Poundland's parent company Pepkor has released its latest financial results for Q1.

Poundland: positive results driven by clothing

• Total revenue: €516m (GB£433m) an increase of 0.6%
• Stores: 882 an increase of 0.2%

Despite the broadly flat performance Pepkor was happy with the results, given the weak UK consumer backdrop.

The results built on the positive Q4 results of 2018. Pepkor has said this is being primarily driven by the successful introduction of clothing 'shop-in-shops', which are now in over 300 stores. By extending the product range and supporting a broader range of price points stores are performing well and delivering strong returns on invested capital.

Poundland opened 13 new stores in 2018 and relocate three stores to larger locations. Poundland is expected to continue to expand in 2019, but Pepkor have not said by how many stores. 

Developing its proposition in a competitive channel

Despite the closure of Poundworld in July 2018 we are seeing increasing competition for all the variety discounters. This includes the launch of One Below, the new chain created by Poundworld founder Chris Edwards. But also, format innovation in existing retailers as they continue to develop concepts to engage value seeking shoppers.

Poundland recently announced plans that it was creating a new transformational team to develop its store proposition, in The Grocer. This will be led by Mat Ankers. Ian Keyworth will report into him as head of operational change. Poundland's retail director, Austin Cooke, has said possible developments are making the stores closer to department stores. 

Dealz: continued expansion

Dealz stores continue to perform well, with Spain said to be delivering positive like-for-like performance. Pepkor is looking to build on this and expand the estate further. This includes entering new market Bulgaria with 10 stores, and opening a further 14 stores in Poland. This will take the total Dealz stores to 60.

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Pepkor Europe-owned Dealz, part of the Poundland family, plans to open 20 stores in Spain over the next three years. Dealz currently has 10 stores in Spain, after opening two in Q4 2018. InfoRetail reports the news as part of an interview with the company.

Targeting shopping centres and high streets

Dealz will continue to open its new stores in shopping centres and high streets and start opening in retail park locations. Geographically, the openings will be split between Madrid and Valencia. The stores will have sales areas of between 750 to 1000 sqm. Around 5,500 items will be sold, 2,500 of which cover its clothing range.

Dealz has upgraded the clothing section in some of its existing stores and has seen higher than expected sales growth. In a Madrid store the average price of clothing items is €1.50. If the expanded clothing range is successful in the initial tests, it will be rolled-out more widely.

Sales growth driving expansion

Dealz performed well in Spain in FY 2018 with positive like-for-like growth. In Q4 2018 Dealz saw 10% sales growth, two percent more than Q4 2017. Read Pepkor Europe’s full 2018 results here.

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We bring you three examples of how value retailers are finding new ways to stand out and drive sales this Christmas.

Poundland: pre-wrapped Secret Santa gifts

Poundland is trialling a 'secret santa' aisle in its Stratford store. All of the products cost £1 and are pre-wrapped, making the purchase a secret for the shopper also. The initiative is aimed at workplace secret santas, where colleagues usually buy low budget gifts for each other. Depending on its popularity, Poundland will consider rolling this out to more stores next year. The secret santa aisle is great way for suppliers to understand how Poundland aims to be inventive and fun for its shoppers; and it attributes this to its success. Read the latest Poundland results here to see how the retailer is performing.

Iceland: online exclusive '12 deals of Christmas'

Iceland is running an online exclusive promotion called '12 deals of Christmas' from Monday 10th December to Friday 21st December. A new product is put on promotion each day, with its strong value proposition being the key sales driver. Promotional mechanics vary e.g. £1 off or half price, however the offer states 'when it's gone, it's gone', encouraging online shoppers to take part in the promotion. The promotion is available with next day delivery only: a tactic to encourage shoppers to complete their transaction and spend up to £35 to qualify for free delivery.

Lidl: calling out higher priced retailers with billboard campaign

In a response to premium retailers M&S and Waitrose, Lidl has created billboard adverts to highlight its comparatively lower prices. The adverts show Waitrose and M&S-style banners overlaid with Lidl's own marketing to highlight the quality and price of several products such Christmas puddings and mince pies. This campaign to promote its Christmas products ties in with Lidl's strapline 'Big on Quality, Lidl on Price', and aims to remind shoppers that Christmas can be upgraded to quality products without over-spending. Last year Lidl was the winner at Christmas with the most growth (16%) and we expect a strong seasonal trading period this year too. Retail Analysis subscribers can read our Christmas 2018 forecast here.

Want to know more?

Retail Analysis subscribers can access our latest insight report on Christmas 2018 retail innovations here.