Over the last 35 years the name Poundland has almost become synonymous with Britain’s incredibly successful and competitive bargain retail market.
In years gone buy you could buy almost anything inside for just £1, an idea that father and son founders Keith and Steven Smith had developed while running a market stall in Walsall.
Three decades later and it has more than 800 stores around the country, with its founding family becoming multi-millionaires in the process and the chain becoming a staple of British high streets.
But when it’s current owners, Pepco Group put the firm up for sale this week after months of dire warnings about its financial state, it was hardly a surprise.
Before Christmas its owner revealed Poundland had taken a £642million hit, something it blamed on a challenging retail market and lack of demand for some of its products, as well as tax hikes brought in by the new government.
Labour’s tax raid budget was the tip of the iceberg, with the firm itself admitting that it lost more than £40million worth of stock in 2024 alone due to thieves plundering it in Britain’s shoplifting epidemic.
With 15,000 employees, many will be desperately hoping a buyer comes out the woodwork as the retail sector continues to struggle in a post-Covid world hit by the cost-of-living crisis.
Experts have suggested that customers have turned their back on the discount store after it forgot it’s bargain roots – it abandoned its £1 price promise eight years ago and has since stocked more premium clothing and merchandise.
The iconic discount retailer faces an uncertain future amid huge losses and a shoplifting crisis
Pictured: Poundland employeeconfronting a shoplifter at a store in Westway Cross Shopping Park, Greenford, northwest London, in July of last year
The worker blocked the thief from leaving the budget shop chain at the front door, leading to the two becoming embroiled in a 30-second scuffle as a shocked customer watched on.
Despite a promise to protect its loyal customers in the cost-of-living crisis, MailOnline previously found that prices in stores had increased by up to 50 per cent on certain food items.
The chain has also been hit by newfound competition from big supermarkets including Tesco and Sainsbury’s offering massive discounts through their loyalty card schemes
Experts say that the company has failed to market itself as a cheaper alternative to the big supermarkets and cannot entice customers away from their usual shopping habits.
The future looks increasingly bleak for Poundland’s, with high street staple Wilko falling into administration and rival B&M in crisis, there are fears Britons are beginning to turn their back on budget shopping.
Poland-based Pepco Group, which owns Poundland, announced on Thursday that 825 stores would be put up for sale as it shifts its attention to its more popular Pepco brand.
The retailer has struggled in recent years and was hit by Rachel Reeves‘s October tax raid which increased national insurance contributions for employers alongside the national minimum wage.
The company said the changes announced by the new Labour government would be likely to cost around £10million.
Poundland has also become a huge target for shoplifters, announcing that last year a shocking £40million worth of stock was swiped from the shelves of the brand’s stores across the UK.
In the three months leading up to December the company recorded a 7.3 per cent drop in sales
Barry Williams has returned to Poundland as managing director, having held the role between 2017 and 2023
In January, the retailer announced it would invest in new anti-theft technology to try and combat the surge in opportunists attempting to steal from the discount stores.
It comes as Pepco reported a £548million loss for the year to September 30.
The company slashed the discount retailer’s book value by £642million due to a ‘significant decline in performance’, and a ‘weaker outlook’ for profits and rising costs.
Poundland recently re-appointed former boss Barry Williams as managing director, after he re-joined the board at the start of the year in order to address the struggles of the retailer.
In the three months leading up to December, the company recorded a 7.3 per cent drop in sales alongside a decline of 3.6 per cent in the last financial year, Retail Gazette reported.
Pepco are looking to cut ties with the store as the group’s other two retailers Pep&Co and Dealz are both reporting sales increases.
One reason for the decline in sales has been a recent change as Poundland began selling the Pep&Co clothing range and merchandise in their UK stores.
The group said it made the shift to Pepco-sourced ranges to help drive scale, increase cost savings and lower prices for customers.
Two brazen youths – who wore black coats in the blistering summer heat last June – were mocked online after attempting to steal from Poundland
The brave security guard was praised online for confronting the pair at the store in Stratford shopping centre
Pepco chief executive Stephan Borchert said Poundland ‘lost its DNA’ when merchandise and clothing from Pepco was brought into the stores
A move to begin selling Pepco clothes and merchandise in the stores has not been successful
However, the change of clothing has not been a success, with even Pepco’s chief executive admitting a sales slump was caused by replacing Poundland’s existing stock and clothing with the Pepco branded merchandise.
Stephan Borchert admitted the move had caused the company to lose ‘bits of its DNA’.
Pepco group admitted: ‘It became clear as the year progressed that both the planning and execution of this implementation had shortcomings, with gaps in clothing and general merchandise product for the UK customer, impacting revenues and profitability during the year.
‘It further became clear that our UK customers had a different expectation of the Poundland brand proposition compared with Pepco customers which has led to a fundamental rethink of approach going forward.’
Sophie Mitchell, retail analyst for GlobalData, argued the issues with the company go beyond the introduction of the Pepco general merchandise.
She instead blamed a marketing strategy which has failed to promote Poundland in order to entice customers away from supermarkets and discount clothing stores.
She said: ‘The failure of its GM and clothing range has likely been due to a lack of marketing and the popularity of well-established value clothing ranges in the UK from the grocers and Primark.’
Pepco is now working with AlixPartners to develop a strategy which includes getting Poundland off the group’s books.
Poundland is now trying to return to basics and offer more items for £1 or less, in a move to try and win back customers
Experts have warned that Poundland is facing new competition from supermarkets due to the introduction of loyalty cards
Sainsbury’s Nectar Prices gives customers access to exclusive prices in store and online
Tesco also offers discount prices for shoppers who sign up to the company’s loyalty scheme
At the same time, Poundland is looking to return to its roots and increase the number of items which it will sell at £1 or below, following a ‘home of the £1’ marketing campaign in December.
Mr Borchert said: ‘The board and I are actively exploring separation options for Poundland, including a potential sale, from the group, with consideration also given to the separation of the well-performing Dealz Poland over the medium term.
‘Barry Williams did a great job as managing director of Pepco, returning it to like-for-like sales growth, and I am confident he will play a pivotal role in getting Poundland back on track, given his previous success there.’
In recent years Poundland has found new competitors in supermarkets, as a widespread rollout of loyalty schemes has led to discounted prices for customers.
David Hughes, Shore Capital equity analyst told Retail Gazette that Poundland has lost its perception as a value store due to the ‘success of Clubcard and Nectar card schemes in Sainsbury’s and Tesco’.
He said: ‘There’s slightly less incentive in consumers minds to shop at the discounters because they don’t feel like they’re getting as big a saving as perhaps they felt they were before.’
In a move to try and compete with supermarkets, Poundland last year launched its first ever lunchtime meal deal, including a sandwich, snack and drink for £3.
The meal deals are a staple of the supermarkets, but Poundland made the move to try and undercut its rivals for price, without the need for a loyalty card.
A one-armed Poundland worker in 2021 karate kicked a ‘shoplifter in Sheffield, South Yorkshire
Shocking footage shows the employee grab the man and put him in a headlock after he allegedly tried to steal products
Poundland has been part of high streets across Britain since it was founded in 1990
However, the chain’s reputation for value continues to falter. the company made a pledge to protect shoppers during the cost of living crisis but research by MailOnline last year showed that some items had increased by up to 50 per cent in price since.
Among some of the price hikes, six-packs of KP Skips and Pom-Bear crisps both increased by 48 per cent from £1.25 to £1.85, while a Discos multipack rose by 20 per cent from £1.25 to £1.50.
Andy Bond, the executive chairman of Pepco, claimed that over the past two or three years, average prices have only increased by a ‘single digit’ and have ‘not gone up more than 10 per cent cumulatively’.
However, he did say ‘some individual items that may have done across the basket’.
Poundland was founded in 1990 by former market traders Steven Smith and his father Keith, who set up the stores to capitalise on the number of pound coins in circulation.
By 2003, the company had opened its 100th store in the UK.
The rise of the budget store saw rivals emerge, predictably the 99p stores brand opened their first store in 2001 and sought to undercut their main rival by 1p.
In 2015, Poundland acquired 99p stores and just a year later the company became part of Pepco Group.
In 2017, the company decided to drop its ‘everything for a pound’ slogan and began pricing all of its products between 50p and £5.
Last year the company struck a deal to buy 64 Wilko stores from administrator PwC after the company collapsed.
However more than a dozen of the former Wilko stores have already been closed by Poundland since reopening, and the retailer currently only retains 46 in their portfolio
While the demise of Wilko presented an opportunity for the company, it signalled the possible beginning of the end for discount shopping.
For decades, Wilko stores were dotted around town centres, offering Brits stationery, gardening supplies, homeware, cleaning products, or simply a tasty pot of pick-and-mix.
In 2024, the family-owned business hired administrators from PwC after it came under pressure from weak consumer spending and debts to suppliers.
PwC then held talks with interested firms but was unable to secure a rescue deal for the whole firm, with a potential takeover by HMV owner Doug Putman collapsing.
As a result, administrators sold off a raft of the company’s assets in order to pay off creditors.
Poundland acquired 64 Wilko stores last year after the rival company collapsed
Another budget retail competitor B&M is also facing difficulties after two profit warnings in a month
Another rival MaxiDeals shut its shops and appointed a voluntary liquidator this month
The future also looks uncertain for another of Poundland’s rivals B&M, as the company’s chief executive recently announced they would be stepping down in April.
It came after the company issued its second profit warning in a month.
Meanwhile, the bargain shop MaxiDeals which was billed as a Poundshop rival went into voluntary liquidation just last week.
The discount retailer was launched just five years ago and deemed a rival to Poundshop and Poundstretcher.
They eventually grew to 24 stores across the country, which will now all be forced to close.
More than 13,000 high street shops shut down last year, a 28 percent increase from 2023, according to the Centre for Retail Research.
Experts are predicting a higher number of closures this year due to tax hikes and wage hikes announced in the Budget by Rachel Reeves in October.
The retail sector has warned of a £7billion increase to its costs this year alone.
