If a decade ago someone said to you that a budget store would be a serious retail market player, you would have thought they were crazy. In 2014, Poundland is a key presence on high streets up and down the UK. They service almost three million customers per week and are generating profit year in and year out. The rise of Poundland has been amazing, which made their IPO one that went against the curve. Against a backdrop of failing public offerings, Poundland’s soared and was an investor’s favourite. Since the March 2014 IPO investors are asking if Poundland shares are still as appealing as they once were? Or, is now the right time to sell?
Becoming the number one brand in the budget-shopping sector is one thing, but staying there is something else. As an investor, deciding whether to buy or sell Poundland shares will largely come down to how you view the company’s sales strategy moving forward. Poundland has kept theirs pretty simple and it is what has brought them to where they are today. Everything in the store is £1. It sounds simple enough, but as Poundland has grown such strategy has begun to present challenges. Differing rates of inflation have allowed larger chains to get back into the budget market, largely as Poundland’s sales strategy is ridged. What will be music to the ears of investors is that going forward Poundland’s plans to make their strategy more flexible. £2 and 50p sections are suspected to become a feature in stores in 2015. It is clear from such move that Poundland aren’t a one trick pony when it comes to sales tactics, and such move should help cement their place in the market.
If Poundland’s sales strategy moving forward is important in deciding whether or not to buy or sell Poundland shares, then their product selection is just as critical. For a budget chain to maintain success, they can’t fall into the same trap that Woolworths did and fail to freshen up their product line. Poundland has divided their products into three categories, core, seasonal and clearance. Throughout these three lines Poundland introduces 1000 new products per year, while also operating 50 Poundland “sub-brand” product ranges. Keeping customers on board, means keeping on top of trends, something Poundland has clearly figured out how to do. It could have been easy for the company to rest on their laurels after recent successes, investors will be thankful to hear that this isn’t the case.
There is no other way to describe it, Poundland’s IPO was white-hot. Since then Poundland shares have seen huge price jumps occur, making them a commodity that is forcing people sit-up and take notice. The decision to buy or sell will largely come down to how you see the budget retail market as a whole. This is because when it comes to performance within such, Poundland are pretty much in a league of their own.
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