Monopoly Madness-POUNDLAND & 99p Stores

This is not directly related to the party market, even though  both operators sell party products and what is more, POUNDLAND is probably the largest Halloween retailer in the UK.

I am absolutely gobsmacked that the monopolies commission has found suitable cause to investigate this takeover. I quote…

‘Sheldon Mills, senior director of mergers at the CMA, said: “Without competition from 99p Stores, there is the possibility that Poundland may have the incentive and ability to deteriorate its offer in these areas to the disadvantage of customers that have come to rely on their offer.”

How so ? 

1. POUNDLAND came into existence long before 99p stores, when there were other single price discounters, all of which have long gone. Consequently, they have been operating in areas where they had no competitors . Did they offer less value in those areas ? I don’t think so. 

2. There is a relatively new kid on the block ie Poundworld. Is it not possible that they may want to fill the gap? This is ignoring the fact that there are  at least  four other major discounters (albeit not single price) who may see similar opportunities. 

3. Where were the CMA (competition and markets authority) when UK’s grocery retailers took it on themselves to dominate small towns and wipe out all local competition, leaving the local consumer with little choice ?

4. Not wishing to offend all discount operators, especially the single price outlets, but I suspect much of the expenditure is not essential. Even to the least fortunate in our society, the removal of a competitor selling product at £0.01p less than an alternative player is going to save £0.10p in every £10 (and I don’t believe the average spend is anything like £10). This is not going to make a great deal of difference to their lifestyle.I know this is an oversimplification as there are pack size issues. However, the principal remains the same.

I am no apologist for the discount retailer, but to suggest the merger of 2 of the larger chains are going to substantially alter the offer is about as likely that the new group will rebrand as ‘ONEPOUNDFIFTYLAND’.

If the CMA wants to examine deteriorating offers within the retail sector, there are far bigger and more important fish to fry. The discount sector is the one sector that have actually had some impact in improving the consumers offer and I am quite sure that going forward they will not be any less aggressive in pursuing this objective.

Perhaps I am missing the point. If so, I would be delighted to hear from anyone who feels there are some serious justifications for this investigation.

 

 

 

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