Poundland is expanding the range of products it sells per pound, as retailers fight for customers.
Half of the company's products are priced at a penny, but 60% of the items it sells will be less than a penny by the end this week.
According to the discount chain, it is experiencing an increase in customers as people look for savings as their cost of living increases.
Recent surveys suggest that customers are spending less when they shop for food due to rising prices.
Tesco and Asda Supermarkets have reported that customers are shopping less.
Asda stated to the BBC that some customers are asking cashiers not to scan items when the total reaches PS30 in an effort to reduce costs. Customers are switching to budget-friendly options as well.
Tesco, the UK’s largest supermarket, said that it is beginning to see early signs of shoppers changing their shopping habits in response to high inflation. This refers to the rate at which prices increase. It includes buying less food, visiting more often, and purchasing less food.
The market is extremely competitive and big grocers are investing heavily to keep prices low for essential items.
Kantar Worldpanel offers a monthly update on grocery spending. According to the latest figures, Aldi, Lidl and Tesco were the only supermarket chains that saw a rise in their market share. Fraser McKevitt, the Head of Retail and Consumer Insight at Tesco, said that there has been no significant shift towards bargain chains.
Prices are increasing at an unprecedented rate, reaching 9.1% in the UK, which is the highest level since 1982.
According to Poundland, there is a "definite dynamic" in which shoppers are moving away from large supermarkets and into discounters.
"I believe you're witnessing a shift, or a flight towards value, from traditional grocers and major multiples into the discount channel, where we operate. "Most discounters are performing better right now," states Barry Williams, Poundland's Managing Director.
According to him, customer numbers have increased by 5-10% over the same period last years.
A portion of this increase can be attributed to the increased number of people who return to High Streets after covid.
However, Mr Williams claims that people shop around and control their spending as best they can.
Customers are placing greater importance on essential areas of spending, which is what we can see. This is more about fast-moving consumer goods than it is food. You might find a few fewer items in each basket.
He says that frozen food sales are on the rise, and that this category tends to do well in difficult times because it helps customers manage their waste.
These low-cost chains have slowly been gaining market share in supermarket sales over the past five to ten year.
According to NielsenIQ's latest shopping survey, one in four households was monitoring the cost of their shopping basket. This included looking for their favorite brands at discount retailers like Poundland or Home Bargains.
Poundland operates more than 850 stores in the UK. Poundland was established in 1990 as a discount shop that sold products for a pound. The chain has grown its product ranges over the years. For instance, half of its stores now sell clothes. It has also been introducing chilled and frozen foods in recent years.
According to Mr Williams, with inflation at its highest point in years, Poundland's 1 Pound price point will be expanded to help customers manage their budgets.
"Customers are becoming more mindful of how much they spend. This is an easy way for them control their spending."
Two-thirds of the products will be branded.
He rejected the suggestion that the price point of one pound would be achieved through "shrinkflation", which is when companies reduce the product's content but maintain the same price.
"There is no shrinkflation in this. That was a fact that occurred in the market many years ago. That's not what's going on right now.
The Poundland boss will not speculate on the inflation rate, stating only that it is "not over yet."
He believes that inflation can get "baked in" and may never come back down. He also claims that discounters such as Aldi, Lil, and Home Bargains have an increasing role in the market's "price anchor".
"Without a healthy discount market, which we are fortunate to have in the market, there is a risk that prices will remain at these high levels."