Poundland sells for £1

With around 100 store locations and over a 1000 jobs under threat as part of a ‘restructuring’ initiative, discount chain Poundland is giving ground in the midst of increased competition in the budget retail market.

Poland’s Pepco group, who acquired Poundland back in 2016, who have now sold the discount business to US investment firm Gordon Brothers for the nominal sum of £1 - a serendipitous number in relation to Poundland’s raison d’etre.

Yet why, despite what should have been fortuitous market circumstances for the discount retailer in the wake of economic recession and uncertainty, has Poundland struggled in the last few years?

The storm of Brexit had provided the perfect opportunities for business takeovers back in 2016. Having recently bought out competitor 99p Stores in 2015, Poundland itself found itself mired in falling profits and share value.

The acquisition of 99p Stores in 2015 should’ve removed a direct competitor and expanded Poundland’s customer base, yet the integration costs and ensuing uncertainty from Brexit delayed any emerging benefits from the takeover. 

Brexit was not the only political headwind interfering with Poundland’s success. While under the management of Steinhoff International, Poundland’s then parent company accumulated between 2017 and 2019 summing $10 billion. 

These debt problems were exacerbated by a corruption scandal over accounting fraud during the same timeframe. Investigation by German tax authorities led to the resignation of Steinhoff CEO Markus Jooste in 2017. 

The summary report in 2019 found that several Steinhoff executives were culpable of accountancy fraud, and therefore, had artificially inflated the profits and value of Steinhoff International (Hence, Poundland).Regardless, Poundland itself had failed to produce satisfactory business results compared to the other two participants of Pepco Group, Pepco and Dealz . 

The most recent statistics show Poundland having achieved -6.5% growth in the six months leading up to March 2025, with Pepco and Dealz growing their revenue by 9.3% and 13.8% respectively. 

With such chronically flat growth, and Dealz exhibiting remarkable momentum in the continental and Irish discount markets, Poundland has in effect, been letting the team down.Poundland would make a strong case study for the long-term decline in the UK high street, as e-tailers continue to encroach on customers through superior value and choice, and footfall continues to dwindle. 

The iconic discounter’s circumstances are not entirely external however; it has failed to provide a satisfactory store experience and maintain food quality standards when up against the likes of the increasingly popular Lidl and Aldi, the latter of which scored a 78% score on YouGov’s popularity index. 

These two budget supermarkets won massively during the Covid pandemic and recession aftermath, and both consistently rank high on watchdog Which?’s annual supermarket satisfaction survey. 

As for Poundland, it has not been helped over public concerns over food quality management, nor the continued hiking of prices beyond the £1 mark since 2017; a move perhaps made inevitable by the reality of inflation, yet to consumer perception a breach of the brand’s foremost USP - and its own name.Now the US Gordon Brothers intend to restore profitability, with Managing Director Barry Williams planning to cut back on Poundland’s store territory. 

Up to 150 store locations are threatened with closure, and 2000 jobs at risk as part of cost reduction initiatives, as well as rent renegotiations. 

Crucially, Poundland will discontinue frozen and selected chilled product lines, not only to restore focus on core offerings, yet perhaps to also break off indirect competition with Iceland and Lidl, who have proven remarkably successful in this segment.It is doubtful if Poundland will ever contend toe-to-toe with value supermarkets such as Aldi, yet its descent from its primary position as a high street staple is still far off. 

Relegation to the rank-and-file of the discount convenience store is evermore likely, although perhaps it could take inspiration from Lidl’s store layout strategy of the ‘middle aisle’ - containing miscellaneous household items at heavily discounted prices. From there, a name change could also be in order, for it betrayed its ‘Everything £1’ promotional slogan a long time ago.