Poundland deal would force supermarkets to take notice

There’s something perverse about the Competition and Markets Authority’s decision to block Poundland’s attempted takeover of 99p Stores

Officials seems to have put Poundland in a very narrow box labelled “single-price discounters”, claiming its only competition following the merger would be Poundworld (PA)

There’s something perverse about the Competition and Markets Authority’s decision to block Poundland’s attempted takeover of 99p Stores.

For a start, officials seems to have put Poundland in a very narrow box labelled “single-price discounters”, claiming its only competition following the merger would be Poundworld.

But surely Poundland’s battles are equally fierce with supermarket convenience stores, where it competes on milk and crisp prices; Boots and Superdrug where it competes on baby wipes and cotton buds; and Currys PC World where it competes on wires and cables to charge our plethora of gadgets at home. And that’s just the start of it.

Yet the CMA seem to think shoppers will be disadvantaged by the idea that if they can’t find that tube of toothpaste at Poundland they will only be satisfied when they find another pound shop to buy it from.

Poundland has been one of the few big success stories to emerge from the recession – along with Aldi and Lidl – and has managed to win over large swathes of middle class shoppers in the process.

And while some might argue that pound shops are a blight on the high street, and a sign of the downturn, at least with Poundland Jim McCarthy and his team have created a business that isn’t completely devoid of character or more akin to a jumble sale of unwanted garden gnomes or meerkat porch lights.

The CMA also appears to have missed the benefits shoppers could feel from an even bigger Poundland empire. For example, the company would be able to push a harder bargain with suppliers to bring prices down, so instead of getting three Mr Kipling cakes in a pack, we could start getting four for a quid.

And, in turn, wouldn’t that force the supermarkets to sit up and take notice?

If I can buy my favourite shampoo at Poundland, instead of £1.90 at a supermarket, shouldn’t that help push prices lower across the high street, especially in convenience stores where prices are typically higher?

The CMA seem caught up on the single-price point, but is completely missing the bigger picture. Poundland, as a listed company, can be held to account far more easily that the hotchpotch of pound shops that went before it.

And if they, in turn, can hold established rivals on the high street to account on their prices, then the consumer and everyone else wins.