Poundland is dropping discount wholesaler Gem Imports as a supplier because of its links to a high street rival.
Gem Imports previously supplied Poundshop.com but the relationship is ending following Poundland’s acquisition of the online discounter. The supply arrangement is seen as untenable because Gem Imports’ director and founder Chris Edwards is also the MD of high street discounter One Below.
Edwards was also part of the founding family team behind the Poundworld, along with his father, also named Chris Edwards, who is now chairman of One Below.
The pair launched One Below in 2019 and have grown it to over 70 stores across the country.
Poundshop.com is the online business created by Steve Smith, who founded Poundland itself in 1990 and sold the chain 10 years later for £50m.
Smith launched Poundshop.com in 2014 and sold it to Poundland last month. Poundland plans to use the deal, which includes Poundshop.com’s fulfilment centre in Wednesbury, West Midlands, to accelerate its own online ambitions.
“Poundland is addressing legacy liabilities left in place at Poundshop,” a Poundland spokesman said this week. He said it would be “inappropriate to detail those commercial conversations”.
Poundshop.com is claimed to be the UK’s biggest online-only discounter, with about 400,000 customers across the country.
Gem Imports latest accounts credited a strong e-commerce customer base for driving turnover up by 58% to £22.5m in the year to 31 January 2021. Increased turnover from online retailers had far outweighed a temporary reduction from high street retailers in the pandemic, it said.
Asked about the supply deal with Poundshop.com ending, Edwards Jr denied Gem Imports had been “officially dropped” yet, adding: “But I’ll be very surprised if they don’t.”
Since buying Poundshop.com, Poundland has started adding its own lines to the website, starting with homewares and Pep&Co clothing.
Poundland also launched its own e-commerce site last year, Shop.poundland.co.uk, delivering from a fulfilment centre in Cannock, Staffordshire, to select postcode areas in the Midlands and north of England.
Both Poundshop.com and Shop.poundland.co.uk offer ambient food across a number of categories. Poundland has not yet said how it intends to integrate the two sites.
One Below does not sell online. Its original premise was to sell everything for £1 or under but it has since introduced higher price points.
Its turnover was £64.6m in the year to 31 January 2021, up 41% on the year before. Coronavirus restrictions caused the business to miss an estate target of 90 stores by the end of the period, according to the accounts, and a turnover target of £75m.
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