Poundland nation: Britain's middle classes flock to discount chain

Firm says it wants more shops than Sainsbury’s as it plans stock market flotation

The dominance of discount chains on Britain’s high streets has moved a step closer as Poundland said it wants to have more UK stores than Sainsbury’s and Starbucks, revealing plans to join the stock market with as value of around £700m.

The firm’s management said it wants 1,000 stores across the UK, doubling the current 500 sites, and added that the middle-class stigma previously attached to the brand has come to an end – with more than one in five of its shoppers now in the top socio-demographic band. Five years ago it was only one in 10.

Retail experts and economists believe the plans by Poundland show a permanent shift in the shopping habits and confirm discount retailers as the big winners from the recession, with its rival B&M Bargains also eyeing up a stock market floatation.

Poundland’s chief executive Jim McCarthy, who will pocket several million pounds from the listing, said: “The value retail sector has been through a period of profound change in scale, customer perception and financial performance. The sector is now a mainstream feature of the UK retail market and Poundland has been a central architect of that change.”

With wages failing to rise in real terms for at least four years, shoppers have felt the pinch and are turning to cheaper retailers.

Matthew Whittaker, senior economist for the Resolution Foundation, explained that income for a typical household has fallen by more than 5 per cent between 2008 and 2012 and is not expected to rise again for at least another year.

He added: “We are still feeling the effects of an unprecedented squeeze on living standards which has seen falling wages and a rising cost of food and other essential items. Given these pressures, many households are making tough choices about how and where to spend their limited disposable income.

“This is unlikely to change until we see a sustained rise in wages.”

Poundland has benefited from the recession, with a rapid expansion seeing stores go from just over 200 five years ago to nearly 500 today. During that time, sales have jumped from £400m in 2008 to £758m in just the nine months to December 2013, and bosses now want to expand into Europe, with 10 stores in Spain already due to open.

Bill Grimsey, former chief executive of Iceland and author of a report into the state of Britain’s high streets, explained: “I think the economic conditions are causing the likes of Poundland and B&M Bargains to transcend socio-economic groups. You’re getting middle-class punters because of the squeeze they have had on disposable incomes, which has led to their success.”

He added that many of the traditional retailers had failed to keep up with the pace of change and that the discounters had managed to win over customers from the likes of Tesco and Morrisons.

Poundland opened its first store in 1990 in Burton-on-Trent and slowly expanded, replacing many of the independently run discount stores. Graham Soult, a retail consultant at CannyInsights, revealed that Poundland took advantage of Woolworths’ collapse, with 93 of its stores located on former sites of the now defunct retailer. Iceland is second with 69 stores, with 99p Stores taking 60 sites and B&M Bargains 54.

He said: “It’s an incredible transformation when you think back to how pound shops were perceived 10 years ago. The growth is coming from ABC1s, which is why you see stores in upmarket towns and shopping centres. By starting to offer quite a nice shopping experience, it has managed to overcome the snob factor of people saying they wouldn’t be seen dead in them.”

Landlords are now welcoming the high footfall offered by discounters and see them as a way to get more shoppers to the high street. Margins at Poundland are also as high as 38 per cent, far higher than supermarkets.

Bryan Roberts, retail insights director at Kantar Retail, explained the appeal of discount shops over supermarkets, saying the latter had too many complex deals for customers to be sure of getting value for money: “People are short on time and want to know instantly whether they are getting a good deal, and pound stores are superb for that.”

PROMOTED VIDEO
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
ebooksAn unforgettable anthology of contemporary reportage
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Front-Office Developer (C#, .NET, Java,Artificial Intelligence)

£30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...

C++ Quant Developer

£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

Java/Calypso Developer

£700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...

SQL Developer

£500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...

Day In a Page

Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

The man charged with inspecting doctors explains why he may not be welcome in every surgery
Stolen youth: Younger blood can reverse many of the effects of ageing

Stolen youth

Younger blood can reverse many of the effects of ageing
Bob Willoughby: Hollywood's first behind the scenes photographer

Bob Willoughby: The reel deal

He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
Angelina Jolie's wedding dress: made by Versace, designed by her children

Made by Versace, designed by her children

Angelina Jolie's wedding dressed revealed
Anyone for pulled chicken?

Pulling chicks

Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
9 best steam generator irons

9 best steam generator irons

To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

Rooney admits England must ‘put on a show’ to regain faith

New captain vows side will deliver for small Wembley crowd
‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

‘We knew he was something special’

Radamel Falcao's journey from teenage debutant to Manchester United's star signing
'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York