One of his more high profile converts was former Safeway chief executive Colin Smith, who joined as chairman in June 2002 following an MBO backed by private equity firm Advent International. He works two days a week at Poundland. "Advent had been stalking the company for a couple of years," says Smith. "I had dropped by to see Advent a few years ago, and they told me about Poundland. So I went to look at the stores and the distribution centre, and realised what a terrific business it was. But more than anything, I was impressed by how busy the stores were all the time!"
But why should food and drink suppliers take any notice of Poundland, and will selling carefully nurtured brands through Poundland pour their brand equity down the drain?
Dodd admits he has had to be a little "creative" in the past to persuade suppliers that Poundland would not damage their street cred or damage relationships with other clients. "For example, there have been occasions when we have asked a supplier to create a multipack for us and they have been nervous about how this might affect their other retail customers. So we bought the product loose, made up a pack of five, and demonstrated to manufacturers it had no negative impact on their brands. Suppliers have been amazed by the volumes we did and now they are happy to do it for us. We buy direct now from people like Cadbury and Nestlé, but it took a few years before we were able to open those accounts directly."
Poundland is an attractive proposition for a supplier looking to shift a lot of product quickly, says Smith. "Unlike the big supermarkets, this business is set up so our senior buyers can make decisions incredibly fast because they are not tied by listing agreements and planograms."
Poundland is also a great testing ground for manufacturers, adds Dodd. "We can feed information back very quickly. When you get under the skin of Poundland, you realise you are dealing with a very sophisticated retail business." The fact stores are so busy makes the chain doubly attractive to impulse suppliers, he adds. "Our conversion rate [where browsing translates into a sale] is unusually high." Sales per square foot at some stores exceed £20. Basket size is also increasing, with more focus on category management says Smith. "We are generating good like-for-likes and have substantially exceeded our financial objectives since the MBO."
Although Poundland is not in the premier league in terms of turnover, it can drive substantial volumes for suppliers as the product range at just 2,000 lines is kept very tight. "We are looking to get a clearer focus on the food and grocery part of the business," says Dodd. "We want to work more closely with suppliers, both existing and new, to demonstrate what Poundland is capable of. Our best and most valuable relationships are with suppliers, with whom we can do a range of business, both on a regular and end of line basis."
Ten years ago Poundland was buying from wholesalers. Today it has buyers scouring Hong Kong, China, the US and the continent.
And, adds Dodd: "Our margin trend has actually improved steadily since we started."
This is not, he stresses, because Poundland is buying in tat to maintain its margin, but because it is increasing its buying power, reducing overheads, and working with suppliers to create exclusive packs and weights to fit the £1 price point.
A fixed retail price has proved anything but a straitjacket, insists Dodd. "It's not as restrictive as it seems. If you have a pack of 72 pegs, you can always work with a supplier to create a pack of 60."
Similarly, as everything is a pound, the company can run three-for-two offers or bogofs on any combination of SKUs a "unique proposition in the marketplace", claims Dodd. "What customers like is the fact the range is so dynamic you never know what you are going to find in store, which is what generates excitement and makes people come and visit us two or three times a week."
So what does the future hold? There are several options available, including a flotation. However, Advent does not appear to be in any tearing hurry to realise its investment. "Clearly we are building something of significant value," says Smith.
In the meantime, Poundland is pressing on with an aggressive new store opening programme in a bid to double the size of the business in three years expansion the 245,000 sq ft depot at Willenhall can "easily support". At least 20 new stores are planned for this year.
Says Dodd: "Most retailers have very strict criteria for new sites in terms of demographics, store size, warehouse space and so on. But nowhere is off limits for us. We have proved we can make money in stores from 1,700 sq ft to 10,000 sq ft. In a shopping centre, a market town, a small catchment, we're always the busiest shop in town."