The signs over its shops promise “everything’s £1” but Poundland is breaking with its past with a range of prices stretching from 50p up to £5.
Shoppers in the Midlands can now find tubes of Colgate toothpaste costing just 75p and bottles of Aussie Shampoo for £3 on its shelves as the retailer tests the customer reaction in a group of 24 pilot stores.
Barry Williams, Poundland’s managing director, said sticking to the £1 price point had prevented it from selling products that customers had to visit rival stores to buy: “This is a way to broaden our proposition in a measured way that stays true to why people love Poundland.” The new price points include 50p, 75p as well as £1.50, £3 and £4. It started selling products at £2 and £5 in 2017.
Williams was adamant that the move wouldn’t confuse shoppers: “Have you ever been to Currys and tried to buy a biryani or gone into Greggs and asked to speak to Greg? Sometimes what it says over the door isn’t reflected in the shop.” About 80% of the 5,000 products it sells in store would still be priced at £1, he said.
The chain billed the move as switching from being a “single price” to a “simple price” retailer. The higher price points mean it can stock bigger packs of washing powder, grocery and toiletry brands that sell in huge quantities in rival supermarkets. Williams gave the example of multipacks of John West tuna – a big selling supermarket line – which it will now retail for £3.
It is not the first time that the near 30-year-old retailer has tinkered with its formula. Two years ago it started selling products priced at £2 and £5 and bargain hunters could find 50p products as “manager’s specials”. The retailer, which has 854 stores in the UK and Ireland, said it was the first time it has offered “dedicated ranges at lower price points”.
Three years ago Poundland, which opened its first shop in Burton upon Trent in 1990, was acquired by the South African retail group Steinhoff for £610m. There has been speculation that Steinhoff would have to sell it after being engulfed by a $7.4bn (£6.1bn) accounting scandal.
Steinhoff, which also owns Harveys and Bensons for Beds, is facing criminal and tax investigations relating to the scandal. In January Pepkor Europe, the subsidiary that controls its UK retail interests, said it had secured a £180m loan, which meant it was no longer dependent on its troubled parent group for working capital.
Shore Capital analyst Clive Black said a more flexible pricing strategy could make Poundland more attractive to shoppers and bolster its profit margins: “After a turbulent period, not aided by the wider shenanigans at its owner, Poundland appears to us to be stronger and more stable. The business has been forced to halt its store roll-out programme, which whilst starving it of the oxygen of new space, has permitted a focus upon the core offer, which management has executed well in recent times.”