Last month, Poundland (that’s the supermarket for people who hate small change of course, and not the inevitable UKIP theme park) bought all 251 ‘99p Stores’ for £55 million. This dramatic business news caused Poundland’s shares to shoot up to 404.5 pence a share, effectively transforming Britain’s favourite crisp multipack and plastic ornament shop into Fourpoundland and Change. But when Poundland inevitably rebrands the 99p Stores, what will happen to all those penny increases in price? Where will they go? And have I, in fact, discovered a way to generate free money?
Yes is the answer. Look, it’s simple. When a 99p Store becomes a Poundland, the staff can mark up all the stuff in the shops and instantly increase their profit margin with extra pennies. So, how many items do you get in a 99p Store? How much stock have they got? Besides going into a 99p Store and counting them all up, the next best thing I can be bothered to do is Google it and generate a rough estimation. The Food Marketing Institute reckons the average American supermarket carries 43,844 items. 99p Stores are quite a bit sparser, so let’s half it and round down. 20,000 items, each increasing in price from 99p to a quid, generates £200 extra per store. Times that by 251, and you get a rough idea of how much cash Poundland has magicked up from the deal. A tidy £50K. They didn’t make their money back, but in a big business like Poundland, I bet an obscure sum like that could go astray. They made £370 million last year, so who’s going to miss £50 thousand? The Poundland accountant who works this out first is well within his or her rights to ferret that cash away and buy a sports car. Or a ferret.
The selling of the 99p Stores also brought the existence of a 98p Store, in Staines, Middlesex to wider attention. Opened up by a Mr Amarjeet Singh opposite a Poundland in an extreme case of ‘two-upmanship’, the store stocks all sorts of items at the low, low price of 98p. The Daily Mail noticed it first, sending down, from their death tower, screeching gargoyle-like entities with hollows for eyes to steal souls, write a report and scout around for any 97p Stores recently opened in the vicinity. ‘Where does this discounting stop?’ is a question the Mail failed to answer, presumably because the obvious response is a ‘Zero Pence Store’. How would one of those even work?! I tried to think about it just now, but it gave me a nosebleed.
Anyway, as I’m sure you know, Aldi and Lidl (who sound at first like they could be Germany’s answer to Ant and Dec) are continuing to reduce prices like they know the apocalypse is coming, and will probably start giving stuff away pretty soon. Perhaps the response from the 98p Store should be one of those signs you get outside a petrol station that allows for the regular lowering or raising of prices? That way, the burgeoning business could remain competitive. Today 98p, tomorrow 56, or 23, or 4. Poundland could then buy them all up, twist the dials till they read 1p, then sell the stores back to their own company and generate millions in mark up. It’s flawless. Why has no one thought of this before?
Ladies and gentlemen, I don’t actually have a business degree. Thank you for your time.