The Rise of the Pound Shop

Pound shops

If there’s one thing for sure in retail, customers love to have things made easy for them. If you can streamline and simplify a process, it’s normally more profitable to do so. Pound shops take this to the extreme – a single price for every item in the shop. Most of these items would cost much more elsewhere, so how do they do it, and why are we suddenly surrounded on all sides by these discount-focused retailers?

The question of how is an interesting one, as you may know if you’ve taken an interest in any documentaries about what goes on behind the scenes of these massive retail chains. Pound shops and similar clearance stores get their products from distributors of wholesale household items at low prices, so they can sell them on for a profit even at surprisingly low prices.

Buying in bulk is of course the key to getting massive discounts off the final recommended retail price. That means it’s vital that the bosses at these stores know exactly what they’re doing – huge shipments of the wrong product can spell disaster on these narrow margins. The decision-making process behind what appears on the shelves of your local pound shop is probably surprisingly complex, involving extensive calculations, focus groups and years of experience.

As for how the discount stores have taken over our high streets in the UK, simplicity does come into it as we mentioned earlier. These chains are proud to be on the opposite end of the spectrum to dodgy retailers who try to conceal fees and hide their inflated prices behind special offers and flashy marketing.

According to business psychologists, studies have actually shown that this strategy of positioning themselves against the big supermarkets and high-end retailers results in higher revenues for the cheapest shops. By removing the pressure on customers to spend more money, research shows that people are relaxed when shopping in pound shops and actually trust them more, leading to higher spending. This clever trick goes some way to explaining the enduring popularity of these discount chains.