Sound as a pound shop: price is secret of success
The High Street is in the midst of a meltdown, but one retail sector is managing to buck the trend, says Donald C McFetridge
At last, there appears to be good news on the High Street. Poundland this week announced a phenomenal 21.6% rise in turnover and annual profits up 24%.
This represents incredible growth in an otherwise extremely difficult, testing and almost stagnant retail marketplace.
At a time when retailers across all sectors are struggling to keep the doors open, pound shops and value retailers are having a field day.
This has come about largely because cash-strapped consumers no longer have to splash out and pay large sums of money for a reasonable product.
The phenomenon of pound shops here (and euro shops in the south) originated in the United States with dollar shops, which still abound even in downtown Manhattan.
Poundland, with more than 400 outlets across the UK, boasts of having more than four million customers through their doors every week.
Whether you love them, or hate them, 'thrift' and 'value' retailers are reaping the rewards of retail success by providing consumers with cheap products and keen prices. A recent examination of the product lines carried by Poundland proved that a large percentage of their merchandise is, in fact, 'branded'. For example, there are leading manufacturers' brands being offered for one pound in a range of toiletries, soft drinks, confectionery and many other product categories.
Canny consumers will ask: why should I pay almost double this price in traditional retail outlets when I can buy it in a pound shop for half the price?
Of course, it's not just the pound shops which are reaping the benefits of this recession. Discounters in 'destination' retailing locations, such as The Outlet and Junction One, also offer attractive discounts to shoppers keen to trim their budgets.
Promised discounts of up to 60% encourage even the profligate to pop in for a look in the hope of bagging a bargain designer brand for a snip. Similarly, TK Maxx is a very attractive retail destination for many who are prepared to rummage around and take their chances of finding the right product, in the right colour, size and style.
Meanwhile, in the food sector, price competition is also rife, with Tesco (in spite of their Big Price Drop campaign) recently being advised that they need to re-examine their pricing policy due to the Asda claim that " ... deeper price cuts are the only way to prevent Tesco customers from switching ... " to them.
At the end of the day, consumers are much more vociferous and vote with their feet, as proved by recent trading results from the 'thrift' retail sector. This is clear evidence that consumers want - nay demand - value for money.
The price-quality continuum is a very volatile one and retailers in every sector need to be very mindful of how fickle and capricious 21st century consumers have become.
Increased consumer sophistication, enhanced product knowledge, rapid technological developments and the ready exchange of information through social media and networking sites have all served to create a new type of consumer: a consumer who knows what they want, knows where to find it and knows how much they're willing to pay for it.
One thing is certain: after this recession is over, consumers they will not revert to their original purchasing behaviour.
Consumers have learned that they no longer have to cough up large sums of cash in order to acquire quality products.
Retailers keen to retain trading operations on the High Street of the future need only heed Portia's advice in The Merchant of Venice to "tarry a little" if they are to have their "pound of flesh".
Let's just hope there's no blood spilled in their endeavours - not one jot.