Rising prices: Even the one-euro shop is getting more expensive

Everything is getting more expensive – even in stores that have made “cheap” the top priority of their marketing strategy. Inflation is also noticeable in one-euro shops.

Summer weather in a Hamburg pedestrian zone. Carolin Schnor is traveling with her five-year-old daughter. An ice cream would cool down, and the girl should at least get a small present every now and then – but 1.60 euros for a scoop of ice cream is not little money for Schnor. So maybe a small plastic toy from the one-euro store? But even in the “Euroshop” around the corner, nothing is the same as it used to be. “Everything was expensive. I took the water pistol, but it now costs 1.10 euros instead of one euro. It used to be cheaper here overall, it’s always been such a shock, the higher prices in general,” says Schnor.

Low prices tempt to “impulse purchases”

Germany’s inner-city cheap shops – from Tedi to Action and Thomas Philipps to the “Euroshop” – may have suffered during the Corona period, but now the galloping inflation is driving them to new customers, almost unnoticed. Even middle-class citizens sometimes stop by the so-called non-food discounters, where you can find everything from plastic toys to stationery and household goods to textiles for a few euros.

“I’m just looking around,” says a customer who says she never shops here. She comes out of the store with a few small things like plastic boxes, soap, Sudoku books and envelopes. Experts who deal with the strategy of the cheap branch call it “impulse buying”: You don’t look for anything and then you find quite a lot – especially because of the apparently so cheap and manageable fixed price.

The assortment on the shelves is huge: “Everything for everyday needs,” say some – “junk goods that nobody really needs,” say others. A matter of opinion, especially if you have little money. It’s always very cheap here, says a regular customer in front of another Euroshop, just a few hundred meters from the first one – she comes by every few days. Today she bought sun hats with “Hamburg” printed on them to protect against the heat. She spends a total of 30 euros a week in these shops.

One-euro shops soften strategy

But appearances are deceptive, and some bargains don’t last long. In addition, supplies are stagnating due to Corona. With a product range of around 2000 items, for example at Euroshop alone, which are advertised with constantly changing prices, the stock is sometimes tight. The delivery bottlenecks also hit the branch of cheap shops. The Euroshop chain, for example, is gradually deviating from the formerly fixed cheap price of one euro.

Retail expert Thomas Roeb from the University of Bonn-Rhein-Sieg still sees a strategy with good chances in price increases – even if the customer’s calculation of being able to buy everything for exactly one euro had undeniable advantages. “If you now deviate from this concept upwards,” says Roeb, “and you might confuse the consumer for a moment, and if the offers are really cheap and stay that way, then you will also be good at a higher price level can sell.”

This still works even if price levels far above the one-euro limit are drawn in, says Roeb. The customer is also being reached more precisely through rising inflation: “I think that inflation and the loss of purchasing power will mean that concepts that are really inexpensive will increase in sales.”

Confusing market, new concept

The market for cheap chains is generally confusing. Some companies have set up large stores for all household needs and have rented thousands of square meters outside the city, others have occupied every little spot in the inner cities. Here, Tedi is the market leader with 1,800 branches. Action also has around 400 branches in Germany. The retail chain Euroshop with around 350 branches actually wanted to expand in the next few years. The industry is traditionally reluctant to press inquiries: no comment on market strategies and pricing. Tedi explains in writing that one even has a “socially balancing role” in times of a pandemic.

When walking through the Euroshop, a different concept is clearly evident: Small, confusing tables of the current promotional prices are pinned to the traditionally unadorned shelves with cheap goods. The slogan “One Euro” that once dominated hundreds of products has given way to the large and very general lettering “Smallest Prices” everywhere in the store. You have to look very closely – between brushes, toys and beach molds. Because under the products is now mostly 1.10 euros, 1.50 euros and more.

“Only these cheap shops”

In the end, many regular customers are torn: everything is still reasonably priced, but often a product is 50 percent more expensive than it used to be: “Everything has increased, especially in the shops here too,” says a woman who currently has one bought sunglasses. “I think the concept used to be this one-euro thing. But everything is getting more expensive. And you have to see where you can save – every cent counts.”

In some districts of Hamburg, for example, cheap shops now dominate: In some places, there are several Euroshops within a radius of a few hundred meters, and there are also shops with cheap shoes, hair shampoo in large quantities, T-shirt shops – and many a weekly market Textiles advertised from two euros.

Two pensioners are sitting in the shadow of the “discounter price oasis”. You have just bought a suitcase at a good price. But what good is cheap if it’s not just missing from your wallet, they say thoughtfully. “There are so many shops that are all going out. We don’t have a real clothing store or a fish shop here – we used to have that here. But now there’s nothing here, just these cheap shops.”

And they’re booming. Even if the one-euro pack sometimes contains a pen or a sponge less, as Julia Wacker and her son discovered: “We just bought this large pack of sponges for one euro, then spices and a writing pad for school. You need it. And you don’t have much money. But the small parts add up and now often cost far more than one euro.” New concepts, new prices.