Publication:

London Evening Standard - 2021-11-25

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Two Poundland would be the real shock of inflation

Puzzles & Games

Simon English @SimonEngStand

THE latest shock news on inflation arrives not from a central bank or economic forecaster. It comes from Dollar Tree in the US, my absolute fave American store, which now admits the price of its goods will probably have to go to $1.25, due to supply chain bottlenecks and ensuing costs. This is funny, since I recall asking the CEO of our own Poundland about five years ago what he would do when selling a pack of 10 pencils for £1 was no longer viable. He answered like a father explaining how the world really works. He would just sell eight pencils for a quid. Or six. See? His maths had not allowed for one pencil being uneconomical at £1. I feel his pain. I love spending £10 in his stores for huge bags of rubbish, and reject family complaints that I have just spent £10 on a bag of rubbish. Dollar Tree is just one of a bunch of huge retailers in America based on the same idea: Dollar Store, Dollar General. There are others. Three Dollar Store looks a far less sound marketing proposition, as does Two Poundland. Dollar Tree says its move is “permanent”, and not a “reaction to short-term conditions”. Consumers, in other words, are facing some tough times next year. I still think the Bank of England has it right that inflation is a passing problem, or at least a lesser concern than whether the economy is growing or not. But the Bank doesn’t base its entire business model around what it can shift for one measly pound. Those that do look sadly vulnerable to whatever happens next.

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