Economic Trends · UK Economy

Pound shops: What’s their effect?

There was a point of time when there were few pound shops around, but nowadays, it’s impossible for you to go shopping without stumbling on to a pound shop. What exactly makes these shops so popular? And how do they actually affect the economy?

First of all, pound shops became popular because of the simple fact that they were considered cheap. In a classic move of economies of sale, pound shops started encouraging purchases in bulk. Since pound stores sell everything for one pound, people start buying more things. Disposable income has been on a decline for a while now, so shopping for things that just cost one pound becomes more attractive.

Popularity of Pound Stores

Pound stores have actually had sufficient impact on big supermarkets such as Tescos and Sainsbury’s. The supermarket giants face sufficient competition from their pound store counterparts and have had to reduce their prices in order to match these. However, supermarkets do have one benefit over pound stores- they can sell fresh products and provide people with branded options.

Of course, there is a chance that this booming acceptance of pound stores will not last a long time. If disposable incomes increase, there is a chance that people would want to buy branded products that cost more. But till then, pound stores are here and they will continue luring us into their trap.

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