Variety store

A variety store (also pound shop, dollar store, and other names) is a retail store that sells a wide range of inexpensive household goods.

Variety stores often have product lines including food and drink, personal hygiene products, small home and garden tools, office supplies, decorations, electronics, garden plants, toys, pet supplies, remaindered books, recorded media, and motor and bike consumables. Larger stores may sell frozen foods and fresh produce.

Variety stores arose in the early 20th century, with Woolworth's model to reduce store overheads by simplifying the duties of sales clerks. They may now be found all over the world.

A variety store often sells all goods at a single price, in which case it may be called a price-point retailer. The name of the store often reflects this, and in different markets it may be called a dollar store, pound shop, euro store and so on.

Economics

Some items are offered at a considerable discount over other retailers, whereas others are at much the same price point as conventional retail establishments. There are two ways variety stores make a profit:

Psychological pricing

Psychological pricing (also price ending, charm pricing) is a pricing/marketing strategy based on the theory that certain prices have a psychological impact. Retail prices are often expressed as "odd prices": a little less than a round number, e.g. $19.99 or £2.98. Consumers tend to perceive “odd prices” as being significantly lower than they actually are, tending to round to the next lowest monetary unit. Thus, prices such as $1.99 are associated with spending $1 rather than $2. The theory that drives this is that lower pricing such as this institutes greater demand than if consumers were perfectly rational. Psychological pricing is one cause of price points.

Overview

According to a 1997 study published in the Marketing Bulletin, approximately 60% of prices in advertising material ended in the digit 9, 30% ended in the digit 5, 7% ended in the digit 0 and the remaining seven digits combined accounted for only slightly over 3% of prices evaluated. In the UK, before the withdrawal of the halfpenny coin in 1969, prices often ended in 11¹⁄₂d (elevenpence halfpenny: just under a shilling, which was 12d). This is still seen today in gasoline (petrol) pricing ending in ⁹⁄₁₀ of the local currency's smallest denomination; for example in the US the price of a gallon of gasoline almost always ends in US$0.009 (e.g. US$1.799).