Is this the end of the pound store?

Founder of 99p stores says single price
point model not sustainable as Poundworld goes into
administration

One-Minute Read

Speaking to BBC News, Hussein Lalani, who founded the business
with his brother in the early 2000s, said he saw what was coming in
the sector and that is why he sold the chain when he did.

It follows news that Poundworld had become the latest high
street retailer to go into administration.

The proliferation of pound-shops following the financial crisis
a decade ago made them one of the few business success stories of
the early part of the decade.

However, like many other high street retailers they have been
hit by the problems of lower consumer confidence, falling footfall
and more online shopping, all of which have decimated the sector
and led to a wave of closures and bankruptcies.

“For pound shops these problems can be multiplied” says BBC business correspondent Jonty Bloom.

“For a start they depend on high turnover because the margin of
profit when everything is sold for a pound is minute.Then they
import a lot of what they sell, including large amounts from
specialised suppliers in China. The weakness of the pound has
pushed up the cost of imports and when by definition it is
impossible to increase their prices, the squeeze on pound shop
profits can be dramatic and very sudden” he says.

More than 5,000  Poundland jobs are now at risk
following the failure of last ditch rescue talks, with Sky News claiming the bargain retailer is set
to become the biggest chain by number of employees this year to
fall into insolvency, just over three months after the same fate
befell Maplin and Toys R US UK.