Retail Insider held its latest Breakfast Event this week with Jim McCarthy, chief executive of Poundland, telling the story of how a business founded on a borrowed £200,000 has developed into an operation with 477 outlets.
Jim McCarthy, CEO of Poundland with Glynn Davis, editor of Retail Insider
At the Gilbert Scott restaurant within the St Pancras Renaissance Hotel in London McCarthy revealed that the first store delivered a cash payback in only 12 weeks. Although the payback is a little longer for today’s new Poundland stores it is still a very good cash generative model.
Retailers from Monsoon/Accessorize, John Lewis, Made.com, Wayfair and SecretSales joined other senior executives from the sector to hear McCarthy relate how Poundland has become increasingly regarded by suppliers and brand owners as a highly valued operator.
They now recognise that its fixed price model has earned a place in the minds of shoppers and that its volumes are now sufficient for it to work collaboratively with brands on unique pack sizes that enable it to hit its £1 price-point.
Such has been the growing demand for products at Poundland that McCarthy has seen the optimum store size grow from 3,000 sq ft when he joined the business to a current 6,000 sq ft. There are some stores that even measure a chunky 14,000 sq ft.
This is indicative of how the product lines have gradually been expanded – there are now 17 product categories that encompass 5,000 separate lines in the average store. As many as 200 of these change every week, which McCarthy suggests gives a “Pandora’s Box” element to Poundland stores that drive a high level of valuable impulse purchases.
The product lines continue to grow, with a recent introduction ‘healthy snacking’ that he says will encompass some very innovative products around Christmas. With such introductions, combined with value now being in the psyche of the UK consumer, McCarthy says AB demographic shoppers now account for a double-digit percentage of Poundland’s customer base.
But most exciting are the prospects for the group’s overseas Dealz business in Ireland, which has a fixed price point of Euros 1.49, because McCarthy believes the 27 store-strong division will ultimately be bigger than Poundland.