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Retail

Poundland Should Invest In Online To Bring Customers Back, Says Analyst

Single price retailer Poundland should "prioritise" the creation of a functional, transactional website, in order to help draw shoppers back to its business, a UK retail analyst has said.

Jonathan Rock, retail analyst at GlobalData, was commenting following a mixed performance for Poundland and its parent Pepco Group – while the group initially benefited from a surge in panic buying at the beginning of lockdown, sales soon dropped off.

Poundland has previously indicated it plans to launch an online delivery service next year.

Store Disruption

This led to the voluntary closure of 130 stores in April and May, due to reduced footfall, and while Pepco managed to reopen 85% of its estate in May, and almost all stores by June, it had lost trade to rivals such as B&M, setting the business back.

‘In what was looking to be a strong year for Pepco with 14% revenue growth already achieved in the five months to February 2020, the COVID-19 pandemic and subsequent lockdowns have stunted Poundland’s success," Rock said.

"With rivals like B&M boasting UK revenue growth of 33.7% during lockdown (29 March to 27 June 2020), Poundland has been held back by its high street-focused store estate and lack of a transactional website at a time where consumer preference for spacious shopping environments and online capacity has never been stronger."

Rebuilding Loyalty

Rock suggested that Poundland should focus its efforts on attracting back shoppers that switched loyalty to its rivals while stores were closed, noting that its competitive value proposition isn't perhaps as lucrative as it once was.

"Poundland’s value focus will be a significant boon as economic turbulence continues, but one that is matched by many of its competitors," Rock added.

"Whilst it accelerated rolling out chilled and frozen products to its stores to capitalise on the boom in grocery demand, B&M’s Heron Foods fascia increased sales by 21.4%."

Shoppers have "become more comfortable" using online services during the COVID-19 crisis, and in turn are more expectant of retailers' online capabilities, Rock noted.

"Weaponising [Poundland's] well-known brand status would also help draw consumers back, as in such uncertain times shoppers crave the familiarity and trust found in well-established names," he said.

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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