A Poundland store in Peckham, south London, has ceased operations after 11 years, leaving local residents without a convenient and affordable shopping option.

Becky Cullen, a passerby, expressed her disappointment at the store's closure, noting that it was a popular destination for affordable essentials, including snacks and toiletries, and wondering where locals would now turn for similar products.

The store's location on Rye Lane, a vibrant high street featuring a mix of independent shops and international cuisine, highlights the challenges faced by budget retailers in areas with high levels of deprivation, where demand for affordable goods remains strong.

Poundland's decision to close the store is part of a broader effort to ensure the company's long-term viability on the high street, as it navigates a rapidly changing retail landscape.

Since the summer, over 100 Poundland stores have either closed or been identified for closure, following the company's sale in June for a nominal fee, amidst significant trading challenges.

As part of its restructuring plan, Poundland anticipates reducing its store count to between 650 and 700 locations, down from approximately 800 at the start of the year.

Other budget retailers, such as the Original Factory Shop and Maxideal, have also struggled, with the former closing at least 22 stores and the latter ceasing operations entirely, while B&M Bargains has launched a turnaround plan to address weak sales.

In theory, budget stores should thrive in times of economic uncertainty, as consumers seek to reduce their spending on everyday items.

However, the current challenges faced by some well-known budget retailers raise questions about the underlying factors contributing to their struggles, despite the ongoing demand for affordable goods.

According to retail experts, the way consumers approach budget shopping has evolved, with many becoming more savvy and strategic in their purchasing decisions.

Catherine Shuttleworth, a retail expert, notes that shoppers are now more informed and discerning, often comparing prices and seeking out the best deals, which can make it challenging for budget retailers to maintain profitability.

Shuttleworth adds that consumers have a deep understanding of prices and are able to make informed decisions about their purchases, which can limit the ability of retailers to adjust prices or maintain profit margins.

The use of technology, such as taking photos of prices and sharing them with others, has also become a common practice among budget-conscious shoppers, allowing them to stay up-to-date on the latest deals and discounts.

In addition to changes in consumer behavior, budget retailers are also facing significant challenges related to rising costs and increased competition.

The retail industry as a whole has been impacted by rising employer costs, which can be particularly challenging for budget retailers, as they often have limited flexibility to absorb or pass on these costs to consumers.

For pound shops, the challenge is even more pronounced, as the value of the pound has decreased over time, making it more difficult to maintain a viable business model.

When adjusted for inflation, the purchasing power of £1 in 1990, when Poundland was founded, is equivalent to approximately 40p today, highlighting the significant erosion of value over time.

Chris Edwards, a seasoned retail executive, has spent over 50 years in the industry and has experience with budget retailing, having previously founded and sold the Poundworld chain.

Edwards' current venture, OneBeyond, initially operated under a similar model, selling products for £1 or less, but was forced to adapt and raise prices due to changing market conditions, including a shipping crisis that significantly increased costs.

According to Edwards, the key to success in budget retailing lies in a combination of experience, negotiating skills, and a deep understanding of consumer behavior and preferences.

A visit to OneBeyond's Croydon store reveals a bustling and well-stocked shop, with a wide range of products and a strong focus on customer experience, demonstrating the potential for success in the budget retail sector.

Edwards attributes his success to a deep understanding of consumer behavior, allowing him to anticipate and meet customer needs, and to negotiate favorable prices with suppliers.

He notes that his team is able to anticipate customer purchases and tailor their offerings accordingly, which helps to drive sales and maintain customer loyalty.

In terms of economics, Edwards is willing to sacrifice profits in order to attract and retain customers, recognizing that a focus on volume and customer loyalty can ultimately drive long-term success.

By securing favorable prices from suppliers, including big-name brands, and negotiating competitive rates for imported goods, Edwards is able to maintain a competitive edge and offer attractive prices to his customers.

The ability to offer a range of products, including those imported directly from China, allows Edwards to generate additional margin and maintain profitability.

However, the budget retail sector is highly competitive, and failure to execute effectively can have significant consequences, as seen in the cases of Poundworld and Wilko, which have both experienced significant challenges in recent years.

Edwards' previous venture, Poundworld, grew to over 300 stores before being sold, but ultimately collapsed under new ownership, highlighting the challenges of maintaining a successful business model in the budget retail sector.

According to Edwards, the new owners of Poundworld failed to understand the fundamentals of the discount business, leading to a loss of focus and ultimately, the company's demise.

Similarly, Wilko's failure to adapt to changing market conditions and consumer behavior ultimately led to the company's collapse, resulting in significant job losses.

Poundland, too, has faced significant challenges, including a decline in sales and profitability, which prompted a major restructuring effort, including the closure of underperforming stores.

The company's decision to deviate from its core premise of offering a wide range of products at a single price point, £1, contributed to its challenges, as did the introduction of Pepco clothing into its stores, which failed to resonate with customers.

The inclusion of Pepco clothing in Poundland stores was seen as a distraction from the company's core mission and failed to generate significant sales or customer enthusiasm.

Catherine Shuttleworth notes that the key to success in budget retailing lies in maintaining a simple and focused business model, which Poundland had drifted away from in recent years.

However, Shuttleworth believes that Poundland can recover and regain its position in the market by returning to its core principles and simplifying its pricing and product offerings.

As part of its turnaround plan, Poundland has closed underperforming stores, renegotiated rents with landlords, and is working to re-establish a strong and focused business model.

According to data from Geolytix, the number of budget stores in the UK has grown significantly over the past decade, with the main budget chains now operating over 3,400 stores across the country.

The growth of the budget retail sector can be traced back to the 2009 recession, when consumers began seeking out affordable alternatives to traditional retailers, and companies like Poundland were able to capitalize on this trend.

The rise of discount supermarkets, such as Aldi and Lidl, has also contributed to the growth of the budget retail sector, as consumers have become increasingly savvy and willing to seek out affordable options.

As the retail landscape continues to evolve, it is likely that budget retailers will remain a vital part of the market, offering consumers affordable options and driving innovation and competition in the industry.

The pandemic accelerated a shift in budget store growth towards out-of-town locations and retail parks by 2019. This trend is exemplified by retailers like B&M, Home Bargain, and The Range, which operate large garden centers and sell bulk items that are more easily accessible by car.

Budget shops are currently facing significant challenges amidst the cost-of-living crisis.

The supermarket sector has intensified competition by offering sharper prices and loyalty programs, while the rise of online "extreme discounting" poses an additional threat to budget shops.

Chinese companies Shein and Temu are now competing with budget shops by selling ultra-cheap products directly to consumers. Another Chinese-based retailer, AliExpress, operates a global online marketplace that connects shoppers with sellers.

According to Nick Carroll, director of retail insight at Mintel, "AliExpress experienced a substantial increase in users last year, partly due to its sponsorship of the Euros, and its growth continues."

Although sales figures are scarce, Mintel data indicates that 30% of UK online shoppers purchased from Temu in the year leading up to September 2025, while 14% and 3% shopped on AliExpress and DHGate, respectively, during the same period.

Amazon has launched its own ultra-low-cost shopping section, Amazon Haul, in response to market trends.

Nick Carroll notes that Amazon's products in this section bear a strong resemblance to those found on Temu, suggesting that Amazon is reacting to a notable market shift.

Carroll predicts that the influx of low-cost influences from outside the UK will persist, with more developments expected in the future.

New platforms like TikTok Shop have emerged, where users can find advertisements for various products, including sweets, toilet paper, and pillows, often at lower prices than traditional high-street shops due to minimal overhead costs.

Catherine Shuttleworth observes that shoppers prioritize affordability and convenience, stating, "As long as they can get the right product at the right price, time, and place, they will shop anywhere."

This shift in consumer behavior means that traditional retailers are no longer the only option, as shoppers are willing to explore alternative sellers.

The primary concern for traditional budget shops is that they may no longer be perceived as the most affordable option in the market.

The combination of a cost-of-living crisis and a "cost-of-business crisis," driven by factors such as rising minimum wages and national insurance contributions, may lead to the decline of weaker players in the market, according to Catherine Shuttleworth.

To remain competitive, retailers must excel in their segment, whether it be high-end, mid-range, or budget, as the market has become increasingly saturated and competitive.

Shuttleworth believes that consolidation is inevitable in this sector, with stronger players ultimately emerging victorious.

However, not all budget retailers are struggling, as some chains have experienced significant growth in recent times.

The Range has continued to expand, opening 60 standalone stores this year, following its acquisition of the DIY chain Homebase. Home Bargains has also continued to thrive and open new stores.

Savers, a retailer specializing in toiletries and cosmetics, has expanded in recent years and is reportedly moving into Poundland's Peckham store space.

OneBeyond has grown to 132 stores, although its expansion has slowed. Chris Edwards attributes this slowdown to government policies that have increased costs for businesses.

Edwards acknowledges that every period presents its unique challenges, and his focus is on navigating the current landscape.

Regarding current trading, Edwards states that his business is managing to break even, but he is awaiting better times.

His primary focus, like many other retailers, is on Christmas trading.

Edwards emphasizes the importance of Christmas trading, saying, "It means everything… a good Halloween and Christmas can help us break even for the year."

Catherine Shuttleworth notes that budget retailers often excel during major events like Christmas, as shoppers seek affordable options for decorations and gifts.

Additionally, budget shops may be the only viable option for many households, particularly those who prefer not to shop online or travel to retail parks.

Shuttleworth observes that while some individuals enjoy budget shopping as a hobby, for others it is an essential necessity.