How to start a pound shop or Discount Retail Store?

Discount stores (aka Pound shops) are the new favorites for shopaholic British! In the process they have thwarted their formidable and lavish opponents - Supermarkets. Whether it is growth rate or profit making capacity, discount stores are way ahead of the Supermarkets. So, if you are thinking about starting a venture, then investing your time, money and effort in launching a pound shop would be a great business idea. But, like in all other businesses, the newcomers in this arena are welcomed with a list of problems. Some such problems, along with their solutions, have been discussed below. We hope you would find this interesting as well as helpful.


What is the best location?

Problem: One of the leading concerns for new discount shop owners is to decide on the right premises for their business. Though discount stores have mushroomed on high streets of the country, yet the new ones are struggling to find an affordable commercial property at a top location. Best locations in any given city have already been occupied by the national chains. The property owners are more inclined to let their properties to these well off national chains, as they commit to long term leases. Compounding upon the problems is the large space required to operate any discount store or pound shop. As such stores, make small profits from a single sale so they need to make more sales through the day. This means you need to stock and display as much of their stocks to the customers as possible. So, finding a large space at a prominent location becomes a big headache for the prospective discount retail store owner.

Solution: But, there is no reason to be disheartened if you are not able to open the store at the first, second or even third location of your choice. As experts believe: discount stores historically perform well in less obvious locations. Contrary to your thoughts, such stores do not fit into expensive and trendier shopping areas. The regular customers of discount stores are prepared to travel a bit further in search of savings!

What to Stock?

This is the biggest and most tricky question for any discount retail store owner. Overtly you might feel it is simple to decide on the stocks - everything that is within £1 reaches the shelves while others do not quite make it. But the real life answer is not so simple.

Problem 1: Once you start operating, you will find some products flying off the shelves while others accumulating dust.

Solution: You can overcome this dilemma by having a good stock management in place. The first few months into business operations would be an eye opener for you. You need to keep a close eye on which products are selling out fast, and which are not. You need to scale up the orders for high selling products (meaning if you were ordering 4, now you will have to order 40). And within a few months, you will master the skill of stock management.

Problem 2: You have to also decide whether to deal in branded products (that will cut your profits) or gamble by excluding such popular products from your store. Mostly, customers are willing to try a new product (for its lower pricing) once, but if it does not meet the mark then they will actually hate you for supplying the low quality product. You cannot allow that to happen, right?

Solution: You have to understand the psychology of the customers. They are willing to shun brand loyalties in certain category of products, while they remain fixed in others. Experts believe that products such as toiletries (deodorants, soaps and lotions) see maximum brand loyalty. Customers are just not ready to take any risks here. While products such as household cleaning products (bleach, floor cleaners, etc.) allow the customers to try new options. So, select branded products keeping such facts in mind.

Pound Line shop UK

How to Forecast Sales?

Problem: This problem again is closely linked with stocks. As a newbie in the trade you are never quite sure how to forecast the sales. Festive seasons such as Christmas, Valentine’s Day, Bonfire Night, Easter and summer holidays witness a sudden surge in demand. Without the capability of forecasting you will be stuck, while every other store around you would be making profits.

Solution: You have to definitely scale up the stocks during festivals. Apart from this, you need to stock festival oriented discount products (such as Christmas cards and decorations during Christmas). Your regular stock levels also need to go up, for your store will get more footfalls during these times of the year. It is also essential to notice the seasonal offerings of big retailers, and include these into your offerings.

How to find a good supplier?

Once you have overcome the problem with stock maintenance another big issue will stare you at the face. You have to now find a reliable supplier to propel your business forward. But there are many problems which will confront you in the search.

Problem 1: If you thought you could find the suppliers by flicking through the pages of your phone directory, you will be disappointed. Most wholesale suppliers rely on word of mouth to get new clients. So, how do you find them and verify their reliability?

Solution: The best place to search for reputed pound line wholesale suppliers is to seek them online. Most reputed wholesale suppliers have a website of their own which makes your ordering simple. Apart from this, you can meet and interact with plenty of suppliers at the trade shows organized each year. Make a point to visit the Spring Fair International at N.E.C or the autumn trade show in September. While at the trade fairs you can meet and exchange words with the wholesalers firsthand. This helps you verify their reliability.

Problem 2: Any supplier you decide to partner with will ask for a complete payment (against the order) before the goods leave their warehouse. That can be a big financial issue for new businesses.

Solution: There is no way to bypass this problem. You have to make down payments to the wholesaler in the early days of association. However, as both of you keep on working some flexibility can be brought about in the payment cycles.

Problem 3: Your business can be doomed if the supplier has a casual attitude towards deliveries. If the supplier keeps failing the delivery dates, your customers would not get the items they want. This will result in the loss of many repeat customers. You simply cannot afford that.

Solution: Again, the solution to this problem comes down to choosing the supplier after research and keeping some buffer time before the stocks sell out.

What are other important aspects of running a discount retail store?

So, you have addressed big business problems such as business premises, stock management and suppliers. But there are some more important aspects you need to ponder about now.

Problem 1: Even though you are selling goods with a low price tag, yet you have to care for various government taxes and norms. Now, what are these?

Solution: As a discount retail store owner you have to count for government taxes, VAT and National Insurance. The health and safety norms should also be implemented at your store.

Problem 2: To operate your pound shop efficiently you need to hire a crew of capable staff too. How to acquire the suitable and talented workforce for your needs?

Solution: Most new store owners try to cut corners, in this respect, by trusting on word of mouth talent acquisition. But that is not the best approach to recruit quality staff for your store. Though, once you have built a core team you can always fill up other vacancies through the word of mouth approach.

Problem 3: Whatever locality you may operate in, there will always be competitors around. So, you need to impress the repeat customers with high stocks and cater good customer satisfaction. How to achieve that?

Solution: One great way of encouraging the customers to keep visiting your store is to give them something fresh every time. In terms of the fashion section, you could watch out for the latest fashion trends in those high end shops and then include their low cost replicas in your store. That would excite the customers and give them enough encouragement to keep walking into your store.


Now, that you know about the problems which might come your way while opening a discount store or pound shop and their solutions you can take an informed step.