Dealz Represents 'A Blueprint For International Expansion' For Poundland
Published on May 9 2014 6:57 PM in Retail
Single price chain Dealz 'can be considered a blueprint of sorts for international expansion' by its parent company Poundland, according to a report on the group by Shore Capital Stockbrokers.
Poundland has engaged in feasibility work on the opportunity to enter up to 20 European markets in the coming years, and has already committed to entering Spain next year, basing its structure on its successful Irish operation.
The Shore Capital report noted the 'favourable conditions' that preceded Poundland's entry to the Irish market in 2011, 'which included a relatively weak property market with falling rental sales. Additionally, it is probably fair to assert that the competition was locked into higher rents than a potential new arrival, enhancing Poundland's relative competitiveness, in our view'.
The reports also notes the use of a multiple pricing dynamic in its Dealz stores (with products priced at a myriad of round euro prices as well as the standard €1.49), a different dynamic to its 'round pound' philosophy in the UK.
'Whilst over 90% of products sold are at the €1.49 price, the multiple pricing is an interesting development,' it noted, 'to our minds that could have beneficial implications for the long-term commercial evolution of the company; the UK core, development in Continental Europe and any online proposition that may emerge'.
Multiple pricing has also helped boost the average transaction value in the group's Irish stores, where the average transaction is valued at £6.18, compared to £4.44 across the wider group.
Shore Capital also noted that it was 'quite remarkable' that Dealz was profitable in its first year of trading, and has been able to fully repay its investment here in the first two years.
Last week, the Revenue Commissioners approved a share option plan for employees at Dealz, whereby staff that save up to €500 a month for between three and five years can buy shares for a set price at the end of this period and avail of tax benefits.