It's bad enough when a Tesco opens nearby, but Poundland? That kind of undercutting is an uppercut. Customers cannot help but notice the price difference.

Jags Sanghera, who trades in West London, wrote: "I try my hardest to provide my customers with value for money. However, there is a Poundland store a few doors away from me and I am very concerned as to how they are able to sell branded goods cheaper than I can buy.

"I always thought that manufacturers give the discount channel smaller packs which they can sell at their fixed £1 price point. Yet after customers accused me of 'ripping them off' I thought I would investigate and made a trip to the store. My customers were correct and I was astonished. The biggest offenders are the cleaning/household goods suppliers."

His two worst examples were Johnson & Johnson cotton buds and Vanish Stain Removal Liquid 1ltr. He sells a 100 pack of J&J's cotton buds for £1, but Poundland sells a 200 pack for £1. The 100 pack costs Jags 68p + VAT.

Vanish costs him £1.73 + VAT and he notes that it is being sold in the major supermarkets for about £2.20-£2.30.

"How is it that Poundland is selling the same product for £1?," he asks. "If this unfair business doesn't stop," he says, "then Vanish will be vanishing off my shelves and cash & carry list."

I asked both J&J and Reckitt Benckiser for a response. J&J demurred, but Reckitt replied: "The prices at which Reckitt Benckiser sells its products into the trade are agreed directly between Reckitt Benckiser and each of its customers. Clearly, these prices are confidential. The price points at which our customers choose to resell those products are entirely at their discretion, as is required by European competition laws."

Poundland mustn't half buy well, though. It surely doesn't sell everything at a loss and many of the brands it sells are not clearance products.

Poundland also sent me a piece pointing out that it is Europe's biggest single-price retailer, serving more than 2.5 million customers a week, selling every item at just £1. This gives it clout.

"The company manages to maintain this attractive price point thanks to the growing volume it takes from manufacturers and suppliers," says the official response.

"Poundland also has an excellent reputation for making quick decisions and paying on time, in full and on the agreed terms, which is important for current and potential suppliers. Poundland offers amazing value thanks to the excellent trading team which sources globally. However, two-thirds of all products are sourced through UK channels."

It also pointed out that Poundland enjoys exclusive deals with key suppliers such as Kodak batteries and Whitworth's sugar. Many FMCG suppliers seeking new distribution channels also knock on Poundland's door, no doubt with attractive discounts.

None of the above will help Jags. His job is to convince customers that he isn't ripping them off and to concentrate on lines that don't go head to head.

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