Quids in

pound shop.jpgInteresting piece by BBC business reporter Anthony Reuben last week, talking about how pound shops deal with inflation.Apparently, they're finding it increasingly difficult to stick to their original idea - ie. everything for a pound. Some are dealing with it by subtly altering the wording of their tagline, 'everything at least £1' (not unlike the pricing structure at Harrods); while others are more determined to keep to the original idea.Reuben makes a good point. Shops like Poundland and 99p Stores are well positioned to cash in on the so-called Aldi effect, but with interest rates expected to drop to 2.5% (0% has been suggested, but let's not go nuts), inflation is set to rocket.Other retailers will be in a similar situation: how does, for example, a local bakery faced with rising grain prices continue to give its customers value for money without losing out?One of the tactics pound shops have adopted is taking a hard line with suppliers. "Often a supplier will say he can't do anything on the price and I'll say, I can't buy it - it's quite simple," says Hussein Lalani, commercial director of 99p Stores. "He'll go away and think about it and come back and do a deal."Negotiating strict payment terms with your suppliers will also help - keeping your cash flow positive will mean you won't have to pass any of your suppliers' financial problems on to customers.Your customers will appreciate it if you manage to hang on to the values you began with at a time when nothing else seems concrete. And as the piece points out, 'everything is £1.05' doesn't quite have the same ring to it, does it?Image by zawtowers @ flickr.

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