Interview: Poundland and Pep&Co’s European expansion guru Sean Cardinaal

“If you’re a software developer you probably want to work in Silicon Valley at some stage and in retail, if you really want to work at the cutting edge, then the UK is the place to come.”

Cardinaal came to the UK last year to help mastermind Poundland’s UK growth strategy alongside Pepkor Europe’s chief executive and former Asda boss Andy Bond.

However, his ambitions for the retailer stretch far beyond this fair isle.

One of his top priorities is to ramp up Poundland’s European arm Dealz, which at present has 60 stores in Ireland and a smattering of outlets in Spain and France.

Cardinaal says the retailer wants to “supercharge” Dealz’ bricks-and-mortar footprint in Spain and will open seven new stores there before the end of the year.

“We have ambition to build a pan-European discount variety business that is of real significance”

Sean Cardinaal, Poundland

The retailer also aims to have 20 branches in Eastern Europe by the end of next year, from which Cardinaal says it will “learn the lessons” about how to tweak its proposition in the territory before a full retail offensive.

When asked how many stores he would like Poundland’s European arm in five years, Cardinaal says “a thousand” without a hint of hyperbole.

Pepkor stablemate Pepco already has 1,000 branches in Eastern Europe and plans to double store numbers there.

“If you take it back that Pepco will have 2,000 stores in Eastern Europe in three years’ time there is no reason why in the same sort of time we can’t have four or five hundred Dealz stores there,” he says.

“Then, if we go to Western Europe and make an acquisition or two there’s no reason why we couldn’t have a couple of hundred stores there. So a thousand sounds like a crazy number but I think anywhere between 500 [and] a thousand is a probably fairly reasonable.

“We have ambition to build a pan-European discount variety business that is of real significance.”

Budding Britain 

Cardinaal is not short of ambition back in the UK either.

After a tricky patch which coincided with the drawn out acquisition of 99p Stores, Poundland has grappled its way back to growth and has positive full-year like-for-like sales to prove it.

For Cardinaal, the way to continue on that trajectory is to challenge the perceived wisdom of what Poundland is – and what it should sell.

“We’ve got to break out of the mindset that the way to grow Poundland is to sell people another bottle of bleach or another four toilet rolls. It’s got to be new categories that they wouldn’t expect to find, and our multi-price strategy gives us the ability to do that,” he says.

“We’re still sitting on some gems in terms of categories where we’re quite dominant but we haven’t even scratched the surface of what we can do.”

“If we do this properly I think we’ll become a retailer about which people will say ‘I can’t believe I got this for the price I did’, rather than just ‘I can’t believe I got this for a pound’”

Sean Cardinaal, Poundland

The retailer has kicked off a trial selling vacuum-packed mattresses from Steinhoff (which acquired Pepkor in 2014) stablemate Bensons for Beds across 20 of its UK stores this week.

Priced at £79 for a single mattress and £99 for a double, this foray into the homewares market is a far cry from its previous single-price proposition.

Moving into new categories is one thing, but does Poundland risk alienating its customers by selling products priced so significantly above a pound?

“We are conscious of that and don’t want to lose our identity in shoppers’ minds,” says Cardinaal.

“But if we do this properly I think we’ll become a retailer about which people will say ‘I can’t believe I got this for the price I did’, rather than just ‘I can’t believe I got this for a pound’.”

It’s a strategy borne out by the value retailer’s shop-in-shop tie-up with sister retailer Pep&Co.

Poundland has added Pep&Co shop-in-shops to 132 of its stores since March, and Cardinaal shows no signs of slowing down.

“It’s been an absolute winner in terms of value creation both for the Poundland business and for Pep&Co business. Whichever Poundland shop can feasibly accommodate a Pep&Co shop-in-shop should have one,” says Cardinaal.

Poundland aims to have in excess of 300 Pep&Co shop-in-shops by the end of next year, which will include concessions in a selection of the value retailer’s Dealz stores across Europe.

Steinhoff services

But it’s not just new products that Cardinaal hopes will entice new shoppers into Poundland’s stores – it is creating services too.

The value retailer is developing an in-store loan proposition with Steinhoff stablemate and micro-lending business Capfin, and will also allow shoppers to transfer money abroad in its store from early next year.

“We’re trying to build a suite of financial services because ultimately that’s a need that our customer has”

Sean Cardinaal, Poundland

“We’re trying to build a suite of financial services because ultimately that’s a need that our customer has,” says Cardinaal.

“If they could get that, a bed and a new jacket all under the roof of a Poundland then it would give lots of shoppers new reasons to come in.”

The value retailer tested a micro-lending proposition in a selection of stores this year but pulled it because the technology that had been developed to process applications was not up to scratch.

“We’re definitely not shelving it, but we need to be confident that it is the best value on the high street and that the proposition is right before we roll it out,” says Cardinaal.

On the attack

It’s been a tough couple of years for Poundland, but the retailer has squared itself up for a full-throated attack on the value sector, both in the UK and abroad.

And although Cardinaal is newcomer to the UK retail market (a fact that he peppers throughout the conversation at frequent intervals) he’s not shy about the scale of his ambitions.

When asked whether the Brexit vote and subsequent currency fluctuations have tempered his appetite for expansion, he suggests looking at the peaks and troughs of the Rand for perspective.

“Maybe there’s a bit of a South African mentality but on that continent if you waited for certainty in the political realm to do anything then you’d sit on your hands forever. You just do whatever the hell you think is right for your business and then do your best to manage any complexities that come out of it,” says Cardinaal.

“Building a business of scale in Europe absolutely makes sense, and doing that sooner rather than later makes sense. It’s also a strategy that makes sense in terms of Brexit, but Brexit is in no way the primary driver.”

The UK’s political and economic outlook may be uncertain, but Cardinaal is anything but – and his appetite to transform Poundland into an international retail juggernaut could bring a serious shake-up to the value sector.