Page last updated at 16:43 GMT, Sunday, 31 January 2010

Why more stores are in for a pound

By Kevin Peachey
Consumer affairs reporter, BBC News

Shop signs
Various stores are battling in the discount market

UK consumers love the sound of a pound. In the last 10 years, everything-for-£1 stores have flooded into the High Street.

In 1999, there were 380 pound shops in the UK. By the end of 2009, that number had grown to 742, according to a report from information services company Experian.

Poundland, which plans to open one new shop a week in the next year, is revelling in a successful Christmas period, having seen a 4.4% rise in sales in stores that were also open a year ago.

So what is dragging shoppers through the door, ready and willing to part with their nugget?

What might you be able to buy for each member of a typical family for £1 each if you had an hour in these stores? We put it to the test.

Price tag

Pound Stores attracts its shoppers with a rather neat catchphrase, encouraging them to "pay less for quality".

1 GIFTS FOR THE FAMILY
Dad: A computer keyboard vacuum cleaner
Mum: Anthony's 70s Disco Workout DVD
Teenage girl: The Official England Annual 2010
Baby boy: A set of bibs for the week
Dog: Four minty bones

But, it becomes clear that quite a few items are being sold for more than £1.

On the corner shelf, a pedal bin is for sale for £6.99. The selection of colourful handbags includes one for £4.99.

Yet, lurking among the £1 items is the present for the dad who has everything - the multi-purpose aspirator. Not only does it suck the air out of food bags to keep contents fresh, it is "a mini, handy vacuum cleaner, which can be used to clean any narrow gap such as a computer keyboard". The batteries required cost more than the machine itself.

Close by is a gift for a baby boy. A pack of seven washable bibs, each branded with a day of the week.

And, of course, the family dog should not be forgotten. Among the selection of chews and pet toys is a pack of four "minty bones" - the canine answer to mouth freshener.

Moving on, the nearby Pound Crazy store seems to have branched out. Instead of cheap knick-knacks, the shopkeeper has moved on to selling suitcases.

So it is on to Poundland. This retailer appears to have moved into the market that Woolworths has vacated, but concentrating on the bargain bucket.

Intriguingly, a huge sign announces that its products are unaffected by the recent increase in VAT to 17.5%. But, of course, in a pound store prices cannot be altered at all.

Tackling inflation and rising taxes is a battle for these stores, but they deal with it by reducing the quantity of the product, buying from around the world, and moving into the market for goods which have risen in price elsewhere to above £1.

Fame game

We have a teenage girl and a mum to buy for, and Poundland meets the need for both.

The success of value retailers is not simply a recent knee-jerk reaction to the pressures of the recession
Jonathan de Mello, Experian

Many of today's youngsters are obsessed with football, and the galaxy of Premiership stars. While many clubs offer the occasional "kids for a quid" admission, ticket prices have soared beyond the budget of some families.

So, to feed the young football fan's interest, there is "The Official England Annual 2010" which, it says, features "all-action footy activities and top trivia", and information about World Cup 2010 venues.

Finally, the mother of the family needs a gift. Without retreating into stereotype, many mums will have made New Year's resolutions to get in shape and shed a bit of weight.

How better than with "Anthony's 70s Disco Workout".

The winner of television's Big Brother 2005 proves that fame does not last for five minutes, but for approximately 39 minutes of a fitness DVD.

"I'll help boogie yourself fit," he says on the cover. "Hope you enjoy this workout, I think it's mint."

'Desire'

The shop is packed and, according to Jonathan de Mello of Experian, stores such as Poundland have tapped into the consumer search for a bargain which has been aided by the emergence of internet shopping.

Pound coins
The 1 coin is a relatively new addition to the currency

"The public's appetite for discount vouchers and the use of comparison websites show that the cost conscious consumer's desire for a bargain is as strong as ever," he says.

"However, the success of value retailers is not simply a recent knee-jerk reaction to the pressures of the recession. It is part of a longer-term trend across the whole of the UK in favour of budget shopping options."

The number of budget names on the High Street has fallen in recent years, even though the number of stores has grown.

This, Mr de Mello says, is the result of well-established discount retailers taking the opportunities that have arisen from other chains' difficulties in the recession, such as Woolworths.

"Since the recession hit, higher numbers of shop units have become vacant and it has become easier for discount and value offer shops to pick up better quality space at a good price," he says.

Notes and coins

With 1.4 billion £1 coins in circulation in the UK at the last count, their value is the highest of any UK coinage.

There are more 1p coins in circulation than any other type of coin, according to the Royal Mint, but they only have a total value of £109m.

So, the stores are making the most of consumers' willingness to spend their shrapnel.

One wonders whether they would have been as successful had the £1 note still been issued by the Bank of England. It stopped putting out the £1 series D (revised version) note at the end of 1984 and it ceased to become legal tender on 11 March, 1988.

Reaching into the wallet might make some shoppers think twice about their spending. But for now, it seems as though some pound stores are coining it in.



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