£1 stores - Just how do they make their money?

a lot of it is often when a brand changes its packaging aswell, people want the new packaging for some bizare reason.

even boots etc sell off stuff for cheap if its the old packaging... my missus gets some huge bargains on makeup
 
IIRC one of the ways the pound stores get their stock is by buying it in bulk off the manufacturers when they have excess stock or stock that is close to it's sell by date.
They also buy up a lot of bankrupt/EOL stock from various other sources (for example one of my local ones still has Woolworths branded items, and Asda own brand stuff).

I'd imagine they can get some very good prices for stock from administrators, and companies that are otherwise looking at having to pay for storage or disposal of their old stock.

They can actually be quite a good place to pick up disposable tools/odds and sods - I ended up picking up a bunch of A4 cutting mats in my local 99p store as I use them for model work, and they normally cost about a fiver each minimum.
 
some stuff they take a loss on but most of the stuff isnt worth a pound. people get it into their heads they are getting a bargain but in reality the same products can be had for half as much in the supermarket.
 
My dad used to own a small chain of 50p/£1 stores, made his fortune in the late 80s early 90s. You buy in bulk from wholesalers around the country, and then store the stuff in your own warehouses whilst shifting it in your stores.

The meetings with the wholesalers were really weird, really aggressive and they'd be arguing about 1/4, 1/3 or 1/2 a pence on items for hours. The vast majority of items were less than 10p, you're talking about ~5p for a bottle of branded body wash (Lynx, Imperial Leather etc). Anything over 10p you'd tend to steer clear of because there'd be a lot more money wasted if you couldn't shift it, and you're obviously not making as much money back on it even if you can sell it.

But obviously it's not as simple as making 95p profit, you've got a fair amount of overhead to recuperate, but you've still got healthy margins.

Generally speaking, nobody is going 'direct to source' in the trade (i.e. Pound Land aren't sending envoys to China to source products as somebody has suggested :p) - it's a waste of money. They just bulk buy from UK based wholesalers or buy excess/EOL stock from other retailers.
 
slylittlefox said:
Generally speaking, nobody is going 'direct to source' in the trade (i.e. Pound Land aren't sending envoys to China to source products as somebody has suggested :p) - it's a waste of money. They just bulk buy from UK based wholesalers or buy excess/EOL stock from other retailers.
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Maybe not sending people but you don;t need the middle man and can cut them out. There are whole dedicated websites to the "one pound" items where you can place orders direct with the factory in China/Far East.

You get samples sent over, negotiate a price based on quantity and then get it shipped.

We are members of quite a few of these sites and we are swamped with offers everyday. As you said though, a lot of items are less than 10p and you do argue over the point of a pence.

Yes, the rest of the stock is bankruptcy/end of line/short sell by dates.

We tend to purchase higher value stuff but it never ceases to amaze me that we can get something made and shipped from China for half the cost of buying it from a British Wholesaler and a fraction of retail worth. The wholesaler will be making a good profit margin don't forget so why not cut them out of the loop?

And you can get agents to check quality and quantity at the docks in China for you to stop you getting sent a container of rocks (which I have heard of happening).

We only ever made one trip to China at the beginning. There is was an area we visited which is just mile after mile of factories which can pretty much make everything. You have an intreperter and have brief appointments with suitable suppliers and test quality and negotiate price.

We only did this at the beginning to put our mind at ease. We now have a large group of trsutworthy suppliers from China and just do everything online. Simples.

I fail to see why you would want to stick with UK wholesalers and argue over half a pence when you could save 5p by dealing direct with China. It's hardly hard in the modern day and age although perhaps was a lot harder in the 80's and 90's.

For example, as I said we deal in higher value items but the principal and mark up will be the same although quantities are less.

A certain item costs us £14.95 delivered, duty paid, direct from the factory in China. Cheapest of the 4 UK wholesalers is £29.95. We sell it retail at £69.95. Yes we were still making a good profit buying them in at £29.95 but since dealing direct we make an extra £15 per item.
 
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They do it because when you're buying the identical product in Boots or wherever else those stores are charging massive profit margins on those items.

Simples.

Also - they stock whatever they feel like stocking not everything a consumer expects to buy, the'yre therefore not bound to take up valuable floor space with low volume selling goods.

Again, simples.
 
slylittlefox said:
My dad used to own a small chain of 50p/£1 stores, made his fortune in the late 80s early 90s. You buy in bulk from wholesalers around the country, and then store the stuff in your own warehouses whilst shifting it in your stores.

The meetings with the wholesalers were really weird, really aggressive and they'd be arguing about 1/4, 1/3 or 1/2 a pence on items for hours. The vast majority of items were less than 10p, you're talking about ~5p for a bottle of branded body wash (Lynx, Imperial Leather etc). Anything over 10p you'd tend to steer clear of because there'd be a lot more money wasted if you couldn't shift it, and you're obviously not making as much money back on it even if you can sell it.

But obviously it's not as simple as making 95p profit, you've got a fair amount of overhead to recuperate, but you've still got healthy margins.

Generally speaking, nobody is going 'direct to source' in the trade (i.e. Pound Land aren't sending envoys to China to source products as somebody has suggested :p) - it's a waste of money. They just bulk buy from UK based wholesalers or buy excess/EOL stock from other retailers.
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Also the fact that they go and pick the products from the producer which reduces the costs to the supplier thus allowing them to sell it to them cheaper and allow pound land to put a higher mark up on the items
 
Gammawolf said:
I've always wondered what will happen to pound shops once inflation makes the sale of products for a pound not viable. :eek:
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They will become £5 shops.lol

Seriously though, it will happen. Just look back through history. A friend of mine first job was £5 per week after he finished his 5 years apprenticeship and he said that was a fortune back then.

Penny sweets have disappeared now and I reckon it won't be long before the penny goes and then the two pence. If you project far enough forward with inflation most people will live long enough to see the smallest coin/note been a pound and perhaps even five pounds.

You will be paying perhaps £20 per pint in the pub but be then the average wage might be over £100,000 per annum.
 
anticonscience said:
How long before this happens? :D
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As a starting point now of £3.00 per pint and say we remain at 4% inflation then it will take 50 years for it to be £20.00.

Of course, duty tends to be increased on booze so it will be less time than that.

Interestingly enough in 100 years it will be £145 per pint. :eek:

If wages keep up with inflation and based on £24,000 as the average wage today, in 50 years when a pint is £20 it will be £164,000 per annum.
 
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Greebo said:
They will become £5 shops.lol

Seriously though, it will happen. Just look back through history. A friend of mine first job was £5 per week after he finished his 5 years apprenticeship and he said that was a fortune back then.

Penny sweets have disappeared now and I reckon it won't be long before the penny goes and then the two pence. If you project far enough forward with inflation most people will live long enough to see the smallest coin/note been a pound and perhaps even five pounds.

You will be paying perhaps £20 per pint in the pub but be then the average wage might be over £100,000 per annum.
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It's already happened in europe. Last time I was in Amsterdam I saw quite a few 5-euro shops.
 
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