Above the general clamour for a new course of action in the grocery retailing sector, the voices of concern in Westminster about Tesco’s market share and lawyers giving the Office of Fair Trading (OFT) a dressing down, you can just about make out the sound of stable doors being slammed. But many in the trade are unsure as to whether the horse has already bolted.
The All Party Small Shops Group completes its evidence hearings this week when the OFT outlines its position on the current marketplace and the regulatory process. The evidence from the Small Shops Group hearings will be used to compile a report, to be published early next year, on the future of high street retailing and the MPs involved are looking at current trends and how they will shape Britain’s high streets in 2015. And they will by now be in no doubt that if they want a vision of the future they will need to take into account how much things have changed in the past 10 years.
A decade ago Tesco was preparing to open its first Express convenience store - now it has about 600 Expresses, plus more than 500 One Stops, as well as reputedly the biggest land bank in the retail industry awaiting development. And there are plenty more c-stores to come, according to company secretary Lucy Neville-Rolfe.
Giving evidence to the committee, Neville-Rolfe said: “We’ve worked out how to do convenience retailing and want to continue to grow in this area. The rate of growth depends on the market, but in 10 years’ time another 600 stores would be sustainable - we might even have more than that.” Neville-Rolfe maintained that it was customer needs that were driving Tesco’s expansion into convenience, and that the opening of Express stores “makes local shopping more attractive”.
She continued: “How much bigger we get depends on customers and competitors. A market share cap was tried in Ireland - they have now decided this is a bad idea. Competition helps the economy grow.” Competition minister Gerry Sutcliffe who, along with Jim Knight of DEFRA and Yvette Cooper from the Office of the Deputy Prime Minister, was one of three ministers to give evidence to the inquiry. He pointed out that the government didn’t want to intervene in the market, and that bodies such as the OFT and Competition Commission existed so that markets did not become politicised.
Sutcliffe said: “I am regularly asked to intervene in markets, but I resist. It doesn’t mean I’m not interested, but we have to deal with issues through the competition structure set up. “I do have concerns that there is an imbalance in grocery retailing, but it’s a very complex area. I definitely feel there is a problem that needs to be addressed, but the consumer has to be the champion - the consumer is driving the market and has to be empowered.”
A grim vision of the future if market forces continue was unveiled by David Smith, chair of the Independent Retailers’ Confederation, an amalgamation of 12 trade associations representing high street retailing. He said: “If market forces continue unchecked we’ll soon be faced with dealing with just two companies - one British, one American - who will be responsible for the distribution of all food, cars, prescriptions and white goods. “Suppliers will be tied to them and governments will be forced to negotiate with them to put policies in place - look how the FSA is struggling with healthy eating labelling.”
Smith told the committee that local and national politicians have a duty to promote local shopping, as continued closures would have a negative impact on the whole economy. He added: “Boarded up shops bring down the whole area, and multiples don’t use the local electrician or plumber when developing their stores. They don’t serve on the town council or the local school, and they don’t sponsor the local football team.”
The Rural Issues
Jim Knight, rural affairs minister at government department DEFRA, told the group about government support for rural enterprises including rate relief, post office funding and ‘hub’ schemes to help convert pubs and village halls into shops. He said: “Where we are now is quite worrying. Those businesses that are undercapitalised will struggle, but should we use taxpayers’ money to keep businesses alive that can’t cope? But we can’t abandon them either. “
The social contact that retailing provides in rural areas is very important, but the challenge for village retailers is the opening hours. Most wage-earners living in villages basically just sleep in their village - it is no good if the store is shut when the customer comes home.” Sean Carter and retailer Adrian Boorman represented the Rural Shops Alliance (RSA) at the evidence sessions.
The RSA has repeatedly asked local and national government for a stronger sense of direction on its policy for rural areas, and to beef up support levels by employing more retail advisers. Carter said: “It was good to be here, and hopefully the rural voice will be heard. But hearing and listening are two different things. “Most RSA members are not large enough to be in symbol groups, so don’t get any retail advice. We need to give small retailers the same level of advice as big retailers, but most Rural Development Advisors (RDA) have little or no knowledge of retailing.”
Boorman added: “We need to encourage those who need encouraging. The problem is we don’t know where we’re heading. The RDAs lack the skills and experience.”