Every little helps?

May 1, 2013 by
Filed under: The RSA, Uncategorized 


We had an excellent seminar this morning exploring the idea of ‘community retail’ with a range of experts and also colleagues from ASDA.  The supermarket chain tells a powerful story about its intention to make stores community hubs, a story given weight by the employment of part time community life champions in every store and its commitment to open up its property to free community use. ASDA HQ had expected the free space offer to lead to about 7,000 community uses over the first few months. In fact, and perhaps reflecting the closure of many publicly funded facilities, over 21,000 community groups – from bee keepers to the victims of domestic violence -have availed themselves of free spaces.

Also, to ASDA’s credit is their willingness to work with the RSA to undertake a robust evaluation of their work and to identify the challenges involved in taking their approach to the point of redefining the relationship between supermarkets and communities.

In the discussion this morning there was praise for ASDA – including from Civil Society Minister Nick Hurd (who has kindly agreed to be on the advisory group for the project) – but also the Minister and several others weren’t afraid to ask tough questions about the impact of supermarkets on local traders and the distinctiveness of town centres.

ASDA don’t operate neighbourhood supermarkets but the conversation put me in mind of a point I have meaning to make for some time.

In my neighbourhood in Clapham the long running attempt to stop Sainsbury from locating a store in the local shopping parade was recently defeated.   Predictably, the new shop is having a demonstrable effect on the competing local businesses including a newsagent, an off licence and a corner shop grocer. The last of these is making a small but unconvincing attempt to diversify by expanding its range of flowers and plants. Judging by their quality and cost, I suspect it will not succeed.

There is no need for local supermarkets to kill off other business. Indeed, the latest data suggests quite a lot of the local trade is redirected from larger supermarkets as people plump for just in time shopping and avoid expensive car use. But for those shops competing directly on basic groceries, the prospects after Tesco or Sainsbury have landed are bleak. Moreover just a couple of empty shop fronts can have a cooling effect on other businesses.

Yet – and this is my point – Sainsbury and Tesco (and other chains that do local supermarkets) must by now have a very good idea of which local businesses suffer, and which thrive, after the nationals have landed. So, why don’t the stores soften the blow and also potentially reduce local opposition by offering a consultancy and investment service to local businesses? In the case of the failing grocer near me, Sainsbury could, as soon as they got planning permission, advises the owner that while no grocer can compete on the basics, they could grow their business by attracting new footfall to a more specialist offer such as a florist, bakery, cake shop or butcher.

I am not suggesting that all grocers would want to adapt or have the capacity to do so, but the national chain could make a very significant offer comprising:

  • Advice and training
  • An interest free loan or investment
  • Some joint local marketing
  • A promise not to expand its own local offering in the chosen area of specialism

With all this, surely. from what might have appeared a threat, many new opportunities for retailers and offers for shoppers might emerge?

It is possible that something like this exists already but I have never heard of it and there is no sign of it in my localities. Indeed, I suspect that apart from simple lack of concern and imagination, the stumbling block might be that the nationals don’t want even implicitly to admit that their arrival has a terminal impact on directly competing outlets.

So, tell me, is this a crazy idea? If not, I might just drop Tesco and Sainsbury a line.

Share

Comments

  • Kay Carson

    Not crazy at all. Generally there is a consensus about ultimate economic goals and the need for change as a response to a changing world – the problem is how to get there without forcing catastrophic losses on some. Supermarket expansion has been a good thing that has come at a cost (by good I mean that we all vote with our feet and wallets for them daily). All you are advocating is that the supermarkets compensate local traders for the adjustment that they are forcing on them “in kind”, by equipping them for the change that they have to go through to survive themselves. It is similar to the building of local roads which supermarkets agree with local authorities before they are granted planning permission. The difference is that you suggest that the supermarkets compensate local traders voluntarily rather than being made to do it in order to achieve their business goals.

  • http://chriscreegan.com Chris Creegan

    Great blog Matthew and not crazy at all. In fact it resonates with various thoughts that I’ve meant to try and articulate for a while. I think your Clapham example is an interesting one and a reminder that it’s good to approach this discussion from a real life situation rather than at the abstract level of big supermarket bad/local shop good.

    I am a big fan of local shops and I’m lucky enough to be able to afford to use them because there’s no question that they are often more expensive often regardless of quality.

    But the reason why it’s one of my hobby horses is the value to local communities of a diversity of businesses and their presence on the high street. I don’t think that value is something that can be measured in straight financial terms, but because on a day to day business the customer does measure it that way (and why not?) it’s a difficult argument.

    I’m have to confess that my partner and I have two homes, one in the centre of Edinburgh and one in a village in Fife. Both make interesting examples.

    In Edinburgh, because we’re so central we suffer from the fact that shops tend to cater for commuters rather than locals (and the situation’s been exacerbated by prolonged tram works but that’s another story). When it comes to food and groceries we’ve been left with very little choice. We have a local Co-op which is okay if surprisingly expensive. And recently, as part of the expansion you refer to, Sainsbury have moved in directly over the road from the Co-op. Bot very handy for commuters leaving the city in the evening. But pretty rubbish from our point of view because neither offers anything substantially different to the other. At the same time we’ve seen the local fishmongers close. I don’t want to buy supermarket fish because the business model they operate means that it simply isn’t as fresh, but a local fishmonger can’t compete.

    In the village the situation is different. We actually have a few great shops on the village high street including a baker which is part of a local chain and a butcher who doubles up as an electrician. Hence both survive. But the local grocery store is poor and expensive and we end up driving to the next town to the Co-op.

    So in both cases I’m left with the same thought, which is similar to yours. Why can’t the big names operate in a way that serves their interests but maintains and enhances local diversity. For example in Edinburgh, both the Co-op and Sainsbury could have decided not to sell fish and recommended the local fishmonger. Hardly a big dent in their profit margin and the local shop survives. Result for me: more choice and better fish.

    On the other hand in the village why doesn’t the Co-op enter into some sort of community partnership model with the local grocer which enhances its offer and protects the other businesses on the village high street. Hardly a problem given the geographical coverage of the supermarket. Result for me: I get to shop in Pittenweem without driving to the supermarket (which is also a result for the environment).

    I’ve gone on at length, but I think these two examples illustrate that with some thought supermarkets could operate on our high streets and out of town in a way that doesn’t simply strip out the competition and leave the customer with convenience but very little choice. It would take quite a bit more nuance, partnership and attention to local sensitivities than supermarkets currently offer for all their community notice boards etc.

    The two examples I’ve mentioned are just that. There could be loads of other ways of doing it. Surely a win-win-win (big store, little store, customer).

  • http://www.magnifirdlesrning.com nigel rayment

    A completely wet idea to my mind. Try telling my local butcher to diversify into flowers and see what you get. If local communities say they don’t want these retail bullies on their patch, they don’t want them. The answer is not to bribe longstanding traders to reorganise their life’s work.

  • Steve Green

    There is no doubt that our high streets are facing a serious long term strategic problem. The Portas report only touched on the surface. Too many high streets are becoming the preserve of charity shops (good as they encourage re-use and recycling); betting shops, payday legal loansharks (both at the very wrong end of the financial services sector), estate agents and fast food chicken outlets.
    The rapid expansion of the smaller Tesco Metro’s etc is damaging to loca business. The problem comes as they increase the range of their products and services. Our local one even competes with the ATM of the sub post office two doors away.
    An answer perhaps lays with the intent of your previous post about active mayors and a long term strategy. Councils could use their planning powers to enforce the type of changes mentioned above (the fishmonger). They also need to use the business rate far more positively to encourage certain type of shop/outlets and increase the charge on others. The right of appeal to Whitehall by the large companies also needs to be drastically reduced. But with silence from anyone of the Labour side and a pro-big business Tory party there is little hope.

  • http://www.milward-oliver.com Gerald Milward-Oliver

    Great idea, Matthew… and something I’d like to explore down here in west Wiltshire… Look forward to hearing if you do pursue it – and do get me involved!

  • Matthew Taylor

    Thank you Gerald, Steve, Chris and Kay. Really helpful responses. With this encouragement I might try to push the idea a bit further.

  • http://urbanpollinators.co.uk Julian Dobson

    Lots of interesting thinking going on in this space. I think two issues in particular are worth exploring.

    First, how to get supermarkets to fully account for (and compensate for) externalities by measuring their impact over time not only on other traders but also on local employment (are they creating jobs or displacing them, and what is the net effect?), support for local suppliers and producers (who gets the service and supply contracts?) and environmental impact (both in terms of impact on the urban fabric and in terms of increased car usage).

    Second, how to ensure that when supermarkets or other big retailers seek to do good through charitable donations or making space available to communities, it’s done with an awareness of the full spectrum of local needs and an openness to causes and opportunities that might be less popular than the usual health charities or animal rescue organisations.

    It’s good to see a serious attempt to start exploring this territory. But the objective has to be a functioning local economy where the result is more opportunities (social and economic) and wealth that recirculates where it will do most good.

  • http://www.now-nz.com Gordon

    The dialogue is certainly a start. But as you have highlighted a lot of the decision making behind consumer spending is price point (I’m not ignoring convenience). Goods prices are generally higher for the local store than for the supermarket. Why is this? I’m sure there are a number of factors, but as a general rule of thumb more business/larger quantities equals more “discount”.

    I would think that the best thing the supermarket could do for the “local grocer” would be to bring their financial bargaining power to the table. I understand that there are more variables to consider such as damage to supplier etc… but if it’s going to drive the “local grocer” out, the supplier is going to suffer anyway and the other factors are rendered moot points.

    So to that end, being able to offer the “local grocer” comparable goods (if not the same) at the cost price that the supermarket receives the goods at, would go a fair way to allowing the “local grocer” to be more competitive given his new neighbor? The “local grocer” essentially uses the supermarket as their supplier for certain goods they wish to stock. If they wish to get their own fresh fish/veg/meat/haircut salon (My Gran used to work in a sweet shop that had a barber in the back, shhh, don’t tell Tesco ;-)) then why not. The “local grocer” can then play around with his prices to suit. There could even be economic benefits for the local consumer.

    I believe that this may make things easier for the “local grocer” to compete and should the discussion go further into the marketing side, perhaps the “local grocer” could receive “help” on what to stock by the supermarket.

    Sharing eh. A lost concept in day to day dealings with each other… ironic given that parents are always screaming at their kids to share.

    Kia Kaha Matthew

    Cheers

    Gordon

  • Alaric Pugh

    Go for it Matthew! Also Mary Portas – Andrew Armour thread v useful.

  • Pingback: Shopping for shared value – Matthew Taylor’s blog | Public Sector Blogs()