Poundland is going back to discounter and pound shop basics in a bid to win back shoppers.
The variety discounter has begun rebooting its store proposition as it prepares for the recovery phase of its turnaround.
The fmcg range has been slashed by close to 50% of products, and price points reduced to three: £1, £2 and £3. Products are divided into bays by price, harking back to the simplicity of Poundland’s original one-price model. About 65% of fmcg products are £1.
Promotions have also been stripped back, with multibuys such as two for £3 (instead of £2 each) the only remaining pricing mechanic for boosting volumes.
As well as giving shoppers more value, the new strategy meant “better availability through focusing on a much more efficient range”, Poundland MD Barry Williams told The Grocer.
“We had way too many SKUs. The principle we’re operating on is what we call ‘narrow and deep’. Focusing on a narrower range allows us to buy much deeper in terms of more volume with fewer SKUs.
“That creates the leverage for us in the supply base and everything works on the back of that.
“It’s thinned out but it’s more impactful in terms of the value that shouts through.
“My supply chain is uber efficient now, because they have half the SKUs to focus on.
“From a store perspective, store colleagues are loving it because the merchandising plan is much simpler. Replenishing from the warehouse to the shop floor is really simple. The level of fill is much deeper. We’re filling to the back of the shelf.”
Poundland has also re-recruited UK buyers who left ahead of its switch to group-level sourcing of clothing and GM under former owner Pepco Group – a move that was blamed for a downturn in sales. Among the re-recruits is clothing head buyer Maria Epaminondas. She is among five clothing buyers that have been brought back, while another five have been recruited in GM.
Valery Slobodyuk, who left Poundland in 2015, is among those to have returned to the GM buying team.
“Now we’re rebuilding our own ranges we’ve brought people back,” said Williams, who himself returned to Poundland in January, after two years as MD of Pepco, its former sister retailer in Europe. He was previously Poundland MD from 2017 until 2023.
“We’ve been rebuilding the team with colleagues who know the business, product and customer, and supplementing that with some new talent as well.”
The new proposition was first trialled in March in Poundland’s Park Street store in Walsall, close to its headquarters. It has since been rolled out to another 22, including 17 in the surrounding area and five more last week.
“We took it to Liverpool, Manchester Arndale, Hanley in Stoke, Wandsworth and Brixton,” said Williams.
“It’s gradually now starting to roll out across the estate.”
He said buyers seeing the new strategy in trial stores were “leaking it” into others, and it was leading to sales growth across the chain. “We’re starting to see signs of encouragement. Customers are responding positively to what we’re doing.
“The business is much calmer and more stable than when I came back in January and that’s a great foundation to build a recovery off.
“All of our customer sentiment indicators are moving positively. That’s not a guarantee of future success but it puts you in the right ball park if customers are feeling much better and more confident about what you’re doing.
“They think the value is better, and the reality is it is better. Our pricing index has improved.
“They see that it’s much better availability. They think there are more brands, bizarrely, even though we’ve taken stuff out.
“And we’re beginning to see the first signs of it in our numbers. That’s giving us encouragement. We’re seeing the like-for-likes beginning to reverse their trend.
“We’re seeing increased transactions and increased units per transaction. On average, customers put five items in a basket; in trial stores it’s 5.4.
“We’re not out of the woods yet, not by any stretch of the imagination. It’s not fixed. There’s a helll of a lot of heavy lifting still to be done in the business. But we’re seeing enough encouraging signs to tell us we’re on the right track, and that’s great news for us at the moment.”
Poundland has also rolled out new ‘dump bins’ in stores, carrying 20 fmcg products all at £1 for a minium of 13 weeks.
“That’s consistent across the chain,” said Williams. “We hold it for 13 weeks because it allows the business and teams to back it with confidence in terms of volume. Customers get used to it and it builds and builds.
“The volume that’s going through these now – we’re taking over £1m a week just on those 20 SKUs. It’s phenomenal for us.”
Williams said the new strategy had also reduced shrinkage. “The only people that don’t like it are the shoplifters, because there are less high-value items for them to nick.”
He said Poundland Local – the convenience fascia it launched in Barnsley in 2021 and rolled out to London in 2022 – was also going.
“It’s just Poundland,” he said. “It’s going to be brutally simple and that is the message that I’m giving to all parts of the business.
“There’s loads of people that have got great ideas – ain’t interested. We’re really clear on what the future of this business looks like – that brutal simplicity – and I’ll protect it to the death.
“I firmly believe that’s what’s going to make us successful and I have enough evidence now to say we’re on the right track.”
Poundland is also closing 68 loss-making stores in a restructuring plan announced after its acquisition by investment firm Gordon Brothers in June. Twenty-eight of them have so far closed, with another 11 set to cease trading this weekend. The plan is yet to receive approval from the High Court and creditors, meaning Poundland currently retains the leases. Creditors are due to vote today (20 August) and a High Court hearing is due to take place on 26 August.
Poundland has said it expects the estate to shrink further as other leases come up for renewal, from about 800 to between 650 and 700 stores.
The restructuring plan also includes removing frozen food from stores, halting online trading and retiring its Perks loyalty app, which rolled out across the UK last year.
Poundland’s frozen and digital distribution centre at Darton, South Yorkshire, is due to close this year, followed by its national distribution centre at Springvale in Bilston, West Midlands, in early 2026. Stores will be served from its other two distribution centres in Wigan and Harlow.
Poundland is due to stop selling online and close its app on 16 September.
Gordon Brothers paid a nominal sum for Poundland and is providing a working capital facility of £95m for the turnaround, made up of an initial £65m and an additional £30m once the restructuring plan has been successfully implemented. Pepco Group is providing a further £30m revolving overdraft facility subject to successful implementation of the restructuring plan and in return for a 30% equity stake.
“That gives us overall funding of £125m, which is more than enough to complete the turnaround,” said Williams.
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