Poundland slashes prices to 93p as pound shop price war erupts

Pound shop price war! An Ipswich Poundland store has cut its prices to 93p in order to win sales from a nearby 99p Store. The new 99p Store upstart slashed its prices to 94p or less for its new city centre Carr Street debut.

But the Poundland store responded in kind. Which begs the question: would you cross the road to save just 1p?

Battle of the pennies

Well, if you spent £15 - don't forget the cheaper pound stores are increasing their product range to items like frozen food, even Calvin Klein eyeshadow in some cases - you'd be saving 90p against the broader pound shop competition as a whole. Times are hard and wages aren't rising, for many. Any savings count. It's a mind-set issue.

And the pennies mount up: Poundland stores saw full-year sales climb to £880m with pre-tax profits coming in at a handy £23.1m. Commercial director of 99p Stores Hussein Lallani told the Telegraph that such price wars were needed when staking out new sales territory.

"We have a different strategy for each new opening. Our stores and Poundland are obviously competitors so whenever we have a new opening it causes some competitive tension." It's thought 99p Stores may also be looking at an online offering (though Poundland has also previously aired online ambitions).

£400m back?

Such discounting though is surely somewhat problematic with so much eponymous pricing. Welcome to Poundland - everything's 93p. But perhaps it doesn't matter. You go to a pound shop to save pennies.

Meanwhile Poundland is eyeing a stock market flotation. In an interview with the Grocer last year, Poundland boss Jim McCarthy said "flotation is usually a natural output of success for firms to move forward". (Other discounters, like Aldi, could also consider an IPO.)

That means big profits for Poundland owners US private equity firm Warburg Pincus. A float could net them £600m - a handy £400m profit from when they bought in, three years ago. How's that for value - even with 7p off in the pound?

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