Pound shops: are they good for the high street?

Love them or loathe them, pound shops seem to be here to stay. But do they provide much needed value, or just lower the tone of a well-kept High Street?

In the interest of a fair and balanced debate, we'll take the argument one side at a time...


Pound shops represent a great route to saving time and money - every shop has rows and rows of cheap essentials that are clearly priced. There's no agonising in the aisles over which brand represents better value, just which one is bigger or better: because they're all £1.

This pricing structure also benefits the retailer. Their business model is simple: buy cheap and buy in bulk. The calculations involved are easier, because there are no price variations to factor in. There's also no staff answering customer queries or discounting stock at the end of the day, which saves time, and money.

Because it's a business based on volume, the more people shop in pound shops, the better their buying power and the more they can stock. Poundland has increased from 389 to 500 stores and, as marketing director Martyn Birks puts it, they have "very strong buying power [and can] offer lots of top brands including Cadbury, Coca Cola, Britvic, Heinz and Johnsons.”

Perhaps that's why the argument that they attract 'the wrong people' doesn't apply and, according to The Independent, discount chains now have a 'growing army of middle-class customers'.

Even the community benefits. During the recession, The Economist says, the proportion of empty shops rose from 3% to 14%. Yet Poundland and 99p Stores were expanding at a combined rate of 90 stores per year, with their expansion helping to save the High Street.


Pound shops are reducing consumer choice and hampering their health. 99p Stores co-founder Hussein Lalani told the Economist that they "pick the easy bits" out of supermarkets' business. That means they don't offer fresh fruit and vegetables, they don't offer Fair Trade goods or publish details about food miles so consumers can make an educated choice about the ethical and health implications that accompany their purchases.

Even the price labelling isn't everything it's cracked up to be. Speaking to the BBC, consumer psychologist Dr. Ben Voyer argues:

"When you are in a pound shop the surprise and novelty actually create the illusion that you need the product. It is new, it is surprising, you might attribute extra value to the product and then your entire way of making decisions is changed, and because of the low price you may actually end up buying the product."

That means spending more but, worse still, wasting more on unwanted goods.

What's more, chains like Poundland and the 99p Store are hurting local businesses who offer similar produce but lack the volume to compete with their larger rivals.

Finishing the debate

Like any business, the best, and perhaps the easiest, way to vote is with your feet. To make a rational decision about where you stand, use our free Money Dashboard finance software to check your grocery spend, and decide whether you really do save money. Then assess the cost of every social and ethical concession you make by shopping elsewhere. That way you use your money to support the business you think is best.


Posted by Marc Murphy, Marketing Manager at Money Dashboard.


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