Poundworld rolling out new discount chain across country

The Normanton-based company, which describes it as an “up-to-date Woolies, with a vibrant look and more choice and value”, has opened 10 stores across the UK since October 2010, employing 300 people, and plans to reach 20 by the end of the year, almost doubling its original target of 12.

Chris Edwards, Poundworld’s buying director and son of managing director, also called Chris, is heading the project. He said it would widen the company’s product base and increase the average transaction value

He said: “Our rapid expansion is a reflection of how popular the Discount UK formula is proving. People want real value, we know this from the millions of customers we serve in Poundworld, and Discount UK can deliver excellent value for money on over 500 products ranging from 28p up to £25.”

New store openings boosted Poundworld’s turnover by 42 per cent to £132.9m, according to figures for the year to March 2011, which have just been published at Companies House. Pre-tax profit rose by over 400 per cent to £5.2m.

It opened 29 stores during the financial year, taking the number to 98. It now has 125 stores all over the UK, including 21 in Yorkshire, and plans to open another 30, including the 10 Discount UK stores, before Christmas.

The company, which began as a stall in Wakefield Market in 1964, employs 2,850 staff.

One of the biggest growth areas is around the London area, where it has opened 10 stores in the last 12 months.

Mr Edwards (senior), who founded the company, said the company was on track to beat its £200m turnover forecast for the next financial year.

“We plan to open 70 stores, which equates to about six a month,” he said.

The number of pound shops on the UK’s high streets has almost doubled in the last 10 years, according to research from Experian, with discount retailers snapping up empty shops in urban areas.

Mr Edwards said: “One of our big focuses is on the availability of stores on the high street. Corporate chains are still going bust, which gives us a lot of opportunities.”

Over the last few years, brands like Poundworld have seen a marked shift in their customer profiles with an increase in the so-called middle market. Mr Edwards said: “Our customer profile now is wider than when we first started. We used to have a certain type of customer but we now get everyone shopping at Poundworld.”

The company’s shelves are stocked with more than 3,500 individually-sourced product lines covering categories such as food and drink, stationery, hardware, tools, pet toys, seasonal, textiles, household and medical.

Mr Edwards said it is continuing to increase the number of groceries it sells to make it a shopping destination and increase the spend-per-basket. Customers currently spend £4.20 per visit compared to £2.80 seven years ago.

Poundworld is also making tentative steps into the frozen food market with a possible partnership with Birds Eye.

The gross profit margin in 2011 was 40 per cent in the year to the end of March compared to 38 per cent in 2010.

One of the challenges with running a store like Poundworld is that prices cannot change when costs increase and with the rise in VAT, margins are being squeezed more than ever.

“It’s an issue but we are learning to deal with it,” said Mr Edwards. “A lot of suppliers are targeting their products to single price retail and measuring their items accordingly.”

The company invested £1.5m in new headquarters on Normanton Industrial Estate in West Yorkshire earlier this year, a move which doubled its storage space.

Improving staff conditions

Poundworld said it had taken steps to improve life for its staff after the company was featured on Channel 4’s Undercover Boss series.

Marketing director Martyn Birks spent six days working undercover on the shop floor to find out how the business was performing on the ground.

Chris Edwards, managing director, said the harsh penalties for shop staff clocking in and out late had been reduced and staff facilities were being improved.

“I was a bit apprehensive about the programme to say the least,” he said. “But we have had a good response and made changes where necessary to make things better for staff.”