: "Yes, Everything's £1!", however in 2015, after it started running promotions for items costing more than £1, the Advertising Standards Authority (ASA) upheld complaints that the slogan was misleading and required Poundland to retire it, though Poundland argued that the products were only available with other purchases. There had been plans to expand the price offering in 2009 (such as a £2 section, 50p section etc.), but they were decided against at the time after understanding the overwhelming message from customers was not to change the easily understandable single price strategy, though Poundland eventually moved away from the strategy and began selling products for over £1 in 2017; as of June 2021, it was reported that one in ten products in its stores had exceeded £1.

For the majority of stock sold at £1, the company does not need to transmit pricing information to stores and associate price tags with each item. With some manufacturers being apprehensive about selling their brands in a discount environment, the store offers the alternative of selling the products under their own brand. Inflation can present challenges to single-price retailers as the primary marketing strategy requires products never to increase in price. However, inflation can also be to an advantage, as some products which may previously have retailed below £1 (therefore cheaper elsewhere) may then become better value for £1.

Problems arising from inflation are dismissed by Poundland, such as freight costs which become lower when the pound is weaker, in turn counteracting the impact. Various sales tactics are adopted to counteract inflation and reduce costs, including decreasing the quantity of an item within a set (such as removing a pencil within a larger pack) and replacing known brands with their own-brand alternatives. Examples of branded products being replaced include confectionery products After Eights and Toblerone. Poundland's Toblerone replacement planned to launch in July 2017, by offering a closely resembling own-brand product named Twin Peaks, though following a legal battle from Toblerone's manufacturer, the product had to be redesigned to be distinctly different.

Products offered

Poundland offer approximately 3,500 products, of which 1,000 are branded, mostly food and drink. Stock typically is categorised as either ongoing core lines (products bought direct from the manufacturer), seasonal ranges or clearance stock, with 10,000 new products featured each year. Initially, unbranded products stocked by Poundland (accounting for roughly 70% of total stock) would carry the Poundland branding and logo, however the retailer determined it could increase sales by removing the Poundland branding and instead marketing their own sub-brand of products. Some of the products sold under the in-house brand are supplied by manufacturers who are worried about their brand being sold in discount stores and would rather allow their products to sell without their own branding attached.

Criticism and litigation

Environmental concerns

In 2008, Poundland faced controversy by green campaigners over transporting Polo mints into the UK from Indonesia, rather than sourcing the product locally, despite its close proximity to the Nestle Rowntree's factory in York. Poundland stated that importing the product remained cheaper, despite transport costs via ship.

Health and safety

Poundland has on several occasions faced enforcement action over product safety and store safety. These have included recalls of defective consumer products, fines relating to unsafe lighters and prosecutions for blocking fire exits, including fines in 2005 and 2011.

Pest infestation

Between 2012 and 2017, Poundland were prosecuted on several occasions over hygiene failures. Council inspections found rodent infestations, contaminated food and failures in food safety management, resulting in fines ranging from £10,000 to £100,000. The breaches were at stores in Croydon, Islington and Wandsworth, the latter of which forced the temporarily closure of the store.

Remembrance poppies

In October 2011, Poundland attracted criticism after a staff member was reportedly prevented from wearing a Remembrance poppy because of company uniform rules and was sent home. The company reversed the policy following public criticism and after hundreds of customers threatened to boycott the store.

#ElfBehavingBad campaign

In December 2017, Poundland ran a social media campaign with a series of eight sexually suggestive #ElfBehavingBad posts featuring a Christmas elf. The campaign received mixed responses on Twitter, with some users also speculating Poundland's account was hacked, but it confirmed the posts were genuine. Twinings also complained about an image featuring the elf posing with a doll in front of a box of Twinings Classics tea, leading Poundland to post a revised image without the box. In February 2018, the ASA upheld all 85 complaints it received about the campaign for depicting "toy characters and other items displayed in a sexualised manner". Poundland defended it as being based on "humour and double entendres", and also posted a tongue-in-cheek response on Twitter featuring a message from the fictional elf.