A pound chain makes its money by buying products in huge quantities from reputed suppliers extremely inexpensively. After this, the pound stores sell these products at low costs. Every sale does result in a profit of only some pennies; at times it may be thirty pence/pound. So, the gross margin gets set at nearly 30 percent. However, just thirty pence/sale is meant they need to sell volumes for making money.
Pound shops can market themselves well. As every person is aware of the cost of every item before he gets into the shop, he does not get surprised. The most surprising thing is the huge array of goodies that remain on offer. Big suppliers do sell many packets of chocolate bars at discounted prices. At times, people buy 4 bars of chocolate and get 2 bars free. So, buyers get things at 50 percent extra. Most supermarkets too have these deals but for this, they are required to invest their money and time in battling on many other products. So, people should check out the pound shop items and discount lines they can use for making their fortune.
Parameters to help you stock up your pound store
Pound shops can sell many products at an inexpensive rate because they follow some economic principles:
- A pound shop buys in bulk – Buying goods in bulk are a typical economy of scale. When a person purchases more products, the involved average costs of these products become low. A large chain of pound shops buys whole containers from China directly and that too at a lower price compared to purchasing from distributors.
- Modest margins – All pound shops run on little margins and these margins work with huge volume as well as strict control of costs. In turn, high volume enables a firm to continue buying in bulk at lower costs.
- Cutting out distributors – Commonly, a retail shop buys from a distributor, and the distributors buy from the source. This saves a shop from dealing with multiple suppliers. Contrarily, a pound shop wholesale can purchase in sufficient bulk for getting products from the manufacturers directly.
Effectively managing your pound stock
When you run a pound shop, you will be hugely popular with customers, but your fellow shopkeepers will treat you differently. The reason behind this is you will most probably be busier compared to most of them and you will undercut their range on cost. However, you must keep in mind that your job is the same as other store owners like you are also purchasing and selling products, paying taxes, managing staff, and many more.
For being successful, you need to keep a strict eye on everything around you besides your margins of profit. Many shopkeepers and retailers fail because they fail to think like business people.
Another important thing is you need to be physically fit as you will do the job of stock shifting. Although every shop tends to be different from each other, you must intend to take away nearly 25 percent after you have paid the VAT of 17.5%. Out of your 25% profits, you must pay your overheads, like rent, insurance, wages, etc.
Finding the best premises for getting started
Although pound shops are pretty common, it isn’t always easy to discover the ideal premises where you can set up a shop. Hundreds and thousands of retail businesses have involved themselves in the process of finding an affordable and suitable property where they can set up a pound store. For instance, if the pound shop is located in a top location, then a corporate fund might own it.
Discovering ideal premises becomes tougher for potential owners of pound shops because selling low-ticket products is meant to maximize revenue. It also means more stock requires to be displayed. Hence, it is important to have a good-sized outlet.
Selecting your stock in a store is a continuous process. The most important thing you need to keep in mind when you pick products is seasonal variations. In this context, the most obvious event becomes Christmas. Any retailer can tell people that a festive period brings huge profits to a store, and in this matter, pound shops do not emerge as different.
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Hence, when you own a pound store, you need to begin to think about stocking it with many discount products, like decorations, stocking fillers, Christmas card packs, etc. for maximizing the escalation of spending. It also means owners must lessen other stock levels for accommodating this. Whatever an owner does, he must plan. This same process will continue repeatedly beginning from summer holidays, Bonfire Night, and Easter to Valentine’s Day.
A pound store needs to use its skills for selecting the items it can store. Hence, it must use some mastering. Again, it must also find companies that would be able to supply them with various products. Pound shop owners might find many discount wholesalers and stock clearance suppliers when they flick through a phone book, and it is always an excellent method to start.