Poundworld has gone into administration, risking 5,100 jobs and the closure of its 355 stores.
The budget retailer of £1 goods sells around 8,000 products including make-up, toiletries, groceries and household items.
Administrator Deloitte said yesterday that Poundworld had suffered from “high product cost inflation, decreasing footfall, weaker consumer confidence and an increasingly competitive discount retail market.”
Clare Boardman, Deloitte Restructuring Partner and Joint Administrator, said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business.
“Unfortunately, this has not been possible. We still believe a buyer can be found for the business or at least part of it and we are keeping staff appraised of developments as they happen.
“We thank all employees for their support at this difficult time.”
- Poundworld was founded in 1974 by Christopher Edwards.
- The BBC reports that Edwards is said to be considering buying back some of the retailer’s stores.
- However he said no deal had been finalised, and that Poundworld “would only survive another two weeks without a buyer”.
What went wrong?
They have missed out on investing in new technologies that improve the customer experience.
Poundworld is just one of a number of high street retailers that have suffered in the UK retail industry of late.
Marks & Spencer announced at the end of May it would close over 100 stores by 2022, while House of Fraser is set to shutter 31 of its 59 stores including its London flagship.
As consumers prioritise economical spending, the number of pound shops on the high street have increased over the last decade.
Chris Haines, Director of Consulting at Amplience, commented: “Poundworld has very clear positioning as a discount retailer.
“But they have missed out on investing in new technologies that improve the customer experience.
“As our expectations for more personalised and convenient shopping expands, even discount retailers are facing a challenge from global online brands such as Amazon and eBay.
“With so many alternative retailers squeezing the low-margin industry, brands like Poundworld now need to embrace all the channels at their disposal.”
Digital engagement was recognised by Haines as an important strategy for pound shops and discount retailers to employ in order to retain a competitive edge.
“Other pound shops are gaining a competitive edge with digital approaches that put their brand in the online world,” he added.
“For example, Poundland’s irreverent ‘elf on the shelf’ Christmas campaign on social media has given the brand a point of differentiation in a market where most retailers are heavily price-focused.
“As consumer wallets are squeezed even further, pound shops can no longer rely on impulse purchases, but should be building customer engagement strategies.”