Half a million garden gnomes can’t be wrong, can they?

Twenty years ago when we were in the last recession (albeit a mini and shallow one compared to this time) there were very few discount retailers around – well certainly not of the form that are strong today.

A good example would be Poundland which did not exist at that time, but has this week reported pretty good figures – sales up c22% and underlying earnings up 26.5%.  It has just opened its 400th store in the UK, has 13 Dealz stores in Ireland and is ambitious for expansion in Continental Europe (using Dealz as its name, as changing Poundland to ‘Euroland’ would be just too toxic).

As the Scottish Chief Executive, Jim McCarthy said “there is definitely some structural shift going on in shopping values”.  That belief explains why he thinks there could be 1000+ stores in the UK.

Current turnover is £780m from 400 stores, which means that if they got to 1000 stores then they would be at £2bn turnover.  Now, close to 1000 stores, £2bn turnover – where did I last see such figures?  Ah yes, Woolworths just before it closed.

Now for me Poundland is what Woolworths should have been, but history and other factors meant Woolworths was never was able to adapt and change quickly enough.  And possibly brand manufacturers did not support them to the extent they are backing Poundland. Poundland on the other hand seems to be a strong business focusing on getting specific things right for consumers.

But, should we be worried at Poundland’s ambition?  Do companies need 1000 stores in modern Britain or is the rush for growth sowing seeds of problems to come?  Many chains are downsizing, so is this reckless or recognition of great opportunity. Perhaps it is reflective of a future polarised retail sector amongst the ubiquitous mass market chains (1000+ stores in the UK), the upper hierarchy flagships (50/75 stores), the internet and a sprinkling of interesting independents?  And for Poundland perhaps the most interesting question of all – will shoppers who have changed to discounters in the recession, stay with them as the recession eases? Are we really seeing a consumer structural change?

Currently half a million garden gnomes – the number sold by Poundland last year, according to The Guardian – are silent testimony to Poundland’s success carrying on for a while yet. How can they sell this number of gnomes (and who is buying them) in the heart of the deepest recession we’ve seen in generations?

About Leigh Sparks

I am Professor of Retail Studies at the Institute for Retail Studies, University of Stirling, where I research and teach aspects of retailing and retail supply chains, alongside various colleagues. I am Chair of Scotland's Towns Partnership. I am also a Deputy Principal of the University, with responsibility for Education and Students.
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