Poundland has recently announced its ambitious plans of opening 30 new stores once lockdown restrictions are lifted on the 12th of April.
The discount retail chain will also reopen 43 of its current stores, creating 400 jobs and a further 250 in September.
This one year plan is due to the chains £25 million package which involves expanding its influence as well as the managing director’s confidence in the reopening of the economy.
“It is fantastic news that our high street neighbours are preparing to get back to business – not just other retailers but the cafés, gyms and hairdressers who make our town centres the vibrant places people love,” Poundland managing director Barry Williams stated.
His confidence may be displaced, although non-essential shops will open on the 12th of April, it cannot be guaranteed that footfall levels will remain the same as their pre-pandemic counterparts.
The lockdown associated with the pandemic has undoubtedly changed consumer habits as more and more individuals favour online shopping methods due to their convenience as well as the reduced health risks, especially for the elderly.
Also, large banking firms such as JPMorgan & Chase have announced that they will be reducing office space to move more staff towards part-time work at home to reduce costs.
This means the high street will see a reduction in footfall levels as there will be fewer office workers travelling to and from work, hence, there will be less spill-over demand between establishments.
Because of this, Poundland’s expansion may not be as successful as the managing director believes it to be as after the excitement of being able to go outside to shop has died down, consumers may return to online shopping.
If this occurs, Poundland will be at a massive loss as they will have several stores which do not bring in enough revenue to be profitable, and, because of this, they may have to close all these establishments.
So, Poundland’s revenues will drastically decrease whilst their costs spiral out of control due to the aggressive expansion placing the retailer at a massive disadvantage compared to its competitors.
If this overtrading does occur, larger retailers such as Tesco will have a massive advantage over the firm as, due to their size, they have access to transport and logistics that are capable of deliveries.
Because of this, Poundland could potentially be put out of business as its larger competitors will be able to appeal towards the changing consumer habits which have occurred as a result of the national lockdown.
We can only hope that high street footfall levels stay the same as if they collapse, many small businesses and retailers will endure harsh losses.
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