The bargain brand Poundworld is closing the last of its 335 premises this week. The chain went into administration in June 2018, when Deloitte were named the administrators.
After the global financial crisis, when people had less money to spend, they were cannier about spending it. Discounters grew. The Pound Shops flourished. The “Everything’s £1” approach was easy to understand. (Marks and Spencer had started with the same idea: “Don’t ask the price, it’s a penny.”)
But when the pound dropped in value, as it did after the Brexit referendum, the cost of goods sourced in China, as many of Poundworld’s were, rose. Other stores could simply raise prices. Pound shops, by their very definition, can’t.
Not that they didn’t try. They had a go at handwriting higher price labels but the customers came in and grumbled. “I thought this was supposed to be a pound shop.”
Deloitte’s tried to find a buyer and failed. They also gave four reasons for the collapse of the discount chain: “high-cost inflation, decreasing footfall, weaker consumer confidence and an increasingly competitive discount retail market”.
Which basically means that the shops faced rising costs and diminishing income. People could get the same stuff cheaper elsewhere, either in Lidl or online.
Also, if your business model is selling everything for £1, well, inflation’s gonna get you sooner or later, I’d have thought. You can shrink the size of your chocolate bars or your packets of pencils. But you can’t keep shrinking the size of your reading glasses or plant-pots or umbrellas forever.
Poundworld has gone the way of Maplin, British Home Stores and Toys’R’Us. Around 5,000 people are losing their jobs. That’s sad news. We are losing our butchers and our bakers and our candlestick makers. That’s sad, too. Now no longer will we be able to pop into Poundworld for some cheap spring bulbs and find ourselves being tempted instead by some hair conditioner, anti-freeze, toothpaste, enormous bags of Christmas tags, or all that loom-band stuff left over from 2014.
Nothing lasts forever. From Poundworld, it usually didn’t. So we should have guessed what would happen eventually.