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Discount retailer Poundworld has appointed administrators, putting 5,100 jobs at risk.

The move came after talks with a potential buyer, R Capital, collapsed leaving Poundworld with no option other than administration.

Poundworld, which serves two million customers a week from 335 stores, also trades under the Bargain Buys name.

Administrators Deloitte stress the stores will continue to trade as normal with no redundancies at this time.

It said in a statement: "Like many high street retailers, Poundworld has suffered from high product cost inflation, decreasing footfall, weaker consumer confidence and an increasingly competitive discount retail market.

Clare Boardman, joint administrator at Deloitte, said: "The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business.

"Unfortunately, this has not been possible."

She said Deloitte believed a buyer could be found for the business, or at least part of it.

A spokesperson for Poundworld''s owner, TPG said filing for administration had been "a difficult decision".

"Despite investing resources to strengthen the business, the decline in UK retail and changing consumer behaviour affected Poundworld significantly," they added.

Poundworld has been losing money for the past two years. Losses for the financial year 2016-17 were £17.1m, up from £5.4m the year before.

Tough

It's the latest High Street retailer to run into trouble.

Just last week, department store chain House of Fraser said it would close 31 of its 59 shops, citing the need to adapt to "fundamental change" in the retail industry.

A combination of falling consumer confidence, rising overheads, the weaker pound and the growth of online shopping have made it tough for traditional retailers.

Electronics chain Maplin and toy chain Toys 'R' Us both collapsed into administration earlier this year.

Other High Street chains such as Mothercare and Carpetright have been forced to close stores in order to survive.

Restaurant chains such as Italian chain Carluccio's, pizza restaurant Prezzo and burger chain Byron have also had to close stores as they battle a triple-whammy of falling trade, higher costs and increased competition.

Analysis by BBC business correspondent Jonty Bloom

Only a few years ago Poundworld was expanding aggressively, now it is set to become yet another High Street casualty.

It has, of course, been hit by the usual suspects, lower consumer confidence, falling footfall and more online shopping.

But for pound shops these problems can be multiplied; for a start they depend on high turnover because the margin of profit when everything is sold for a pound is minute.

Then they import a lot of what they sell, including large amounts from specialised suppliers in China. The weakness of the pound has pushed up the cost of imports and when by definition it is impossible to increase their prices, the squeeze on pound shop profits can be dramatic and very sudden.

'Too many mouths'

Independent retail analyst Richard Hyman said Poundworld was simply not managing its business well enough. "The clue's in the name: These days having a fixed price in the title is a disadvantage but it is not a killer disadvantage.

"Importing products is not peculiar to Poundworld but others have been getting round this by getting manufacturers to put fewer biscuits in the pack, for example.

"The bigger picture is there are too many retailers with too many stores for the market to feed."

But despite the collapse of so many stores, David Gill, the national officer for the Union of Shop, Distributive and Allied Workers, was not wholly pessimistic: "When Toys R Us went into administration we had a number of retailers we work closely with saying 'there are job vacancies can you point them in this direction?', but whether you can absorb all 5,000 jobs that's another discussion."

Poundworld, which has its headquarters in West Yorkshire, was formed in 2004, but it says it can trace its origins "back to 1974 and a market stall in Wakefield, West Yorkshire".

In 2014 Poundworld's founder Chris Edwards took a central part in a BBC documentary about the intense competition between the company and its rivals Poundstretcher and Poundland.

Investment company TPG, which bought a majority stake in Poundworld in 2015, also controls the restaurant chain Prezzo whose landlords and creditors agreed a restructuring last month.</s>Poundworld has become the latest retail casualty on the British high street as it called in administrators on Monday, putting 5,100 jobs at risk.

The budget retailer has appointed Deloitte to handle an administration after last-ditch rescue talks with R Capital broke down over the weekend.

Poundworld, which is owned by TPG Capital, has 335 stores. Its collapse comes after both Toys R Us and Maplin fell into administration earlier this year.

Deloitte will try to find a buyer for the business, and has said there are no redundancies or store closures at this time.

Clare Boardman, joint administrator at Deloitte, said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business. Unfortunately, this has not been possible.”</s>Poundworld has become the latest retail casualty on the British high street as it called in administrators on Monday, putting 5,100 jobs at risk.

The budget retailer has appointed Deloitte to handle an administration after last-ditch rescue talks with R Capital broke down over the weekend.

Poundworld, which is owned by TPG Capital, has 335 stores. Its collapse comes after both Toys R Us and Maplin fell into administration earlier this year.

Deloitte will try to find a buyer for the business, and has said there are no redundancies or store closures at this time.

Clare Boardman, joint administrator at Deloitte, said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business. Unfortunately, this has not been possible.”

She said the business was hit by falling footfall, alongside rising costs and weak consumer confidence.

A spokesman for TPG said putting the business into administration was a “difficult decision”.

“We invested in Poundworld because of our belief in how the company serves its customers and the strength of its employees,” he added.

“Despite investing resources to strengthen the business, the decline in UK retail and challenging behaviour affected Poundworld significantly.”

It is understood that TPG and Poundworld’s management rejected offers to buy the business out of a pre-pack administration, and were hoping to sell it as a solvent business.

Other parties named as possible buyers were turnaround specialist Alteri Investors and Poundworld’s founder Chris Edwards.

But a deal could not be struck.

Poundworld’s losses widened in 2016-17 to £17.1 million, from £5.4 million of losses the year before.

The news came just days after House of Fraser detailed its plans to shut 31 stores, affecting around 6,000 jobs.

House of Fraser is seeking landlord approval for the restructuring plan, which is a form of insolvency known as a Company Voluntary Agreement (CVA).

A raft of CVAs have been struck in recent months as retailers struggle amid surging costs, rising business rates, competition from online rivals and a slowdown in consumer spending.

Other retailers undertaking CVAs in a bid to keep trading include New Look, Mothercare and Carpetright.

Restaurant businesses have also been seeking to cut their costs with store closure programmes, with Carluccio’s, Byron and Prezzo all pushing through CVAs this year.</s>Talks with potential buyer R Capital collapsed meaning the chain had no other option but to put Poundworld into administration.

Administrators Deloitte stress the stores will continue to trade as normal with no redundancies at this time.

It said in a statement: "Like many high street retailers, Poundworld has suffered from high product cost inflation, decreasing footfall, weaker consumer confidence and an increasingly competitive discount retail market.

Clare Boardman, joint administrator at Deloitte, said: "The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business.

"Unfortunately, this has not been possible."

She said Deloitte believed a buyer could be found for the business, or at least part of it.

A spokesperson for Poundworld's owner, TPG said filing for administration had been "a difficult decision".

They added: Despite investing resources to strengthen the business, the decline in UK retail and changing consumer behaviour affected Poundworld significantly."

Poundworld serves two million customers a week from 355 stores - 39 of which are in Scotland - and also trades under the Bargain Buys name.</s>What shape will the retail industry be in this time next year? The only thing we can say for sure is that it will be leaner, especially when it comes to frontline staff. And, as the C-suite works to build strategies which will ensure business longevity and profitability both online and in-store, it seems like a good time to revisit fables from the past which still have a message for the CIOs and strategists of today.

Hans Christian Andersen’s perennial tale about judging things for what they are not what they look like has a truth for retail at its core. While everyone’s heads seem to have been turned by a new breed of shopper-friendly celebrity – the online influencers, vloggers and trend hunters with impressive reach for promoting everything from the latest fashions to the newest superfood – retail staff on the ground are quietly getting on with their jobs, providing superb customer service and building face-to-face relationships which enable them to shine.

Anything that has an appeal based on something as fundamentally fleeting as internet fame can never be relied on as a sustainable business model. Like the latest viral videos and hot take memes, their shelf-life is limited by a medium built on immediacy and perpetual forward motion. Inevitably, in true ugly duckling fashion, the reality is emerging. A recent survey by field marketing agency Gekko showed that while 28 percent of the online influencers’ key market – 18- to 24-year olds – are swayed by the opinion of vloggers and bloggers, most actually prefer getting a personal service and recommendations from in-store staff. A report by the BBC’s business team into the selling power of beauty vloggers backs this up – while they certainly have a part to play in increasing brand popularity, most customers appear to want to go shopping in the traditional sense and try out new products for themselves – in 2017 to 2018, only 20.8 percent of cosmetics spending in the UK happened online.

The moral of the story

Success for retail staff depends on hard graft – there’s no substitute for putting the hours in when it comes to product knowledge and personal service. According to Gekko, 40 percent of 18- to 24-year olds prefer to go in-store to see, touch and experience a product before buying, and this increases to 58 percent for the over-55s. As its Managing Director Daniel Todaro says: “The shop floor is clearly still winning in considered purchases, therefore [retailers] need to invest in making the experience as good as it can be.”

The moral for CIOs is to make sure they don’t clip the wings of their best assets by denying them the information they need to make the in-store interactions that customers clearly crave easy, comfortable and profitable. A commitment to data democracy and device-based intelligence is the way to let them show their true colors.

The three little pigs

For CIOs seeking long-term, sustainable ways to make their retail workforce more profitable and cost-effective, there’s no doubt that the Big Bad Wolf is AI and automation. According to a House of Commons briefing paper issued in March this year, in the UK alone the retail sector currently employs around 5 million people – 20 percent of the total workforce. With dire predictions that automation might be responsible for the loss of as much as 80 percent of traditional retail jobs, it’s understandable that the industry is on the horns of a dilemma. On one hand, automation has tremendous potential for delivering better, faster, cheaper services when it comes to key customer wants such as stock availability, logistics and fulfilment, and will free up sales staff to offer more customer-focused and personalized experiences. On the other, it involves a wholesale upheaval of the way retail works and a significant realignment of sales staff infrastructure and management. Ultimately, the C-suite will have to embrace the inevitability of a mechanized industry and all it entails. The issue is that no one knows exactly what that will look like – the wolf is more frightening because it is faceless.

The moral of the story

As I mentioned in a previous article, whether or not the Big Bad Wolf will blow your house down depends on the choices you make about your foundations and how solid they are:
• Choose straw: Do nothing, continue with a strategy built for a less tech-enabled time and hope for the best – and your house will definitely not survive the onslaught of automation.
• Choose sticks: Make some surface changes that pay lip service to staff empowerment such as allowing them to look up products online but not actually order them – and your house will stay up in the short term, until it becomes clear that there’s no data behind the devices or real commitment to empowerment behind your strategy.
• Choose bricks: Build your foundations on a digital bedrock of useable data which will give your sales associates what they need to become trusted advisors with real power to meet customer needs, which means everything from customer profiles to inventory both online and in-store – and you’ll not only survive the wolf, you’ll tame it and make it work for you.

The ant and the grasshopper

It’s a fable that exemplifies the benefits of having a cost of delay framework – the ant is lean, agile and determined to do what’s necessary to make it in the long term without procrastinating because it knows that wasting time means losing ground, while the grasshopper is, in fact, close to being a HiPPO – concerned only with what works right now, based on personal opinion rather than evidence. When the future is uncertain – on the face of it, it looks like famine rather than feast for retail at the moment – putting the effort in now to build a different way of working will pay off. Waiting to see what others do with their employees before you take action will result in your staff being poached because they’re offered a better opportunity in more tech-aware businesses that recognize the new structure of retail jobs and value staff accordingly (attributing online sales in store, for example).

The moral of the story

Use data to “be more ant” – gather it, harmonize it, take the decisions and do the hard work now so that you’re prepared for the inevitability of change. Data expert Bernard Marr sums it up: “Data can take the emotion and opinion out of decision-making. When you depersonalise decision-making, it’s not about you or what you think or what the HiPPO thinks. It’s about what the facts state. Build your data arsenal to cover the most important things the highest paid person will be concerned with or judged by—usually that’s the bottom line. If you have data that speaks to the highest concerns of the highest paid person, it will help drive decisions.”

These fables have endured for hundreds of years because they have truth at their center – while the retail industry can’t be described as enchanted right now, it can become a happier place if it takes these truths to its heart.

This article is published as part of the IDG Contributor Network. Want to Join?</s>Poundworld crashed into administration yesterday, putting more than 300 stores and 5,000 jobs at risk amid conditions described by analysts as the worst period for the high street since the financial crisis.

The total number of retail store closures so far this year will total 1,398 if Poundworld is forced to shutter at least 100 of its 335 sites, according to data compiled by the Centre for Retail Research.

Based on these figures, the retail sector has haemorrhaged 27,750 jobs already this year.

Professor Joshua Bamfield of the Centre for Retail Research said this put 2018 on track to be the worst year for retail since the height of the recession, with 10,000 store closures expected by the end of the year.

Poundworld’s founder Chris Edwards confirmed yesterday that he was trying to assemble a bid to save some 200 of the retailer’s stores.

But concerns are growing that a “toxic mix” has made the high street a death trap for retailers.

Richard Lim, chief executive of Retail Economics said: “It’s been the toughest year since the financial crisis and I think there’s a toxic mix of factors that are all hitting the sector at the moment.” He cited a softer consumer environment, higher operating costs, and the impact of online shopping.

“Those retailers with large property portfolios are not able to react fast enough to the structural changes,” he added.

Robert Hayton, head of UK business rates at real estate advisor Altus Group, said that the government must tax the digital economy in order to even up the playing field for bricks-and-mortar retailers.

“Internet retailing is convenient, but will lead to the substantial extinction of the high street if left unchecked,” he said. “Extra taxes raised from digital businesses could be ring fenced and invested in encouraging people back to our high streets.”

Meanwhile Diane Wehrle, insights director at Springboard, said the average decline in footfall so far this year is three per cent, the worst level since 2012.

“We will see a reduced number of stores,” she said. “Some will never come back into retail use and that’s quite shocking.”

Read more: House of Fraser confirms plans to close more than half of its stores

Poundworld’s collapse yesterday made it the latest casualty of the retail sector this year, following the failures of Toys R Us and Maplin in March, while Fabb Sofas also fell into administration just last week.

The news also came just days after House of Fraser announced plans to close more than half its stores through a company voluntary arrangement (CVA). The process has been used by New Look, Mothercare, Carpetright and several other retailers this year, resulting in heavy store closures.

Read more: DEBATE: Does it matter if consumers desert the high street?</s>More than 5,300 jobs are at risk after discount chain Poundworld went into administration.

Gloucester’s Eastgate Street branch is one of 355 at risk after Daniel Butters and Clare Boardman, restructuring partners at Deloitte, were appointed joint administrators.

The retailer will continue to trade while it searches for a buyer for all or part of the business. No redundancies or store closures have been announced yet.

“The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business," said Clare Boardman, joint administrator.

"Unfortunately, this has not been possible. We still believe a buyer can be found for the business or at least part of it and we are keeping staff appraised of developments as they happen.

"We thank all employees for their support at this difficult time.”

Poundworld, which is owned by TPG Capital, has so far failed to sell the retailer as a solvent business.

A spokeswoman for TPG said Poundworld deciding to go into into administration was a "difficult decision".

"We invested in Poundworld because of our belief in how the company serves its customers and the strength of its employees," she said.

"Despite investing resources to strengthen the business, the decline in UK retail and challenging behaviour affected Poundworld significantly."

Poundworld's losses widened in 2016-17 to £17.1million, from £5.4million of losses the year before.

The retailer was hit with a £5.7 million charge for onerous leases, a provision retailers make when the cost of a lease is no longer covered by the income of the store.

This is the latest blow to the high street after House of Fraser confirmed plans to close 31 stores last week.

Cirencester will be one of the store hit as the 169-year-old company closes its branch in Market Place.

Both Maplin and Toys R Us have disappeared from the high street, while Carpetright, Mothercare and New Look have undertaken sweeping store closure programmes.

Restaurant groups including Carluccio's, Prezzo and Byron have also been shutting dozens of stores as they are squeezed by rising costs and a fall in consumer spending.

Here is full list of Poundworld stores:</s>Have your say

Poundworld has become the latest retail casualty on the British high street as it calls in administrators, putting 5,100 jobs at risk.

The budget retailer has appointed Deloitte to handle an administration after last-ditch rescue talks with R Capital broke down over the weekend.

Poundworld has at least 35 stores in Scotland, including six in Edinburgh.

There are round 350 Poundworld outlets across the UK.

The firm’s imminent collapse comes after both Toys R Us and Maplin fell into administration earlier this year.

Poundworld will continue to trade while a buyer for all or part of the business is sought, Deloitte said, adding that there were no redundancies or store closures at this time.

Clare Boardman, joint administrator at Deloitte, said: “The retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business. Unfortunately, this has not been possible.

“We still believe a buyer can be found for the business or at least part of it and we are keeping staff appraised of developments as they happen. We thank all employees for their support at this difficult time.”

It is understood TPG and Poundworld’s management rejected offers to buy the business out of a pre-pack administration and were hoping to sell it as a solvent business.

Other parties named as possible buyers were turnaround specialist Alteri Investors and Poundworld’s founder Chris Edwards.

But a deal could not be struck.

A TPG spokesman said: “This was a difficult decision for every party involved.

“We invested in Poundworld because of our belief in how the company serves its customers and the strength of its employees.

“Despite investing resources to strengthen the business, the decline in UK retail and changing consumer behaviour affected Poundworld significantly.”

Poundworld’s losses widened in 2016/17 to £17.1 million, from £5.4m of losses the year before.

The retailer’s move would come just days after House of Fraser detailed its plans to shut 31 stores, affecting around 6,000 jobs.

House of Fraser is seeking landlord approval for the restructuring plan, which is a form of insolvency known as a Company Voluntary Agreement (CVA).

A raft of CVAs have been struck in recent months as retailers struggle amid surging costs, rising business rates, competition from online rivals and a slowdown in consumer spending.

Other retailers undertaking CVAs in a bid to keep trading include New Look, Mothercare and Carpetright.

Restaurant businesses have also been seeking to cut their costs with store closure programmes, with Carluccio’s, Byron and Prezzo all pushing through CVAs this year.

READ MORE: Record foreign investment in Scotland as London falls away

Here is the full list of Poundworld stores:</s>Budget retailer Poundworld has become the latest victim of harsh trading conditions in the UK retail. The British chain has appointed Deloitt as its administrator, putting 5,100 jobs at risk.

According to many reports, Poundworld was in talks with a potential buyer R Capital, but the talks collapsed over the weekend, forcing the group into administration today.

Meanwhile, Deloitte has stated that the stores will continue to trade as normal with no redundancies at this time: “Like many high street retailers, Poundworld has suffered from high product cost inflation, decreasing footfall, weaker consumer confidence and an increasingly competitive discount retail market.

A spokesperson for Poundworld”s owner, TPG added that filing for administration had been “a difficult decision”.

The collapse of Poundworld comes days after the news of Toys R Us UK, Maplin and drinks wholesaler Conviviality.</s>LONDON, June 11 — Troubled UK budget chain Poundworld today fell into adminstration, putting it closer to collapse with the loss of up to 5,100 jobs unless a last-ditch buyer can be found.

Poundworld, which is battling against discounting in supermarkets, has appointed financial group Deloitte to help it find a buyer and stave off store closures and job losses.

The announcement comes just days after House of Fraser, the Chinese-owned department store chain, said it is closing more than half its shops across Britain and Ireland, risking the loss of 6,000 jobs.

British retailers with large amounts of stores are suffering also from fierce online competition from the likes of Amazon.

The UK is also experiencing weak household spending generally amid Brexit uncertainty.

Speaking of Poundworld’s move, Deloitte administrator Clare Boardman said that “the retail trading environment in the UK remains extremely challenging and Poundworld has been seeking to address this through a restructure of its business.

“Unfortunately, this has not been possible. We still believe a buyer can be found for the business or at least part of it and we are keeping staff appraised of developments as they happen,” she added in a statement.

Operating out of 335 stores, Poundworld sells items including household cleaning items and confectionery mostly priced at £1.

“Like many (UK) high street retailers, Poundworld has suffered from high product cost inflation, decreasing footfall, weaker consumer confidence and an increasingly competitive discount retail market,” Deloitte said.

Last month, British food-to-clothing retailer Marks and Spencer said it would shut more than 100 UK stores as it looks to shift at least one third of overall sales online.

Emphasising the fast-growing shift to online among British consumers, Amazon last week said it plans 2,500 new UK jobs by the end of the year. — AFP
British retail chain Poundworld, which employs thousands of people, collapses into administration.