Pound for pound they're worth every penny (From Echo)

Pound for pound they're worth every penny

4:00pm Saturday 15th August 2009 in News By Adam Gaudry

Cut-price shops like Poundland are beating the recession

MANY shops have struggled to turn a profit as the recession has hit the high streets and town centres of south Essex.

As people slash their spending to cope with the credit crunch, well-known high street retailers such as Woolworths, Zavvi and Adams have had to close.

Yesterday, the Echo looked at how shops such as Cash Converters and pawnbrokers were making the most of the lull in the economy.

Pound shops, too, have been defying the trend and have managed to open more stores during the credit squeeze over the last year.

Poundland and the 99p Stores, which both own shops in south Essex, have opened new shops which have proved popular.

Poundland in Basildon moved from the town centre to half the former Woolworths store in the town, doubling the size of the store and creating 12 jobs.

David Coxon, trading director for Poundland, said it was one of 50 new stores opened in the last year. But he claimed it was not just low prices which made the shops so popular, but the simplicity of the pricing.

He said: “During the recession, there’s no doubt there has been a fight for value. How many times have you got to the till and found everything cost more than you thought?

“In one of our stores customers know that if they have five items, it won’t come to more than £5.”

Meanwhile, 99p Stores has moved into 28 former Woolworths since the century-old firm went bust last year.

One of the sites was in Furtherwick Road, Canvey, which created around 30 jobs.

Hussein Lalani, 99p Stores’ co-founder and commercial director, said his company was able to offer its low prices because of the deals it made with manufacturers.

He said: “We work on less profit than retailers like Tesco. Suppliers will often create brands for discounts shops. We pick up a lot of clearance goods. When Woolworths shut, we were also offered a lot of their old stock.

“We often get companies which change their packaging so they need to get rid of their old stock.”

Mr Lalani said pound shops were able to offer low prices because they offered a fixed price for all their goods, compared to supermarkets which often made losses on some items and recouped the costs by pricing up other products.

Both chains get most of their stock from Britain, with Poundland obtain 60 per cent of goods from UK suppliers and 99p Stores acquiring 70 per cent from the UK.

Councillors said the pound shops played an important part in keeping high street doors open.

Basildon councillor Phil Rackley said: “In the current times people are all after a bargain. The most important thing is it’s something open, although I would like to see a vibrant town centre with a variety of shopping.”

Canvey councillor Dave Blackwell believes pound shops might not be here to stay.

He said: “People haven’t got an awful lot of money, so these shops attract a lot of people. But when the recession is over, pound shops will find they struggle because people will have more money.”

However, Mr Coxon said even wealthier shoppers stuck with Poundland once their finances picked up.

Anna Waite, councillor responsible for planning, said: “We’re fairly well served for shops in Southend. The pound shops clearly have a role to play as people’s pockets are hit harder.”