Retailers are bracing themselves for further competition

In four months the Competition Commission will publish its final report in the grocery market inquiry, and decide the fate of small stores across the country. Given the Commission's failure to offer any real solutions to the growing
problem of the dominance of the big four supermarkets in its interim report published last October, many feel that the outlook is not exactly promising.
The Commission said it had found no evidence that c-store numbers were in decline, that it saw no signs that below-cost selling or local vouchering harmed consumers, and that there was no proof of a waterbed effect. It also threw out suggestions that Tesco, the largest supermarket group with more than a 30% share of the grocery market, was hurting competition. Yes, the phrase "You should have gone to Specsavers" does spring to mind.
The Association of Convenience Stores, Federation of Small Businesses and many other campaign groups and green activists have been lobbying relentlessly to change the Commission's "flawed" thinking over the past few months, even challenging the soundness of the data used to influence their findings.
And retailers have been doing their bit by writing to MPs and urging them to make their views known to the Commission. However, only time will tell how successful all the lobbying has been.
But worryingly, it won't just be the supermarkets that smaller retailers will have to contend with in 2008. Price-led operators such as Poundland, Aldi, Netto and Lidl are all growing rapidly, and increasingly tapping into the convenience market by enhancing their food offer. Even high-street retailers such as Boots and Superdrug are increasing their stake in the convenience market by introducing new grocery ranges and comprehensive food-to-go offers.
With all this extra competition, plus the relentless rise of red tape, rent, fuel, parking charges and the national minimum wage, it's fair to say that the going looks decidedly tough for retailers in 2008.

Matthew Knowles, deputy head of public affairs, Federation of Small Businesses

"One only has to walk down a local high street to see the impact that the big four supermarkets are having; we now see either clone towns or ghost towns.
"However, small retailers can and must fight back. They can keep a close eye on, and good contacts with, their local councillors and lobby them to reduce parking charges or reject planning applications for new out-of-town retail development.
"Politicians know that they depend on the votes of small firms and their employees, but it certainly never hurts to remind them.
"Independent stores can also win out over their larger competitors. First, they can get to know their customers and provide them with a better and more personalised service. Second, they can serve niche products and markets that the supermarkets miss out on, such as locally sourced foods.
"Just as the supermarkets use loss leaders, so small stores can use their flexibility and quality customer service to attract and retain customers.
"2008 will be tough for independents, but by fighting back we feel there is success to be had."

Nigel Dowdney, owns two stores in Norfolk

"Unless the Competition Commission changes its thinking, next year will be hard for independent retailers.
"The Commission recently said that the price differential between supermarkets and independents was 16%, when we all know that it's about 25%, so we can't compete on price. However, there are other things that independents can do to draw in customers. We have to be recognised in the local community by getting involved in local events. Simple things such as supporting the local football team or dance club can help.
"Stocking local products is also a great idea. That way, we can make a huge point of difference between ourselves and the faceless manager of nearby Tesco."