Britons cutting purchases of essential items, says Poundland owner

Cost-of-living crisis in the United Kingdom has seen consumers scaling back even on essential items, Pepco Group, owner of European discount retailer brands PEPCO, Poundland and Dealz, said today (9).

The Warsaw-listed group said that while the absolute levels of inflationary pressure were greater in Central and Eastern European markets, higher wages in those regions were substantially offsetting this in the short term.

In Western European markets, however, the acute spike in inflation in a stagnant wage growth environment had quickly resulted in absolute lower spending by consumers.

"Specifically in the UK, the cost-of-living crisis has impacted customers’ disposable income as they scale back even on essential purchases in the short term," Pepco said.

The group said a focus on reducing the costs of doing business meant it was able to offset some of its input inflation.

This was "allowing us to protect prices for all of our cost-conscious customers whilst also absorbing some of the input inflation ourselves".

"We are seeing switching into the value discount channel across our markets," Mat Ankers, interim group chief financial officer told Reuters.

"We're growing our price gap to market, that's what's happening at the moment."

Ankers said the group had invested 35 million euros to keep a lid on prices in its first half to March 31, which dented its gross margin by 137 basis points.

"This is a very meaningful and very considered investment that we're making," he said.

Pepco added that the war in Ukraine continued to create volatility, albeit with some trading upside driven by the influx of people to the core markets.