Strategic Analysis of Poundland Limited (Research Paper Sample)

Strategic Analysis of Poundland
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Introduction:
Poundland Limited is a British Public Limited Company established in the year 1990 by Dave Dodd and Stephen Smith. The company is a variety store chain with several stores within the country. The company stores various products mainly kitchenware, household goods, healthcare and several other different commodities. The products get divided into 16 categories by Poundland, and most of them are named in terms of their brand name and clearance products. The company boasts of over 10,000 employees according to its 2013 audit. Poundland currently operates over 400 branches in the United Kingdom, and its headquarters are located in Willenhall and West Midlands (Poundland Official Website, 2015).
The Poundland Company employs the price-point retailing strategy for all its operations. The company operates a continually revolving merchandise throughout all its stores. All these products get sold at the sole amount of just £1. Poundland regards itself as one of the first companies to introduce the price-point retailing strategy in the entire European retail market. The company remains one of the largest single price discount retailers across the whole of Europe. The company serves over 4 million customers averagely per week. Their yearly revenue is past the £900 million mark with an operating income of over £30 per year (Annual Report, 2014).
Overview and Analysis of Poundland Limited
Poundland mainly operates and competes in the retail business. The retail industry has faced a period of economic ups and downs within the last decade. However, Poundland has always posted positive results with a steady profit growth in the last few years. There was a significant slowdown in the retail industry throughout the world in 2009 during the global financial crisis. The slowdown affected Poundland, but the company has been able to turn around its fortunes and is currently among the best performing retail companies throughout the world. The company has a strong customer base comprised majorly by female shoppers. The company faces several competitors within the retail market in the UK with the main actors being Poundworld and 99p stores (Annual Report, 2014). These stores might not be as big as Poundland, but they offer a serious threat to the company with their prices reduced by a penny. Poundland Limited is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.
Poundland's Current Business Strategy
The company currently enjoys a substantial market share and regional brand recognition: The Company has set up several branches across the United Kingdom and is also a significant player in the Northern Ireland market. It has over 400 stores spread across this region. Poundland is the most recognized price-point retailer brand in the UK and is the largest price-point retailer in the entire European region (Kollewe, 2012).
The company applies a strategy of offering their products at a standard price of £1. "Yes, Everything's £1!" is their major catchphrase that attracts several shoppers. Such a strategy ensures the company attracts several customers who do not wish to spend more. Poundland has a strong market position as well as an enormous brand recognition throughout the market. These are the factors that have ensured Poundland has a strong competitive advantage over its competitors (Wallop, 2012). The company is also looking to grow and expand not just in the UK but in other regions. Plans are in place to purchase one of their major rivals, 99p this year (Paton, 2015).
Poundland has continually realized significant economies of scale due to their efficient distribution channels and good working relationships with their suppliers.
Poundland has always ensured high-quality products remain available in their stores. Despite their low prices, the company has earned a reputation among its customers for offering high-quality goods at lower prices. The high-quality products combined with low prices is a major attraction for most clients (Danziger et al., 2014). Most customers regard their products as the best value for their money. Such strategy has ensured most consumers prefer goods from Poundland as they are not only cheap but of high quality.
Most of Poundland’s stores are situated in strategic places across the UK. The Company targets areas with high traffic and clear visibility to the public. They are visible in several downtown and suburban retail centers across the UK. They also target Business Offices and Campuses where there is high traffic of people. Other stores are situated in rural areas while others are located busy highways. Such a strategy has ensured the company maintains significant competence and advantage that enables it to enter prime markets. Their brand visibility also allows them to convince more customers to try their stores.
Poundland stores are structured to appeal to the local community in which they serve. The stores get designed in an environmental friendly way, and they have a ‘cool’ factor attached to them to attract more customers. The interior decoration o0f the stores is made to portray a warm atmosphere, and there is great music in the background to entertain shoppers. These factors make shopping at Poundland an unforgettable experience for most customers (Jackson, 2008). The strategy ensures that each store gets designed in a way that relates to the local market thus making them uniquely beautiful.
Poundland is well known for its friendly base of employees who are always ready to listen to the customers. The company’s workforce is the principal assets of the business and is highly valued. The employees receive high remuneration packages as well as several other benefits. The company’s effective management of its employees has ensured that they have a happy workforce, and thus they offer excellent service to the customers.
Poundland Company has a huge customer base in the UK market. They have ensured the client base remains intact by providing loyalty-based programs to keep this customer base. They offer rewards to their loyal customers and also offer discount for most of their products. The Poundland Card is one of the initiatives that offers shoppers convenience as well as offer them chance to get rewards from the company (Jackson, 2008). Such a strategy ensures they keep their consumers while also attracting more.
The company Poundland sells some of its products packed in customized Poundland logos. Such a strategy offers the company with the opportunity to further improve on their brand. The company now packages its products in several other sub-brands to increase their sales. Such a move has ensured the monetization of their sub-brands for future growth. The company is also able to repackage some products to make them more appealing to the consumers.
Poundland has embraced new technology and is always adapting the technology. They have a mobile app that allows customers to access products being sold in their stores without setting foot in those shops. The company also uses advanced point of sale solution technology by Epson. This technology enables the company to track the products that customers prefer in their stores so as to inform their decision-making when it comes to ordering their stock (Danziger et al., 2014). Such strategies ensure smooth running of business operations by the company. They also help in ensuring all products are regularly available in their stores.
The company Poundland is a significant brand image within the UK market. They could increase their brand visibility into other areas. Already, the company is thinking of adopting a new name for their expansion into Europe. The company hopes to use the name D€ALZ, which the management thinks would be more appealing to different customers across the Eurozone.
Analysis of Poundland’s Environment and how it has helped their strategy
We will carry out a SWOT analysis of Poundland as well as Porters Five Forces to be able to understand the environment that Poundland operates. Poundland was the first shop in the entire Europe region to adopt this strategy of price-point retailing. As such they were regarded as a pioneer in the industry. Most other competitors modeled their operations following Poundland’s strategy. The company remains the largest price-point retailer in the entire UK market (Bolton et al., 2010). The current business environment has affected Poundland either negatively or positively. This part will look at how Poundland has been able to use both these positive and negative effects of the business environment to its advantage.
There has been increased government scrutiny in this industry within the last few years. Consumer rights group have also been monitoring this industry keenly as well as several other relevant bodies. The primary source of concern for these organizations is the notion that most of these price-point retailers offer misleading prices of their products to gullible customers. Some industry experts argue that most of these companies use unethical business practices to attract more customers. Poundland has been accused of such practices, but no evidence has been found to back up that claim and s no charges to the company. The company remains a top attraction for most shoppers who believe they offer fair prices for their products.
The company’s operations get mainly concentrated in the United Kingdom market which may prove catastrophic in the future. The current business market in the UK is unpredictable, and there is no guarantee that Poundland’s success will remain in the long-haul. Most of Poundland’s revenue is from this market and so if anything goes wrong the company stands to ...