Dave Dodd: The Austerity Entrepreneur

The pair paid Keith back within two years, then relied on bank finance to build Poundland into a 70-strong chain. After “amicable discussions”, Dodd led an MBO, backed by Advent International, in 2002, taking the Smiths out of the business. Poundland was valued at £47.5m. “It’s far enough in the past now for me to say that that was substantially more than any of us thought it was worth,” says Dodd. “The trade-off was that Advent took a 75 per cent stake.”

He became chief executive with a 12.5 per cent share in the business, and Advent brought in Colin Smith, former chief executive of Safeway, as chairman. “The MBO wasn’t just about a cash injection,” says Dodd. “We probably could have gone back to the bank and arranged a new working-capital facility. But the business was at a point where it needed to change. We had to bring in more expertise at the top.”

Poundland’s main supplier hubs were the UK, the Far East and, more latterly, Eastern Europe. Dodd set up an office in Hong Kong in 2003 and would spend ten to 12 weeks a year in the region visiting factories. “You’ve got to reach as far up the supply chain as you can,” he says. “You never really know you’re at the ‘source’ of a product until you’ve actually stood in the factory that manufactures it. Be wary of agents who present themselves as manufacturers – they’re usually taking a five per cent fee, sometimes more, on orders.”

When we quiz him about cheap labour, Dodd admits that the welfare of overseas workers just wasn’t an issue back in the eighties. But things have changed. “I would never, ever now place a purchase order with a factory that I hadn’t physically visited. And I’d want a very clear understanding that the job wasn’t going to be sub-contracted.”

Indeed, it was Dodd who introduced “supplier days” to the business. “Retailers tend be to wary of suppliers, assuming they’re going to run off and divulge trade secrets to competitors. We were never like that. Periodically, we’d gather together our key suppliers and discuss our plans, performance, growth prospects, new product categories and so on. A lot of goodwill came out of those meetings. And if we ever went out for a meal with a supplier, be it in the UK or the Far East, I would always insist on Poundland picking up the bill.”

Continued on page four…

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