£1 shops

[killah]

How do they make any money at all being so low cost.

 

[Merchant UK]

They buy in bulk and direct from the manufacturer

 

[killah]

So are all branded products this cheap when bought direct. Ie electrical goods

 

[StevensOnln1]

They buy a lot of end of line products which have been heavily reduced by manufacturers/distributors in order to get rid of old stock. The £1 price also makes people assume they are getting a bargain whereas some of the items can easily be found cheaper in supermarkets etc.

 

[mckellar]

have you watched the programme pound shop wars?

basically tells you what you need to know.

 

[charlotte@malaboo]

They buy a lot of end of line products which have been heavily reduced by manufacturers/distributors in order to get rid of old stock. The £1 price also makes people assume they are getting a bargain whereas some of the items can easily be found cheaper in supermarkets etc.

Was just going to say, some of the items are not worth the £1 x

 

[mckellar]

Was just going to say, some of the items are not worth the £1 x

consumers are fooled into believing £1 is a bargain, no matter what the product is

 

[MOIC]

I don't think you can generalise that ALL the products in £1 shops are not value for money.

Yes, some items, if bought in larger volumes from supermarkes and chemists maybe better value, but that is not necessarily the point of buying from £1 shops.

It may be the case that the consumer only wants a specific size of an item that suits their budget and not a larger volume.

Also, the vast majority of items sourced and sold in most of the £1 shops are generally good value (not top quality) and suits the purpose that the consumer requires.

I think the draw of £1 pound shops is that when you are inside, you see other items that tempt you to spend more than what you had originally intended.

Given the growth of these types of shops nationally and internationally (99cents, 1 Euro) they must be providing consumers with a service they require.

We source many items for these retailers and some are exceptionally good value for money, given the alternatives avilable in the high street.

The success (and profit) is in purchasing the correct products at the right prices.

 

[Merchant UK]

alot of the food in poundshops have been made smaller than what you can by in supermarkets, ie, large bags of crisps the outer bag is the same size but you only get 5 packets inside instead of 8

 

[WJP]

Does a new thread on this topic not get started about once a week? There's a search function in the top right OP, you'll find a lot of valuable info in there.

 

[Jack@GillespieBS]

Some products will be great value, some products you will be able to get for less than £1 elsewhere.

Also you will notice that sizes are often smaller than other shops, so can often be seen as cheap but you don't get as much for your money.

 

[Alex - A2 Hosting]

Look out for a program 'Pound shop wars'. It was on the BBC a short while back and will give you a lot of information about how it all works and how they're competing etc

But +1 to another comment on here, it is about buying the right products at the right price.

 

[MyAccountantOnline]

have you watched the programme pound shop wars?

basically tells you what you need to know.

Yes it was an interesting program one worth watching.

 

[MyAccountantOnline]

consumers are fooled into believing £1 is a bargain, no matter what the product is

I know I've seen quite a few products in our local stores for £1 which are cheaper in Tesco.

 

[Merchant UK]

So are all branded products this cheap when bought direct. Ie electrical goods

yes if you by enough of them, I mean you need to spend a good million to make it worth your while

 

[Excel Expert]

Going by the comments on the pound shop wars it is all bulk and very low profit margins. Several times they mentioned that if they dropped prices by just a few pence they would be out of business.

Not sure if that is true or just said for the cameras to make them seem like they are constantly trying to bring the public bargains.

 

[mckellar]

Going by the comments on the pound shop wars it is all bulk and very low profit margins. Several times they mentioned that if they dropped prices by just a few pence they would be out of business.

Not sure if that is true or just said for the cameras to make them seem like they are constantly trying to bring the public bargains.

i think like everything, there will be products being bought in bulk at like 10p per unit and others 6x that, and by the time its all transported/shops/staff/boardroom staff the products dont have much of a margin in them after the outgoings.

 

[Alex - A2 Hosting]

Going by the comments on the pound shop wars it is all bulk and very low profit margins. Several times they mentioned that if they dropped prices by just a few pence they would be out of business.

Not sure if that is true or just said for the cameras to make them seem like they are constantly trying to bring the public bargains.

Probably said for the camera when you consider VAT increases in the past among the other increasing business expenses, they're already out a few pence.

Probably makes it harder to survive but then again, they're opening new stores constantly so maybe it makes up for that loss?

 

[Excel Expert]

Looks like the next battle for the pound shops are online http://www.bbc.co.uk/news/business-26243902

 

[Jenever]

The BBC program is well worth watching from a business point of view

 

[MyBusinessStory.co.uk]

I love this website so many things i have researched before.

profit margin on £1 lines is not too bad, they make about £0.30 an item which is not far off normal retail profit margins. they make money buy the amount you buy when you go in and see how seemingly cheap the prices are.

When we go into £ land we always spend about £20 a time, we never go in and buy 1 thing, unless i need a coca cola fix, but hey their 3 for £1

 

[drdes]

Just thought I would reignite this thread.

Has anyone any experience or views on online pound shops. Loads of them springing up but I don't see how they can make money given postage costs and small ticket value? Even at order sizes of £18ish where free delivery seems to kick in and a 40% gross margin, that doesn't leave much profit after postage costs which are probably £5 depending on items ordered.

Anyone know of anyone who is doing well or anyone care to share their failure stories?