The once-booming discount stores are facing unprecedented challenges amidst the ongoing cost-of-living crisis. While many consumers rely on budget-friendly options to stretch their earnings further, some of the UK’s most familiar bargain retailers are closing shops or struggling to stay afloat. But here’s where it gets controversial: are these stores simply losing their relevance, or are shifting shopping habits and external economic pressures systematically undermining their business models?
Take the case of the Peckham Poundland, which recently shuttered after operating on Rye Lane for over a decade. This store was a staple for local residents, offering affordable essentials for families—snacks, toiletries, and children’s items—serving an area with significant economic deprivation. Passing shopper Becky Cullen expressed her disappointment, asking, “Where are we going to shop now?” The high street of Peckham remains lively, dotted with Caribbean grocery stores, vibrant cafes, bars, and vintage shops. Yet, despite the apparent demand for budget options, Poundland and similar stores are shutting locations or scaling back significantly.
Since the summer, over 100 Poundland outlets have either closed or are slated for closure. This contraction follows the sale of the business in June for a symbolic £1, amid what the company describes as challenging trading conditions. While Poundland has announced plans to streamline its store base—aiming to operate between 650 and 700 shops down from over 800 at the start of the year—the broader picture reveals a host of other discount chains facing difficulties.
For instance, The Original Factory Shop has closed at least 22 outlets, and smaller chains like Maxideal have entirely disappeared from the landscape. Even B&M Bargains, one of the largest discount retailers in the UK, is implementing a turnaround strategy after experiencing sluggish sales. These are brands that, in theory, should be thriving during economic hardship, since they offer the option for consumers to reduce their spending on everyday goods or switch from more expensive shops.
So why are these household-name budget retailers struggling—especially when many shoppers are tightening their belts?
A surprising truth is emerging: it’s not that consumers are abandoning budget shopping altogether—they are simply becoming more strategic, more informed, and more demanding in how they shop. Retail expert Catherine Shuttleworth points out that today’s shoppers are increasingly ‘outsmarting’ these discount stores. They’re well-versed in pricing; they know exactly how much items should cost and often share deal information with friends via social media or messaging apps to maximize savings. They are essentially conducting their own research, which makes it harder for these stores to survive on traditional promotions and pricing.
Furthermore, discount chains are battling both rising operational costs and fiercer competition—particularly in a climate where their slim profit margins leave little room to absorb increased wages, rising rent, or higher supplier prices. Post-Brexit inflation has hit the cost of goods and wages hard, disproportionately affecting stores with a fixed-price model like Poundland. When a product that sold for £1 in 1990—when Poundland was founded—is now roughly equivalent to 40p due to inflation, maintaining profitability while still offering affordability becomes a Herculean task.
The story of businesses like Poundworld and Poundworld’s successor, OneBelow (now called OneBeyond), illustrates these struggles vividly. Chris Edwards, a veteran in the bargain retail business, built Poundworld into a chain of over 300 stores before selling it in 2015. Yet, that venture collapsed within three years, revealing the difficulty in managing discount retail at scale without losing control. His newer business, OneBeyond, has so far managed to stay afloat by focusing on experience, negotiation skills, and product mix—selling items from bargained Chinese imports alongside well-known brands. Edwards is optimistic about the model, seeing value in catering to customers who want a bargain but needing a keen eye on costs.
However, effective management and sharp industry insights are vital because missteps can be costly. Past examples like Poundworld and Wilko spotlight how quickly a discount retailer’s fortunes can turn, especially if they lose sight of their core purpose. Poundland, in particular, had drifted from its original offer of selling everything for £1 and experimented with different pricing ranges and additional product lines, including clothing. This dilution of focus has alienated some shoppers expecting simple, low-cost options and contributed to store closures and declining sales.
Despite this turmoil, some chains are still expanding or maintaining their position. The Range recently opened 60 new stores and acquired the DIY chain Homebase from administrators, while Home Bargains continues to grow. Savers, a smaller player focused mainly on toiletries and cosmetics, is also expanding and is reportedly moving into former Poundland spaces.
The key takeaway? During times of economic stress, the ability to adapt and stick to a clear, focused strategy is essential for survival in the discount retail sector. Many experts believe that consolidation will occur, with the strongest players emerging victorious.
Meanwhile, the landscape of budget shopping is being reshaped by global and digital competitors. Chinese online giants such as Shein, Temu, and AliExpress increasingly attract consumers with ultra-cheap products sold directly from abroad, often undercutting brick-and-mortar or traditional online rivals. Digital platforms like TikTok Shop also revolutionize how consumers access discounts, often at lower prices due to minimal overhead costs.
And here’s the question that might stir debate: as these new players enter the market and consumer habits evolve, can traditional budget retailers maintain their relevance and stay competitive? Or is this the beginning of a decline, where only the most agile will adapt? Do you agree that the core of budget retail success lies in simplicity and focus, or do you see room for diverse, multi-price strategies to thrive in these turbulent times? Share your thoughts in the comments!