Generally it’s easy to spot inflation when you’re doing your shopping because the prices have gone up. For one group of commercial property retailers that has never been an option, up until now.
In April 2010, Colin Sharp changed the names of his commercial property pound shops in Wales from Famous £1 Shop to Famous £1.20 Shop. Mr Sharp was under pressure from the increasing cost of his stock and, while he did not know it, the increase in VAT from 17.5% to 20% would be announced two months later.
People running other pound shops have said that raising the price would execute their business model, however Mr Sharp says he’s got away with it. He said: “People moaned about it at the start but it didn’t make the slightest difference-I’m still cheaper than anywhere else.”
Mr Sharp started running pound shops in Wales 15 years ago. At the moment he has four of them, having recently transformed one of his two stores in Tenby into a picture gallery.
Every year he has a half-price sale in which everything is 60 pence. Mr Sharp reckons he’ll be okay for at least the next five years charging £1.20 for everything. He says: “It’s the way Poundland and 99p stores will have to go in the end.
Sticking to 99p
The co-founder of 99p Stores, whose 173 stores to some extent dwarf Mr Sharp’s estate, disputes this. Like other fixed price commercial property retailers, 99p Stores have had to change the quantities it offers because it cannot change the price. For example, the Toblerone bars it sells are now 30g lighter than they were.
Hussein Lalani from 99p Stores said: “I may be selling a smaller Toblerone than I did 10 years ago, but I am still the cheapest on the High Street for that particular Toblerone.”
Mr Lalani said his commercial property business will not be following Mr Sharp’s lead: “We’ll never go down that route. We’re sticking to 99p. We understand that’s what gets out customers excited.
However 99p Stores have found other ways to escape the pricing straight jacket. It has recently opened 18 commercial property stores in retail parks named Family Bargains, which are not tied down to a single price.
Mr Lalani explains: “We had a lot of customers coming in and saying: ‘It’s great that you’ve got all this 99p stuff, but I need to buy a new vacuum cleaner’,” adding that it was an opportunity to take advantage of low-cost space becoming vacant in commercial property retail parks.
Furthermore, the commercial property company has opened its first stores in the Irish Republic. They are called Euro 50 Stores. As the name suggests, everything in the commercial property stores costs less than one euro 50 cents (£1.25), noticeably more than the domestic price-point.
Poundland, which is the industry giant with 381 commercial property stores, has opened Deals-branded stores in the Irish Republic and the Isle of Man, which do not stick to a single price, however in the UK it remains the pound shop purist’s dream, with nothing costing either more than a pound or less than a pound.
Tim McDonnell, Retail Director is convinced that the pound shop format can survive: “Poundland has been going for 21 years, but if you look at the model in the States, they’ve been going for 40 years, so clearly there’s longevity in the business.”
And what will they be selling in another twenty years? McDonnell said: “If you go into any other supermarket you’ll see a whole range of products ranging from 10 pence up to 60 or 70 pence. There are thousands of those lines, and over time, with inflation, they will eventually fall into our price bracket.”
