Poundland's takeover of 99p Stores looks likely

25 August 2015

poundland It looks like Poundland's £55m takeover of 99p Stores is going to happen, as the venture has got provisional approval from the competition watchdog, Competition and Markets Authority.

The CMA said that everything seems above board, as the deal won't make customers "worse off". Although, if Poundland change 99p Stores prices, then everyone stands to be at least 1p worse off on things like plant pots, German biscuits and dry shampoo.

The initial investigation, which took place in April, said that a merger between the two companies would result in a lessening of competition in some areas, as well as the likelihood of a reduction in promotions, a loss in quality and the closure of some shops.

However, after surveying 5,000 customers and looking through company documents and commercial data, the CMA came to a different conclusion. They said: "Customers would not face a reduction in choice, value or lower-quality service as a result of the merger". A blunt answer, but an answer all the same.

The idea now, is that the company merger would still face a lot of competition from places like B&M Bargains, Wilko, as well as retailers like Asda and Tesco.

Philip Marsden, Chair of the CMA's inquiry group, said: "There has been a significant rise in prominence of value retailers for UK shoppers. Our evidence indicates that customers are primarily attracted to Poundland and 99p Stores because of their affordability and see them as good alternatives to each other."

"Nevertheless some customers can and do switch to other types of discount retail chains. We have also seen in recent years the Big Four supermarkets engaging in intense price competition, some of which involving the promotion of £1 products."

"On the basis of the evidence to date, we do not think customers will be worse off from the merger."

TOPICS:   High Street News

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