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How long can Poundland defy the laws of digital gravity?

Date posted: 15 April 2015   |   Posted in: Blog

Poundland’s growth has been nothing short of phenomenal in the past few years. At the start of the recession in 2008, the pound shop chain had 170 stores with a turnover of £330m. The company has just announced sales of more than £1bn but without a clear digital strategy, has it reached its peak? Just how long can Poundland defy the laws of digital gravity?

Along with Aldi and Lidl, Poundland has primarily focussed its commerce strategy on physical stores. It sells products cheap and aims to sell a lot of them. This smash and grab tactic to take market share away from the big-four supermarkets has worked so far, but with grocery prices falling Poundland may find itself unable to simply compete on price anymore. This is where a Plan B is needed.

Discounters rely on their low prices to attract customers but if they aren’t significantly cheaper, people look to other sources of value when they shop. If a shopper can’t find something cheaper they need something else to keep them coming back. Aldi and Lidl look to do this by creating a “surprisingly good” feeling towards the brand.

Aldi shouts about its award winning wines and spirits as often as possible, all while highlighting the price. Lidl do lots of local direct marketing about its famous weekly special offers. Poundland, however, don’t have much recognition above its “£1 for everything” strategy.

This is where a digital strategy could provide Poundland with its Plan B. With computers, smartphones and tablets hugely outnumbering people in the UK, retailers have a huge opportunity to engage with customers outside of their stores. Whether it’s an ecommerce website, CRM portal or loyalty app, Poundland needs to be looking towards creating consistent digital experiences, regardless of channel, for its customers.

Tesco’s dominance in this sector was achieved largely through its Clubcard scheme in the early 90s. It used the promise of savings and points in exchange for huge quantities of customer data which it used to make buying, marketing and pricing decisions to great success.

It was only when the company lost sight of this data first strategy that allowed them to miss the discounters biting away at its market share.

Digital experiences are pretty much the modern day equivalent of loyalty cards. They offer the customer something, in this case the convenience of buying or viewing something on their phone or computer, in exchange for data.

However, this data provides a much more contextualised understanding of shoppers than when Clubcard was first introduced. As well as activity on its own website or app, companies can now see where they came from and what they were doing before. This context allows companies to create a more in depth customer profile, creating better opportunities for personalised marketing.

With the falling grocery prices, Poundland needs to find its own Plan B to the provide added value for its customers. It may not be a loyalty app, an online CRM portal or an ecommerce website but given the huge value in data, it really should be digital.

Bruce Griffin is managing director of Rockpool Digital


Source: Drum

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