Retailer Dealz plans to expand in Ireland and broaden its offering
Poundland and Dealz managing director Barry Williams says group also aims to compete in fresh and frozen food
DISCOUNT retailer Dealz still plans to open 10 new outlets in Ireland this year and could open as many each year for the foreseeable future, according to managing director Barry Williams.
He also heads Poundland in the UK, and said the group intends to significantly expand its fresh and frozen food presence there, putting it in more direct competition with existing grocery retailers.
It is trialling the expanded food offering in 20 stores in the UK at the moment, and is also looking at rolling out the fresh and frozen food category to Ireland.
Dealz currently has 65 stores in Ireland, with 92 across the island. Almost all have remained trading during the pandemic crisis.
“It’s quality, not quantity that I’m after,” Mr Williams told the Irish Independent.
“If we expand at another 10 stores a year, I can see that happening for a good few years yet. There’s plenty of room for us to expand further in Ireland.”
Dealz and Poundland are part of the Pepco group, which is owned by South Africa’s embattled Steinhoff group.
There are almost 900 Poundland stores in the UK.
Mr Williams said the trialling of the expanded fresh and frozen produce range in the UK is “going gangbusters” for the retailer.
The offering will be rolled out to 70 stores in total once it’s safe to do so given the current environment.
“Chilled and frozen is a great example of a category that is a massive market that we don’t really play seriously in,” he said.
“If we can add a great offer of that to our portfolio, then I’m sure we’ll attract further customers and hopefully get a bit more spend out of the ones that we’ve got.
“As customers stay local and look for more value, what we want to do is broaden our proposition so they view us as a genuine either top-up shop or weekly shop,” he said.
The UK pilot stores stock a range of staples such as ice cream, pizzas, frozen vegetables, fish fingers, dairy, hams, poultry and other meats.
“It’s just covering off the basics really – a bit similar to what you’d see in other discounters,” according to Mr Williams.
“That is a massive market that we don’t operate in at the moment, so it’s all white space to us.
“We’re working on the plans and the options to roll that out right across the board, and that would include Ireland as well,” he said.
Rolling it out to the entire Poundland estate will take about 18 months to two years, according to Mr Williams.
‘There’s plenty of room for us to expand further in Ireland’
BARRY Williams has retail in his blood. As a teenager, the Scouser started out packing shelves at a Kwik Save store after leaving school. Now managing director of the UK-based Poundland chain that trades as Dealz in Ireland, the Liverpudlian is facing the toughest challenge of his already long career.
“We’ve experienced all parts of this,” he says. “We saw the big stock-up as people stockpiled in March, saw sales fall away, and then gradually rebuild. I wouldn’t say we’re having a great time, but we’re still out there trading.”
There are 65 Dealz stores in Ireland, with just two of those having been put into hibernation during the pandemic. There’s 92 on the island of Ireland, while Poundland trades out of about 900 outlets in Britain – 700 of which remained open in the past number of weeks.
While sales of lines such as clothing had been doing well prior to the pandemic, it’s necessities that have been by and large the biggest sellers of late. Hardly a surprise.
“Retail is usually a pretty good barometer of where the mind of a nation is,” says Williams (49), pointing out that food, essentials and medicines have been top sellers. Vitamin sales are up more than 100pc in recent weeks. But home and DIY products have also done well.
“Last week was a record for sales in our gardening range. But pregnancy testing kit sales were up over 50pc as well,” he says.
Picture-perfect gardens and a baby boom will be just two of the pandemic’s legacies, it seems.
And Williams also thinks the pandemic will cause a structural shift in the retail trade.
That will be two significant impacts in the space of a decade.
During the financial crisis, German chains Lidl and Aldi saw their share of Ireland’s multi-billion euro grocery market increase as shoppers tightened their belts. By early 2013, the pair had a combined 13.1pc share of the market, with both putting in strong performances as consumers coping with pay cuts and higher taxes struggled to make their money stretch further. Today, Lidl’s and Aldi’s combined share of the market is almost 24pc, according to research group Kantar.
Without the financial crisis, perhaps they wouldn’t have reached their current positions as quickly.
“As we come out the other side, people are still going to need to be fed, clothed and entertained,” says Williams.
“That’s the sort of business that we’re in,” he adds. “Everything that you see in terms of the economy and the recession that it seems obvious we’re heading into, just means that customers are going to look for value even more and that’s absolutely the market that we play in.
“I think there’s going to be a couple of really key trends that will play to us: customers are going to be looking for value because of the challenge that the economy is going to present them, and I think they’re going to remain staying local,” he predicts.
“I think a number of Dealz customers have experienced the proposition for the first time as part of this, and I hope they’ve had a good experience and decide to stick with us.”
Williams says there’s two types of model in retail: the every day low-price retailers, such as Dealz, Aldi and Lidl, which price items “right” first time; and the high-low operators who he says are “expensive on all the core stuff, but they try to distract you by putting promotions in”.
Williams once worked for the UK operations of Cork-based retail group Musgrave, which controls SuperValu, Mace, Daybreak, Donnybrook Fair and Centra here.
“The subtle thing that’s happening at the moment is that with the vast majority of the high-low retailers – all of the promotional activity has been removed,” claims Williams. “Now, they would argue that they’re doing that because they’re trying to maintain availability because of the spikes in demand. But really, they’re creaming those customers and I think those customers are seeing really expensive baskets. It could perpetuate the move to discounters even more.”
All much-needed good news then for Poundland’s and Dealz’s ultimate owner – South Africa’s Steinhoff International – if the prediction proves correct.
The stock market-listed global retailer – with a market capitalisation of €211m (it had a €14bn market cap in late 2017 just before an accounting scandal) – has units that sell everything from clothing and general merchandise to building materials, electronics and home furnishings. Its Pepkor subsidiary, which trades in Africa, is separately listed in South Africa, with a €1.8bn market cap.
Dealz and Poundland are stuffed into Steinhoff’s Pepco unit, which operates a total of about 2,800 stores in 14 countries across Europe. Poundland and Dealz generated revenue of £546m (€610.5m) in the three months to the end of last December, representing a 1.3pc like-for-like increase in an environment where many high street retailers were already in decline before the pandemic struck.
The latest full set of accounts filed for Poundland in the UK show that it posted sales of £1.5bn in the year to the end of September 2018, and a pre-tax profit of £15.2m. Its adjusted earnings before interest, tax, depreciation and amortisation were £45.5m.
This week, Steinhoff’s chairwoman resigned after it emerged that she didn’t properly disclose dealings between an investment firm she had a stake in, and a company linked to the retail group.
Just before the pandemic, there were rumours that the Poundland and Dealz business were being targeted for a potential buyout by a consortium of private equity groups that could have valued the Pepco division at more than €4.5bn.
Williams dismisses the reports and who knows what the post-pandemic M&A landscape will be like.
“It was speculation back then,” he says. “The most important thing is looking after our colleagues and customers and running a really good business.”
Amongst the boosts for its staff given the current climate, Poundland and Dealz workers have been given an extra week’s paid holidays this year, some additional discounts, and won’t have to work on St
‘As we come out the other side, people are still going to need to be fed, clothed and entertained’
Stephen’s Day here or in the UK this year. There are 18,000 workers between Poundland and Dealz, with 1,300 in Ireland.
Meanwhile, Williams insists there will always be a place for Dealz and Poundland on the high street, despite the carnage that was being wrought even before the crisis and which has intensified dramatically since.
“There’s always going to be a bit of an evolution of it,” he says.
“When I look at the numbers for the UK market, and I’ve no reason to believe that the Irish market is any different, there are two main customer trends that have been happening for the last five or 10 years.
“That’s a migration out of the major multiple box retailers and they’re going to two places, either online or to the discount channel,” he says.
“The migration to the discount channel has been far greater than has been to online.
“So I think we’re ideally placed to benefit from that,” he said.
“There’s more than enough traffic on the high street for me to do my business plan 10 times over in all of our markets.”
‘They’re going to two places, either online or to the discount channel’