Cheap shops doing great business in the UK

The same economic austerity factor that sent Aldi to the top of the supermarket ratings has put the super-discounter Poundland at the head of the pack in its particular industry niche. Both Aldi and Poundland were launched in the UK in 1990, and both companies expect to open their 500th store sometime this year.

In the first quarter of 2013 Poundland saw its sales increase by 15% to £880m, with its pre-tax profit up by 29% to £23.1m. Partly as a result of this surge in sales, the largest single priced value retailer in Europe is planning to turn its 458 stores in Britain and Ireland into 1,000 over an unspecified length of time. Right now the signs point to that time period being not long at all.

With its strategy of selling all items in the store for £1 or less, the company has filled a much-needed role for many consumers in the current economy of rising inflation and stagnant wages. The appeal of dramatically discounted merchandise that fills a lot of everyday needs is becoming apparent to a larger strata of medium to-to-high income buyers, so much so that Poundland’s executives are talking about a flotation on the stock market after Christmas.

The discount chain has opened 69 new stores so far this year, 17 of them in Ireland where Poundland had only two stores in 2011. Now Ireland has 26 of them, and chief executive Jim McCarthy says that is a good indication of Poundland’s ability to expand in new territory with positive financial returns.