Business Models - How could you emulate Poundland?

So the story goes, a man bought 10 pairs of reading glasses from Poundland for £1 each. That's £10 he reckoned it cost him to save his marriage. He was going to put a pair in each room so he stopped bellowing to his wife to help him find his one existing pair.What a good idea! (But see comment below)

In Poundland every item is one pound. With some 299 stores after 20 years of trading, they make substantial, rising profits. So how?

They won't say exactly, but there's two streams of business:

1. Specials. They buy surplus stock, such as end of lines or cancelled orders. That way their suppliers avoid a major loss.
2. Regulars. They offer items that usually sell for just over a pound, by buying in megabulk directly from the manufacturer at the lowest possible price. 

For items selling just below a pound, they can provide manufacturers with megabulk purchases to justify special packs not made for anyone else, such as 1.5kg bags of sugar instead of 1 kg.

Poundland also runs on super-slim margins, relying on high volume through their stores to deliver profits. Admin costs are cut by making everything one sales price. 

In negotiating buy price, they also offer swift payment. None of this 60 day malarkey the big boys impose on struggling suppliers. Payment can be right with delivery, possibly on order. Now wouldn't the world be easier to trade in if everybody did that?

The trouble with that idea, of course, is that not everything flies off the shelves the same week. I remember a trader from my youth that was selling cut-price jeans. Demand was high, and the list of stores expanded rapidly. Then bang! Bust! They had to pay suppliers before they had sold enough to cover their costs, and the money ran out. It's called "over-trading"and is a major risk of rapid growth. Poundland apply sound business sense and clever use of systems.

So here's another case of everyone winning... manufacturers, customers, landlords and indeed fellow retailers who appreciate the extra footfall. And Poundland earns the profit.

So how can Poundland's principles be applied to your market?

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