Poundland poised to press button on £1 price rollout as it awaits restructuring green light

“Poundland is back,” proclaims managing director Barry Williams as he bounds across the threshold of a remodelled store.

“Look at that,” he says proudly as he surveys the shop. You see instantly what he means. The aisles are chock-full of products for £1, everything from Haribo sweets to Oral B-toothpaste, as the retailer goes back to basics with an emphasis on eye-catching value for money.

While he says Poundland is back, there’s one hurdle to be jumped – the retailer’s restructuring needs to be approved. Later today creditors will have their say on that and next week a court must green-light the plans, which involve closing approximately 70 stores, cutting rents on others and the loss of as many as 1,000 jobs.

Williams is optimistic that Poundland’s revival proposals will win backing, enabling him to press the button on a roll-out of a back-to-the-future strategy across the business. He acknowledges that the restructuring has been hard for affected business partners and employees but emphases it is essential to put the retailer on a firm financial footing and rebuild.

“Some of them have been faced with difficult choices,” he says. “But this business has always benefited from the goodwill of suppliers, staff and landlords. My expectation is that they’ll continue to remain supportive. All I can be responsible for is how credible is it [the turnaround plan] and how fair is it?

“We’ve had to paint a vision of a Poundland of the future. In order to get there, people have had to go through painful times. We need to be really respectful to those people, but it’s a sort of ‘Poundland’s back’ moment.”

The approach he’s highlighting at the store in Walsall, a few minutes away from Poundland’s head office, has also been adopted at 16 other West Midlands branches and five in the North West, including in Liverpool and Manchester’s Arndale Centre.

Abut 60% of products on sale are priced at £1, while the remainder are £2 or £3, and every bay is merchandised at a single price-point. The intention is to offer clear value through a proposition that makes sense to shoppers and is easy and efficient to operate.

“There are two clear missions for customers: value – that’s our home suit and we’ve got to compete on it – and that treasure trove feel, finding something new, different, interesting and exciting.”

Poundland had previously lost that clarity of purpose and simplicity. Williams formerly ran it for several years before being promoted to another role with then parent Pepco, and returned earlier this year as the retailer conducted a strategic review and was then sold to investor Gordon Brothers.

While he doesn’t excuse himself from involvement in some of Poundland’s mis-steps in recent years – “the vast majority of the problems we incurred were of our own creation” – he also observes: “When I came back everything I encountered was more complicated. More range and prices were added, more promotions, we ended up with an online business and a loyalty app. But as we added more, the result was less and at the same time we were operating in a high-cost environment.”

Now, he maintains: “The route forward is a sharper proposition, well executed.” FMCG product will all reflect the new pricing architecture within a month or so, followed by general merchandise and clothing – prices in the latter category will sometimes stray beyond those elsewhere in the store.

In the shops where changes have been made, Williams says there are “encouraging signs” already as customers embrace the return to a tried and tested formula. That gives Williams confidence in the longer term.

“The rapid decline can be followed by an equally rapid recovery, and it’s not rocket science,” he maintains. “If you look at our historic performance you see very consistent sales and profit delivery, whatever was thrown at it. I’m not saying you could have set your clock by it but it was a solid, resilient performance.”

As the familiar price points have been reintroduced, Poundland has reduced its SKU count and will bring it down further. At present, for instance, FMCG SKUs are being reduced to about 1,500. Across the board, the SKU count is coming down by 40% but Williams says “customers actually think there are more because it’s clearer”.

 “It’s all about backing from shoppers who, Wiliams believes, will return to a Poundland of the sort they knew and loved”

Suppliers have worked with the retailer to, for instance, produce pack sizes that fit within its price architecture in expectation of a volume pay-off. The simplification is also making life easier for Poundland’s supply chain team and staff in stores, who now have fewer price points and products to match up and can easily replenish stock. Even the dump bins only carry £1 pricing – the retailer decided on cost grounds not to print a double-sided version with a £2 option and just that small choice has helped focus minds on the need to provide value and keep things simple.

The change of approach has also brought an unexpected side-effect – less theft. Williams says: “The only people who don’t like what we’re doing are shoplifters. It was costing us a huge amount. Now the product isn’t here any more and our shrinkage is starting to collapse. Anecdotally, colleagues are starting to feel a bit safer.”

“Simple is easy to say, but probably the hardest thing to do,” says Williams. But the transformation push has begun and he is determined to keep it on track.

The average customer buys five items when they visit, so if Williams is able to get them to put just one more into their basket it makes a difference. “And the more you get out of existing shoppers, the more you’re likely to attract new customers,” he says.

In the next few days it will be clear whether the retailer has the backing it needs from creditors and the court. Then it’s all about backing from shoppers who, Wiliams believes, will return to a Poundland of the sort they knew and loved.