13 February 2012 | Updated: 13 February 2012 10:42 am
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Poundland is riding out the recessionary storm in fine form, and it’s about to move online, reveals general counsel Jinder Jhuti
The economy is continuing to claim victims on the high street, with budget clothing retailer Peacocks being just one recent high-profile casualty, but Poundland, Europe’s biggest single-price retailer, seems to be quite comfortable operating in these austere times. Year-on-year it continues to stave off the recessionary chokehold.
In 2010-11 the company posted a 34 per cent hike in profit, with turnover soaring by 26 per cent to £641m. The Willenhall-headquartered chain has opened branches across the country at the rate of one a week since its inception in April 1990.
Sound as a pound
The budget retailer now has more than 380 branches in the UK and Ireland, employing more than 7,000 staff. With a growth strategy of at least 50 new stores per year, Poundland is on track to create around 2,000 jobs in the next few years.
Each store sells some 3,000 product lines, including 1,000 branded goods from companies, including Cadbury, Nestlé, Colgate and Procter & Gamble, all priced at £1 unless on special offer.
General counsel Jinder Jhuti is confident that Poundland’s business model is a force to be reckoned with.
“We’ve offered a single price point of £1 for more than 20 years and now, hand-in-hand with that, comes the confidence that well-known brands will be on sale in our stores week in, week out,” she says. “On the single-price front, I’m often asked how long we can keep our price of £1, [but] the combination of astute buyers, a driven board and more brand owners appreciating the magic of Poundland means the best is yet to come.”
By this Jhuti means Poundland’s aggressive European growth strategy (it aims to have more than 1,000 shops by 2016 and is currently in talks about a takeover of some of Peacocks’ stores) and its online offering is due to be rolled out this year, which will make it the only budget retailer to offer its range on the internet.
Poundland is evidently a thought leader in the notoriously volatile retail sector. It is changing the way consumers perceive value for money.
So how does Jhuti keep up with the demands of heading the legal department of one of the most expansive businesses on the high street?
“Growing at the phenomenal pace we are - we had just 151 stores when I joined in November 2006 - the main challenge is keeping up with the business while trying to stay abreast of the legal changes affecting retail,” she relates.
And with its first foray overseas in the shape of its launch in Ireland last year, Jhuti has certainly had her work cut out for her during her five years at the helm.
“The team had a big challenge when the board decided to open stores in Ireland in 2011 under the name ’Dealz’, as this brought a host of statutory compliance issues we had to get to grips with quickly,” Jhuti says. “Regulatory changes can also be difficult now that we’re operating in a multijurisdictional way.
“For example, we have a carrier bag ban in Wales, but this isn’t applicable elsewhere. Similar issues apply on tobacco-related sales. I see this as a big challenge for me and the team as other markets are investigated.”
The previous year saw Poundland’s £200m acquisition by Warburg Pincus from Advent International, with Weil Gotshal & Manges and Clifford Chance picking up the respective lead roles advising the private equity houses. Jhuti sees the takeover as her biggest challenge to date.
“It was a really tough process and I didn’t have a team then. It was just me working with the various teams representing the seller, the buyer and the firm advising management,” she recalls. “Sitting in the office wrapped in a duvet at 3am, waiting for the confirmatory call that the deal had been completed, has to be a highlight I’ll never forget.”
When it comes to external counsel, Jhuti says the fixed pricing she introduced across the property panel three years ago has had a positive impact on the level of service she expects from a legal panel.
“Being a fixed-price retailer we have to be more mindful of costs we bring into the business than other companies,” she says. “Fixed pricing allows our partners to concentrate on doing the day job while encouraging them to think of other ways they can stand apart from the crowd.”
Jhuti recalls how one national firm undertook a survey of its employees to identify what they love about Poundland and to identify ranges they wanted the retailer to sell.
“Some of these ideas will be rolled out over the next 12 months, while others will be more suitable for
when we offer online shopping,” she says.
Admitting that she still gets “a real buzz” from visiting stores and interacting with customers, the perks of her job are perhaps slightly racier than your average nine-to-five.
“The fact is that, while there are other single-price discounters in the market, Poundland’s blazing the trail, which means my work can range from reviewing a multimillion-pound contract to considering an order for edible underwear,” says Jhuti.
Jinder Jhuti’s C
Title: General counsel
Reporting to: CEO Jim McCarthy
Company turnover: £641m
Employees: Approx 10,000
Total legal capability: Three
Main law firms: Browne Jacobson, Clifford Chance, Eversheds, Freeth Cartwright, George Green, Shakespeares, Shoosmiths, William Fry
Company secretary, Iceland Foods
Mine is a role to get your teeth into, indeed. The Groceries Supply Code of Practice that came into force in 2010 proved a major challenge, as it required us to put in place formal terms and conditions with our suppliers. This resulted in a ’battle of the forms’ as we repeatedly exchanged documentation with suppliers, making it hard to keep track of whose terms prevailed.
Fraudulent claims are a big issue, particularly where members of the public allege that they have slipped on a spillage. CCTV cameras in-store have helped us to defend many of these successfully.
We have seen a rise in slips and trips claims in the past couple of years and we find that most claimants’ legal costs are disproportionate to the damages claimed. We are hoping Lord Jackson’s reforms will be enacted and prevent disproportionate costs being awarded.
Underage purchases of alcohol continue to be a hot topic and we carry out an in-house programme of underage test purchases to ensure our cashiers operate our ’Challenge 25’ policy.
Theft is an ongoing problem: the Citizens Advice Bureau has criticised retailers for using civil recovery against individuals caught stealing, but the lack of police action and interest leaves us few other options.
Generally, it is an extremely competitive environment as consumers continue to tighten their belts, so the prime requirement for a lawyer is to react quickly and commercially when it comes to advising the business to enable it to be innovative and stay ahead of the game.