Poundland chief executive Jim McCarthy has predicted the discount retailer will still be going strong after 50 years as it celebrated its 25th anniversary.
The company marked its 25th birthday with a 1990s-themed fundraising celebration with Macmillan Cancer Support at its Willenhall headquarters and Mr McCarthy told the Post he expects the firm to continue its “tremendous growth” both at home and abroad.
“Poundland is a growth story, a Midlands growth story that has become national,” said Mr McCarthy, though he conceded there were those who thought its £1 retailing concept was a ‘crazy idea’ when it was founded by Steve Smith in 1990.
“Customers got the value straight away but I think the pundits and the analysts couldn’t understand,” he said.
“It is something that is quite difficult to understand. How can a company sell at a fixed price?
“Given inflation, if you have got your cost base going up how can you keep selling at a pound?
“What they didn’t know was across the pond, in the US, there were three dollar shops - Dollar General, Family Dollar and Dollar Tree - selling everything at a dollar or less.
“Dollar Tree is over 50 years old now. If that can be going for 50 years then Poundland can be around for a very long time.”
Last year Poundland saw growth of between 13 and 14 per cent, opening around 60 stores and creating 2,000 jobs. Its total turnover was £1.1 billion.
It has also expanded its operations beyond the shores of the UK with its Dealz chain in the Republic of Ireland and less than a year ago it launched in Spain, where it now has six stores.
It is currently awaiting a decision by the Competition and Markets Authority (CMA) on its proposed takeover of rival chain 99p Stores, in a deal that will see it pay £47.5 million in cash plus £7.5 million in new shares.
A decision is expected in October and would see it acquire 251 new stores, which would be rebranded as Poundland, in one fell swoop.
If it goes ahead it is likely to see the firm revise its estimated UK store capacity up from around 1,000 to 1,450 stores.
“We certainly believe it is in the interests of our customers,” said Mr McCarthy.
“Javelin Strategy & Research has already told us we could trade from well over 1,000 Poundland stores in the UK.
“If the CMA approves the 99p Stores acquisition that adds in growth for 99p Stores, so Poundland could then go up to 1,450.
“That gives ten further years of growth in the UK.”
The first Poundland store opened for business in Burton on Trent 25 years ago and did £13,000-worth of business on its first day.
Mr McCarthy believes the firm has a simple recipe for success.
“Poundland found a retail proposition that was compelling for customers and it has been like that for 25 years,” he said.
“We punch above our weight in the products we sell so are disproportionately important to suppliers.
“We have the ability to source globally and offer manufacturers genuine growth at a time when they are not getting it from other retailers.
“All that enables us to keep at that single price of £1.”
As to why Poundland is thriving in the retail sector when the ‘big four’ supermarkets are struggling Mr McCarthy pointed to changing shopping patterns, and with the average family now estimated to buy groceries from four different retailers, Poundland is well placed to capitalise.
He said: “The recession started in 2008 and people started to think about value in a different way.
“They started to shop carefully - savvy shopping they call it - wanting to get value and make their hard-earned money last longer.
“The difference between the recent recession and 1989-90 was access to discount and value was so much greater.
“Aldi and Lidl now have 1,000 stores, we have got 600 and Primark has got stores in every major UK city.
“The wider thing that changed was the internet - so customers could access in real time where the bargains were.
“Everyone had access and more especially could take that up with either physically visiting stores or ordering online.”
Acknowledging Poundland keeps a close eye on supermarkets and tries to benchmark its value against the cheapest of the big four Mr McCarthy admits the pace of change did surprise him.
As a result he believes retailers have to flexible, innovative and open to change.
“In retailing you have to try and develop and progress - every minute, every hour, every day,” he said.
“If you stand still that is dangerous.
“We are constantly innovating, constantly thinking about how to do things better but always with the customer at the centre of that.
“Customers have a 99 per cent brand recognition for Poundland and I think it has got a special place in hearts of customers..
“They love the value, the fun and the treasure chest - the Pandora’s Box - experience..
“A lot of people go in just to see what we have this week. We have 200 new products each week and 200 that are deleted.
“There is something new and stimulating for everyone that comes in to our stores - that is part of our magic.”
Mr McCarthy says he is “totally” confident Poundland will still be around in another 25 years and offering customers even more.
He added: “The example of the dollar shops in the US underpins my notion Poundland will be around.
“If you look forward 25 years Poundland will be bigger and serving more people,
“I think we will be well developed in Europe, will have e-commerce ability, click and collect, contactless payment and other formats we can develop along the way.
“The only thing that is going to stay the same is the value but around the offer you will see new products, new services, new formats - all over the next 25 years - all with the object of pleasing more customers. That is the best way to make a profit.”