The co-founder of 99p stores has said the single price point model is no longer sustainable, raising serious questions about whether it could be end of the road for so-called pound stores.
Speaking to BBC News, Hussein Lalani, who founded the business with his brother in the early 2000s, said he saw what was coming in the sector and that is why he sold the chain when he did.
It follows news that Poundworld had become the latest high street retailer to go into administration.
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The proliferation of pound-shops following the financial crisis a decade ago made them one of the few business success stories of the early part of the decade.
However, like many other high street retailers they have been hit by the problems of lower consumer confidence, falling footfall and more online shopping, all of which have decimated the sector and led to a wave of closures and bankruptcies.
“For pound shops these problems can be multiplied” says BBC business correspondent Jonty Bloom.
“For a start they depend on high turnover because the margin of profit when everything is sold for a pound is minute.Then they import a lot of what they sell, including large amounts from specialised suppliers in China. The weakness of the pound has pushed up the cost of imports and when by definition it is impossible to increase their prices, the squeeze on pound shop profits can be dramatic and very sudden” he says.
More than 5,000 Poundworld jobs are now at risk following the failure of last ditch rescue talks, with Sky News claiming the bargain retailer is set to become the biggest chain by number of employees this year to fall into insolvency, just over three months after the same fate befell Maplin and Toys R US UK.
