Poundland boss Jim McCarthy has said customers will stick with the retailer as the economy recovers and he is unconcerned by the new living wage.
Speaking at the IGD conference in London today, McCarthy dismissed suggestions that customers will desert Poundland when the economy bounces back and it will be forced to change its USP.
He rejected the idea that it cannot keep selling at the £1 price point, as it has for its 25-year existence. He pointed to the US business Dollar Tree, which has 13,600 stores and first opened in 1953. “Even given the currency rate in a more difficult market, it has been very successful,” he said.
Trading up
On the recovery of the UK economy, McCarthy pointed to research suggesting only 3% of Poundland customers would trade back up. “Our customers will spend more money but not waste money,” he said.
He also shrugged off the threat of the Government’s new living wage, saying VAT rising to 20% had meant a £13m hit to Poundland so it was used to dealing with such pressures. “We have had several months’ notice, so we will plan for its effect,” he said.
McCarthy also rejected the idea that Poundland has poor-quality products, using the provenance of its make-up offer as an example. “You can’t fool customers,” he said.
Mix of sales
He addressed the notion that most of his company’s sales are in general merchandise by pointing out that 40% of its sales are food and drink, while it operates in 17 categories.
Poundland last month completed its acquisition of rival 99p Stores and has also launched a trial ecommerce site. However, it warned its first-half profits are likely to be lower than expected as like-for-like sales fell 2.9% in the six months.
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