How much? Poundland cuts prices to 97p
So why did it make the move, and will it work?
Poundland confirmed that when a 99p competitor opens up nearby, a store may cut prices in the early weeks, to ensure it retains its market share. Jim McCarthy, CEO at Poundland, told AOL: "Like all retailers we test competitor response options all the time and this is just one of a number of tactical options. This price point is currently being applied in just four stores."
This is a big step for Poundland, which has kept prices static since 1990. In that time it has faced a number of challenges - not least inflation. It has worked with a number of suppliers on specific packaging to ensure it could keep the price steady (most notably ordering Toblerone bars with one triangle less than is sold elsewhere). It also took the VAT increase on the chin in order to ensure it could stick with its strapline 'Yes! Everything's £1'.
PressureHowever, the store is under pressure from a number of rivals. The supermarkets have embraced the round pound pricing strategy in order to appear as close competitors. Meanwhile a variety of general discounters and 99p shops have moved into empty high street shops. In some high streets there are more discount retailers than full-price stores. In Dagenham, for example, 56% of shops are 'value' rather than 'premium' stores.
The move is just one marketing approach that Poundland has adopted. It has also started experimenting with discount vouchers, such as a '£2 off when you spend £12' voucher when you 'like' the store on Facebook. And it is currently running a competition to win £400 Poundland vouchers to celebrate the opening of its 400th store.
In order to capitalise on a focus on essentials and groceries in the downturn, it has also expanded these lines, to encourage grocery shoppers to consider the brand.
And the strategies seem to be paying off. It remains Europe's largest single-price retailer (by number of stores). It opened 60 new stores last year in the UK and will open another 60 this year.
But what do you think? Would 3p really influence your decision on where to shop? Let us know in the comments.
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