When the All Party Parliamentary Small Shops Group needed to select a date to project current trends in retail into the future, they deliberately chose 2015 to mark the 200th anniversary of the Battle of Waterloo. Napoleon’s famous jibe that Britain was “a nation of shopkeepers” may have been true in 1815 but, according to the MPs, that description may no longer apply in a decade’s time unless there is more help from the authorities.
As well as providing a list of policy suggestions for government to preserve the fabric of small stores, the report also pays tribute to the role independent outlets play in the UK’s social and economic structure.
The report states that the small store sector is “a key driver of entrepreneurship, employment, skills, local economies, innovation and sophisticated business networks, as well as accessibility to vital goods and services, diversity, social inclusion and community activities”.
It also notes that the aggression of larger competitors, distortion of the supply chain, the cost of property, crime, poor planning decisions, a lack of appropriate business support and a disproportionate regulatory burden are creating so much pressure for small shops that many will have ceased trading by 2015, with few new entrants taking their place.
Taking into account the level of competition, supplier power and threat of alternative channels such as the internet, the report concludes that independent c-stores are “unlikely to survive” in 2015, while independent newsagents are “very unlikely” to survive. The wholesale sector will contract as a result, magnifying the price differentials with the multiples and leading to further contraction in numbers.
This bleak picture would be damaging for the UK as a whole, the report argues, as it would mean a decline in entrepreneurship, innovation and traditional skills, and would have implications for accessibility, diversity and levels of social contact and health, as well as an environmental impact from increased congestion and noise from car journeys to the supermarket.
Jim Dowd, chairman of the group of MPs behind the report, said that it was vital that the government recognised the trends that are occurring.
“If the future is going to be just about the Big Four supermarkets then let’s at least go into that future with our eyes open, rather than finding later on that something is lost for ever,” he pointed out. “Currently, there is abuse of power, or at the very least misuse of power, by the supermarkets and this needs to be reined in. When it comes to planning, it’s almost as if the Big Four feel they are above the law.”
Colchester MP Bob Russell said: “The reality is that supermarkets have been successful because others have not been on the same playing field. Where wholesalers have an insufficient number of retailers to get their stock to, there will be a domino effect and you end up with ‘clone town Britain’. We are not a Select Committee, but we can still raise issues.”
A third member of the group, West Cornwall MP Andrew George, added: “Although Tesco’s behaviour is entirely rational in itself, the question is whether it is appropriate or inappropriate abuse of power. The time has now come that this juggernaut needs to be regulated. It has gone beyond the watershed of acceptable behaviour.”
LLARGE CHAINS "SHOULD BE STOPPED" SAYS FORMER OFT CHIEF
John Bridgman, former director general of the Office of Fair Trading, said at a seminar in London last week that “large chains should not be allowed to expand into new areas”.
Speaking to an invited audience, he said: “Market power is not benign - it is used to secure increased earnings for shareholders, not to make food cheaper for shoppers.”
Bridgman dismissed the ‘two market’ definition as “arbitrary” and called price competition in grocery “a myth”.
He said: “It is a huge challenge for a householder to work out the best value among different pack sizes and brands at different supermarkets on different days of the week. About 95% shop in their nearest, most convenient supermarket.
“It is patently not true that there are two different markets. There is such a thing as a main shop and a top-up shop but supermarkets are after both. It is bizarre to allow Tesco to make more acquisitions in a market it is already in.”
Another myth is that multiple retailers grew to be the size they are because of superior trading practices, according to Bridgman.
He said: “The predators didn’t appear on the basis of a fair fight - we created them by denying parking in town and making huge out-of-town sites available to retailers. Tesco is the biggest because it was able to secure the largest amount of land near the largest number of people, not because it is the best. Where there is competition, prices are lower and standards are higher. But the key to this is a level playing field - it is the small stores that keep the big stores honest.”
Implement a moratorium on further mergers and takeovers until the government has brought forward proposals to secure the diversity and vitality of the retail sector
Establish a retail regulator
Revise the ‘two market’ ruling
Introduce comprehensive codes of practice across the retail sector
Review the tax system and close the Jersey VAT loophole
Review application of rate relief system as applied to independents trading on the threshold of viability
Introduce a new requirement for all local authorities to adopt a retail strategy within the Unitary Development Plan
Develop regeneration units in all local authorities within the UK
Develop retail-focused regeneration units in all Regional Development Agencies within the UK
Delegate greater decision-making power to local consumers and communities
Rapidly implement the recommendations of the Hampton review on cutting red tape for businesses
Make revisions to the retail property market
Encourage the transformation and innovation of the Post Office network
Implement measures to restrict the environmental impact of shifts in the retail sector
Jane Moore, The Village Store, Cheswardine, Shropshire:
“I’m glad MPs have woken up to this and although it would be nice to think that anything will help, they’ve probably left it too late. All the other specialist stores in our village have closed in recent years and we’re the only one left - it’s very sad.”
Michael Wordingham, Exeter Road Post Office and Newsagent, Peterborough:
“I have reservations about whether they can do anything. I think the time to achieve something was a long time ago. You can’t stop people going somewhere cheaper to shop, as we just can’t compete with the likes of Sainsbury’s. The fact that fewer people are using our post office will probably kill us off in the end.”
Dennis Williams, Broadway Star Supermarket, Edinburgh:
“Tesco is targeting convenience stores and the local councils are just letting it. It’s fine to produce a report but will anything be done about the recommendations? I think we need a public inquiry or for the OFT to do something more about the problem.”
Charles Wilson, chief executive of Booker:
“Booker is fully supportive of the All Party Parliamentary Small Shops Group recommendations. The recommendations are essential in maintaining and growing the independent retail market and ensuring consumer choice of brands, availability and location. We hope the OFT will fully embrace the report to promote the future prosperity of independent entrepreneurs.”
Chris Fitzpatrick, Fitz’s General Store, Moreton, Wirral:
“Something like this is long overdue and I’m pleased that the group is trying to do something to control the supermarkets. Saying that, the damage might already be done. I’ve been here 25 years now and it’s harder than ever. As well as a Tesco Express right opposite us we’ve also got Tesco, Sainsbury’s, Asda and Morrisons just 10 minutes’ drive in different directions. We’re doing all we can to survive but having to work 112 hours a week with paperwork on top can be soul destroying.”
Robin Fisher, Chesterton Stores, Ditchling, East Sussex:
“Slowly all the high street opposition to supermarkets is being wiped out. I don’t believe the government supports small shops at all and I don’t like the way supermarkets dictate to the suppliers. We hear a lot of rhetoric but see very little action.”
John Schofield, Nisa-Today’s chief financial officer:
“This report is an excellent contribution to the ongoing debate on the future of local shops and identifies many of the issues that Nisa-Today’s and the Association of Convenience Stores have been highlighting for many years. The recommendations are welcomed, but it is important that they are now translated into actions.”