Blog: What The Great British Bake Off tells us about Poundland

Poundland’s sales growth of more than 12% in the third quarter was impressive enough. But some of the eye-catching numbers show, to an even greater extent, how Poundland has widened its appeal and show how the retail landscape is changing.

Poundland revealed that sales of baking products were up 146% - that was more than 345,000 products sold.

No doubt The Great British Bake Off prompted a rush. Another retailer to benefit from the GBBO effect, of course, was Waitrose -  a business at the opposite end of the spectrum from Poundland.

But fans of Mary Berry, Paul Hollywood, Ruby and the rest are clearly, like consumers generally, reassessing attitudes to price and value. Poundland, like Aldi and Lidl, is a beneficiary.

Poundland said that 22% of its customers now come from the AB demographic. That has doubled since 2008/09, testament to how consumers of all types have changed habits during the downturn and austerity.

Many shoppers may buy some of their ingredients at Waitrose but pop in to Poundland for cake tins, icing bags and similar baking essentials.

Shoppers will buy ingredients – or at least some of them – at Poundland too because the retailer has, like some of its competitors, been building up a food business. It’s now quite sizeable.

In the last financial year, food accounted for 20% of Poundland’s sales. Once mainly comprised of chewing gum, chocolate and the like, Poundland’s shelves now feature products such as breakfast cereals, pasta and rice - as well as items such as eggs, useful for those chocolate gateaux and Victoria sponges.

Food is likely to grow in importance for Poundland. Trading director Richard Lancaster is a former Morrisons man and chairman Andy Higginson a Tesco veteran.

In the same way as grocers such as Asda built up general merchandise businesses, Poundland is travelling from its variety store origins in the opposite direction.

It is hardly likely ever to offer anything approaching a supermarket offer but, as its customer base broadens so too will the food range.

Woolies at one time sold sliced ham and similar products. Maybe Poundland will follow Lidl with lines such as DOC bresaola – that would be popular with the Waitrose crowd.