Poundland acquires Fulton Foods

Date : 09 October 2020

Lucy Ingram

Retail Analyst

Variety discounter Poundland has acquired frozen food specialist Fulton Foods, as part of its continued evolution towards offering shoppers a greater grocery offering.

What?

The purchase was made for an undisclosed amount, however the retailer has said it is part of a £25m investment into its grocery offering over the next two years.

Key elements of the deal;

  • Poundland will retain all 80 Fulton Food stores, converting some into the full Poundland format, including a frozen and chilled section
  • Fultons' Barnsley base will be transformed into Poundland's national frozen distribution centre
  • The co-owners Karen Rees and Kevin Gunter will remain within the business. Rees has been appointed as managing director and Gunter will remain in an advisory capacity for the next six months
  • Poundland will also now rollout its frozen food range to 500 of its stores. This will start with 40 of its stores by December, bringing the total to 125

Why?

Poundland began working with Fulton Foods in October 2019 when it launched its first chilled and frozen trial in Ashbourne, Derbyshire. This trial proved to be successful and the new range was quickly rolled out to 60 more stores, meaning one in ten stores now have the chilled and frozen shop-in-shop. 50 more items were then added to the range, taking it to 400. 

The new range appeals to shoppers on different missions, helping to extend Poundland's reach and grow average basket size. We have also seen a frozen food revival as shopping habits have changed during the pandemic and with the continued uncertainty the pandemic is causing, this seems a sensible category to be investing in.

The retailer has said;

"The transaction demonstrates the intent of Pepco Group, the owner of Poundland, to invest in widening the customer offer in Poundland while also improving its operational gearing, primarily through reducing the discount retailer’s in-store rents. Together these will build both sales and profit"

How else is Poundland evolving its proposition?

In July 2020 the retailer expanded its grocery its range by adding free from products to 16 stores. 

Poundland also announced significant transformation on the horizon including trialling online delivery in 2021, a new store segmentation proposition and extending its new pricing structure to all categories.

What does this mean for the future?

Poundland's continued evolution is in line with other leading variety discounters Home Bargains and B&M enhancing their grocery offers. Whilst these changes may not make it possible for shoppers to complete a total shop, it helps increase frequency of visit with products shoppers buy most often and helps it appeal to a broader shopper base.

These changes will put even more pressure on other channels and fuel competition in the value segment more widely.

We expect the rapid pace of change to continue as Poundland looks to stay ahead in an increasingly competitive channel.

Looking for more Poundland insight?

Subscribers can learn more about Poundland and it's new frozen range in the following presentations;

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