Poundland sends profits soaring by winning over the middle classes

Two interesting trends emerged today when Poundland, the discount store group that sells over 3,000 items for £1 each, produced spectacular results — pre-tax profits up from £8.6 million to £19.8 million, with sales rising by 28.9 per cent to £509.8 million.

Just as they did with Primark and T K Maxx, the middle-classes are taking advantage of the bargains on offer. Stores in affluent areas such as Cambridge, Stratford upon Avon and Sutton Coldfield are performing very well, as well-heeled shoppers hunt ferociously for bargains.

Like grocers Aldi and Lidl, the chain seems to have avoided the Woolworths stigma by artful offers such as boxes of Maltesers, reading glasses and glam lashes. It has also forced the big branded goods firms to take notice and it now deals regularly with companies like Heinz and Colgate, with branded goods accounting for an increasing share of sales.

Now owned by private equity firm Warburg Pincus, Poundland has 293 stores and is set to open 50 stores this year, including superstores in retail parks, to cater for its growing customer base.

And all achieved by the use of judicious PR rather than massive ad campaigns. No doubt after these results, the group will be on the target list of quite a few UK ad agencies.

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About David O'Reilly

David is a former deputy editor of Campaign and writer for a number of leading titles including Management Today and the Sunday Times. He is a partner in The Editorial Partnership.