Thursday, 14 May 2015

How do Pound Stores Make any Money?

There’s at least one pound store on pretty much every high street in Britain today and if it’s not a pound store, then it’s a 99p store or, as has recently in opened up in the town where I live, a 95p store. They started as stores selling very cheap homeware products and end of line biscuits and chocolates, but, now, you can get no end of things for one pound or less and, many of those items are big brand name items too. The big pound shops have become hugely successful and are making big profits.  Here’s how pound shops manage to sell things for just one pound and still make a profit.

1. Multi packs have less pack in them
It’s not only that the fact that pound stores sell items for one pound, it’s that they have been able to keep on selling them for one pound, year after year, that  might have had you wondering. Well, what they have done to keep their items at that low price is to decrease the size of the product that is in the packaging. Think back a few years and you will remember that a family pack of Quavers used to have ten packs inside. Now there only five!

2. They sell items in non-standard sizes
A loaf of bread in a pound shop seems like great value doesn't it? Check the weights of items though, and you get a slightly different story. A loaf of bread in a supermarket will be 880g but, in a pound store, you will probably find that it is 600g.

3. Everything in a pound shop seems to include something free
Have you ever noticed in a pound store how many of their multi-pack items include something for “free”? You know the sort of thing; “50% free” or, “2 bars free”.  Often, the price of eight bars of your favourite chocolate is exactly the same price as it is in the supermarkets and the only difference is the packaging. In the pound store, you buy five bars and get three FREE. In the supermarket you buy eight bars for the same price. It just means that the pound shop can tempt you with the word “FREE”.

4. They use phantom brands
Some of the items that can buy in a pound store are their own brands, but you will never see an own branded product in a pound shop. That’s because they know that you would never give your mother a present that was branded as “Poundland”, so they make up posher sounding brand names for their own products.

5. They buy up overruns from the major manufacturers
When a big brand manufacturer produces too much of a product, they want to shift the overrun quick to save on storage costs. That’s when the pound store buyers jump in quick and take the overstocked items from the manufacturer at a huge discount. Nothing wrong with that, it just means that we get to buy Colgate toothpaste a lot cheaper than it would be in a supermarket.

6. They sell products with non-English labels
Another way that pound store buyers make a killing is with products that were destined for export, but the export deal fell through. Supermarkets won’t sell products that have non-English labelling because they think it will put customers off. Customers, who are only paying one pound per item, aren’t so fussed if they can’t read the ingredients!

7. They buy big
The biggest pound shop chains can afford to buy big, so that gives them a better discount. They expect that items, which they are selling for just one pound, won’t stay on the shelves for too long, so they can afford to buy up discounted items in huge quantities and cram them on their shelves.

8. They keep their costs down
Let’s face it, the pound shops are hardly the most luxurious of places to do your shopping are they? They spend as little money as possible on shop fittings and displays. Unlike the supermarkets, who want you to browse, pound shops expect their customers to be in and out gain of their shops quickly.

9. Not all products are cheaper because they are one pound
Who bothers doing price comparisons, when a product is only costing you one pound? Actually, if you were to shop around, you’d find that some products that pound shops are selling for one pound, are the same price, or cheaper, in some supermarkets.

10. They buy end of line products
The other way that pound stores can sell for just one pound is that they buy up end of line products that the big stores don’t want to stock.  That could be things like limited edition versions of your favourite chocolate bar or, even, if a manufacturer has changed its packaging on a big brand.



So, don’t knock the pound stores, you can get some great bargains, even though they do use some sneaky marketing tactics for some of their products. Five quid and you have a bag full of goodies. What’s wrong with that!

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