What can be done to preserve access to groceries for those affected by
food deserts?
CONTENTS OF THIS PAGE
1) Specialisation or diversification
1.1) Specialisation of small shops
1.2) Diversification by small shops
1.3) Interaction between different retail premises
1.4) Loyalty cards schemes
1.5) Buying groups
1.6) Support from wholesalers
2) Small shops, deliveries, and Internet orders
2.1) What goods can be bought on the Internet
2.2) Possible problems with grocery purchases on the Internet
2.3) Who purchases on the Internet / uses remote delivery services
2.4) Small shops and Internet grocery orders
3)
Subsidising the rent of small shops
4) Subsidies and grants for local shops
4.1) Why (small businesses) may not get subsidies
4.2) A wide array of grants available
4.3) Problems with grants, moral hazard
4.4) Suggestions for other financial help for small shops, problems with these
5)
Farmers markets
6) Local buyouts of grocery stores
6.1) Community owned stores
7) Local activism, local co-operation
7.1) Saxmundham
1.
Specialisation or diversification
1.1.
Specialisation of small shops
Rural shops in affluent areas can specialise in an upmarket range of goods; for example, cheese, wines, or locally-made crafts goods. Smaller grocery shops have the advantage of flexibility of stock compared to the inertia of a large supermarket, and can stock unusual foods such as multicoloured pasta, a different such food each week to maintain custom. The shop gains tourist trade, and also draws custom from a wide radius of neighbouring villages. Profits from this support the shop, enabling it to maintain a range of general groceries. Of course, not every village can have such a specialist shop.
Examples of non-food shops successfully specialising include a video shop in Memphis, Tennessee, which stocked a wider range of films than the local Blockbuster, and expected staff to spend several hours a day watching the videos so they could advise customers on them. A local independent building supplies shop in the USA stocked not only power tools but the spare parts for them, unlike the major chains. Independent clothes shops can specialise in clothing for the very tall, large, or small persons. Independent shops generally can specialise in product training, because customers at chain retailers may obtain their cheaper prices at the cost of lack of available advice on products.
Specialisation can work in less affluent areas. On The Beechway, Ashby, Scunthorpe, there is a fishing tackle shop that draws in custom from a wide area of Lincolnshire and Yorkshire. North Lincolnshire has many canals, rivers, and dykes, and is quite a centre for recreational fishing. This shop on The Beechway also brings trade to the other shops on the parade, enabling them to stay open and offer grocery items.
Small grocery shops can specialise in ethnic-minority foods if there is a local market for this. The supermarkets have already entered many ethnic-food markets, for example Indian, Chinese, Italian, and Thai, to an extent. However the specialised spices and other ingredients for home cooking of authentic ethnic dishes, as opposed to ‘ready meals’ in an ethnic style, is not always found in a large supermarket. There are also smaller ethnic-food markets such as Greek, Jewish, and Vietnamese, where there are insufficient economies of scale and insufficient development of ready meals for English consumers for the supermarkets to consider penetration, as yet anyway.
1.2)
Diversification by small shops
Diversification is the route followed by many small convenience stores. Space once used for food retailing has been given over to photocopying, newspapers and magazines, telephone cards, cash point machines, lottery and electricity payment machines, dry cleaning services, and much else. Some convenience stores gained extra space by expanding into an empty unit next door. The danger is that every local convenience shop will do this and one shop’s gains will be at the expense of another. Worse, a local price war may result, reducing profits for all. Some shopkeepers, although reluctant to co-operate with a competitor, will try and avoid such price wars.
1.3)
Interaction between different retail premises
Specialist shopkeepers often welcomed the presence of a different type of specialist shop close by, as this would increase footfall to their shop. Some types of retailers were less welcome as neighbours. Off licences were feared for possibly generating rowdiness and vandalism, and takeaways for generating litter. Both these types of shops were seen by shops opening regular hours as doing little to help their business because they opened at different hours, later in the evening. Convenience stores were less tolerant of any neighbouring retail facility. A convenience store in east Birmingham welcomed the closure of the chemist next door, as this meant more parking spaces for customers coming to him. A convenience store in Lincolnshire looked forward to the closure of a garden centre opposite because housing would be built there, hopefully bringing him more custom.
1.4.
Loyalty cards schemes
Some groups of shops have started loyalty card schemes, copying the loyalty card schemes in operation at e.g. Tesco. Customers gain points for using one of the participating retail outlets. Leominster in Herefordshire is trying this scheme.
Pay Point, the company which operates pay terminals in 17,500 small shops, is pioneering another scheme using customers’ mobile phones (Daily Mail, 13 April 2007, p.41). Some shoppers see coupons as outdated and inconvenient; this scheme will see a barcode sent to participants’ phones, and they will be able to get this barcode scanned at the shop till to receive loyalty rewards.
1.5. Buying
groups
Buying groups, or affinity groups, were first set up in 1955 in the UK to defend small grocers against the multiples. By the 1970s about 21,000 of the UK’s 57,000 convenience stores had organised themselves into buying groups such as Wavy Line, Spar, Mace, and VG. Convenience stores in this 21,000 were less likely to close than others (J Tanburn, 1981, p.22). Buying groups provided some of the economies of scale enjoyed by supermarkets for small shops too. However some small shopkeepers resented the loss of commercial autonomy they felt went with joining a buying group. Member shops had to keep up certain standards of cleanliness because the name itself became a brand with the public and one unkempt shop might spoil opinion of all the others. Some buying groups required their members to become off-licences. This would raise turnover and profits but the shop would then by law have to stay open till 10pm, raising the crime risk to shop staff. Applying for permission could also be costly for the shopkeeper, especially if local people objected because of fears of noise and crime. The 2003 Licensing Act will permit off-licences to trade for 24 hours (The Grocer, 26/7/03, p.34). This will favour supermarkets, which may be open for 24 hours anyway, but will increase pressure on small shops to open for those hours or lose trade.
1.6.
Support from wholesalers
Wholesalers might give support to their small-shop clientele, recognising that their business depends on them. Giving discounts to shops who ordered in bulk presented a dilemma. If the wholesalers gave discounts, this might encourage concentration of small shops, increasing the small shops’ buying power over wholesalers. On the other hand not giving discounts did not encourage customer loyalty. A clientele of fewer customers with large orders encouraged buying power but also simplified the wholesalers’ business. Many wholesalers gave small discounts for bulk, of 5% to 10%.
Wholesalers gave other support to small shops. Some offered a makeover of the shop, rearranging merchandise (both to increase sales and to improve security). Wholesalers might arrange advertising free to the shop such as neighbourhood leafleting or posters for the shop’s windows.
2.
Small shops, deliveries, and Internet orders
2.1.
What goods can be bought on the Internet
The Internet, as used for commerce rather than for information-seeking, has made perhaps rather less progress in the area of groceries than it has in, say, books, travel plans, financial schemes, or music. The Web is best suited for commerce in low weight, or even zero-weight, standardised, non-perishable, goods; ideally, goods with a high value-to-weight ratio. These characteristics make them easy to order, cheap to deliver, and immune to long delays at the delivery end before the purchaser picks the goods up. Groceries have virtually none of these characteristics, and it has been estimated that even by 2005 just 7% of the UK grocery market will be transacted via the Web. Clothes, with their great variation in colour, texture, pattern, size, and quality, may also be less suited to sales via websites that may not give true indications of colour etc.
‘Groceries’ that are bought via the Web tend to be standard items like toilet paper or mineral water. Mineral water is hardly a ‘high value-to-weight product, or a low weight product, but the strategy for ordering groceries from supermarkets appears to be for many shoppers to order the standardised items from there, but still visit for items such as fresh vegetables. If the supermarket is perceived to be charging the same delivery cost (often £5, though perhaps nothing if from Iceland or if over, say, £100 of groceries are ordered) no matter what is ordered, the shopper may as well get the heavy items delivered and just carry lighter items themselves. Shoppers using the Web may still like to visit the shop physically, to examine fresh produce for freshness, quality, and other characteristics, and to see what new products or bargains are on offer.
2.2. Possible
problems with grocery purchases on the Internet
Those relying solely on the Web for grocery purchases are vulnerable to erratic substitutions for goods they have ordered but are not in stock, single deliveries of ‘two-for-one’ offers which they would have taken two if physically present, and missing out on cheaper, better value substitutes they may have taken if actually at the shop. Earlier problems with computers crashing part-way through an order, uncertainty as to what had been ordered or whether an order had actually been placed, and payment-security problems, are being sorted out. However large supermarkets may stock 30,000 different lines and sorting through a catalogue online may be very slow. Pictures of the goods on offer – all goods, not just groceries - could persuade shoppers to buy more, but pictures take large amounts of data compared to text, so can make sites slow to download.
Shoppers might find they were missing out on bargains – they certainly would not benefit from the discount shelf many supermarkets have for goods that are about to date-expire, always a busy place in supermarkets. Worse, if there was a BOGOF (Buy-one-get-one-free) offer on, and the shopper would almost certainly have picked up two items, if they ordered one of these on the Net, only one would be delivered.
Some shoppers were worried about payment security, of giving their credit card details over the Net. Although sites have security measures, and shoppers would often be giving such details at the store, people instinctively felt less secure about such transactions at their home computer.
The last stage of Web shopping; delivering the goods, has proved to be the major bugbear. The retailer can use their own fleet of vehicles, or attempt to use an existing delivery network such as the Royal Mail or the milk delivery vehicles. Either way, the logistical problem of having the goods arrive in a reasonably short time and with a reasonably predictable time slot of delivery, remains. Popular delivery slots such as early evening when the shopper is home from work would go quickly. Customers don’t want to wait days for delivery, and then be told they must be in all afternoon to receive the goods. Devices such as lockable boxes attached to the outside of a property may partially solve the second problem. However they are not suitable for all properties, e.g. flats, they are unsightly, and still are not 100% secure.
For supermarkets, there were problems of delivering frozen, chilled, and ambient (room-temperature) goods all on the same van, and of frozen goods left for collection thawing out.
2.3. Who
purchases on the Internet / uses remote delivery services
In theory the Internet could be a boon for those of limited mobility who find it hard to physically access a good quality grocery store. In practice, ownership of computers, access to the Internet, and the expertise to operate a computer, tends to be limited amongst those who may suffer limited access to larger stores; that is, the elderly, poor, and disabled. These people, likely to live in small households and order limited amounts of groceries at a time, get hurt most by the delivery charge put on small orders by many store operators. Those ordering via the Web tend to be cash-rich, time-poor households; the Web seems to be mainly a time-saver rather than an access-facilitator. Better-off career women, who are also bringing up a family, find that ordering from a supermarket via the Internet avoids the risk of ‘pester-power’; the children cannot demand from the array of sweets often found at supermarket checkouts.
2.4.
Small shops and Internet grocery orders
This is where small shops could play an important role. Most urban households are still within 500 metres of some kind of retail facility, albeit not one selling much fresh fruit and vegetables. Rural households with cars will likely have a shop within 5 – 10 minutes drive. Small shops might be able to hold goods delivered, for example, when the householder is at work, for picking up later. This has some advantages and some drawbacks, for the small shopkeeper. The customer, when coming to pick up the goods, may well make some purchase in the shop also. The shop could charge for holding the goods, or simply rely on extra purchases generated. However shops could face problems with finding space for Web-ordered goods hanging around on the premises for hours; many small shops need to find a sales use for every last square inch of their premises to remain profitable. At the same time, some types of goods are demanding more space. The number of different types of chocolate bars, for example, has multiplied over the past few years, and shopkeepers have to stock them all, as if the one they don’t stock is a customer’s favourite, that customer will take their whole trade elsewhere. There would also be a crime risk. Would the shopkeeper be liable if the goods were stolen, and if the householder opened the packaging to find damaged goods, would the shopkeeper be able to prove the damage was not incurred at their premises? There may also be hygiene issues; butchers in particular may be less enthusiastic about having packages hanging around near meat. Which entrance would the deliverer of the goods to the shop use? If it was the customer entrance, the sales area of the shop would become congested, presenting a trip hazard to customers. If it was the back deliveries area of the shop, congestion and damage to the goods may result.
However, as congestion on UK roads becomes worse, delivery times perhaps become less reliable, fuel costs rise, and people become more time-pressed, small shops might be able to play a role, as the ‘last-mile’ deliverer. With many direct-to-home delivery networks, whether of electronic goods, like cable TV, or of physical goods, the ‘last mile’ to the customer’s home presents more problems than the rest of the journey. Some shops might, for a fee, act as local hubs for Web-ordered goods, either delivering themselves or having the customer come in. Some small grocery shops do deliver for local well-known customers who cannot get in to the shop themselves; minimising delivery costs by combining it with a journey being done anyway such as home after hours or to the wholesaler. Local shops, with knowledge of their customers’ time needs, may be able to have a ‘man and a van’ serving the last mile of such Web-ordered goods.
Local takeaways that also deliver anyway could also deliver Internet goods, as Domino’s Pizza is doing already (Guardian II, 22/6/03, p.6). This works well with lightweight goods such as CDs. Some late-night garages, as well as off-licences that are also open till late anyway, are holding Web-ordered goods for a charge of £1 a package. Even hospitals, which are also of course open 24 hours a day, have been proposed as pick up points for Web-ordered goods.
3.
Subsidising the rent of small shops
Could landlords of retail premises reduce the rent? This would not help village shops which are often owner-occupied anyway, but might seem preferable, to private landlords of urban parades, to seeing units stay empty with no rent. However private landlords are reluctant to give an outright rent reduction as this reduces the effective capital value of their property. With several units, some occupied, a private landlord may prefer to sit it out with the empty ones till a tenant comes along. Or they may give ‘hidden’ rent reductions such as rents holidays, whilst still maintaining the nominal annual rent as before. If councils gave rent reductions, this could worsen the retail access problem in neighbourhoods with privately rented parades because shops would migrate to the cheaper rents of the council parade. In practice, rents for suburban shops tend to be at the borderlines of profitability for the landlord, private or council, given administration and repair costs. Councils, already short of money in most cases, might be reluctant to cut their income further.
4. Subsidies and grants for local shops
4.1. Why
(small businesses) may not get subsidies
Subsidies for particular businesses are generally discouraged by both Westminster and Brussels. The prevailing ethos is of a ‘level playing field’ where all businesses can compete on an equal footing. Of course one might argue that, to take the sporting analogy a bit further, on a real playing field, with players of differing size, aptitude, and ability, some would need to be handicapped, others given a points advantage, for a truly fair game to take place. On a level playing field where all compete together, the biggest players, for example the supermarkets, will always have an advantage over the small corner shop.
Where, however, there is a perceived economic necessity for a grant to a specific business, this will be made. This tends to mean, where a business is so important to the local economy that it should not be allowed to cease production – for example the car plant at Longbridge, south Birmingham. Smaller businesses may then perceive a government bias towards help with the larger businesses.
4.2. A
wide array of grants available
A number of grants are available for small shopkeepers, mainly for purposes like smartening up the shop front or for one-off costs like buying new freezers, purchasing anti crime items such as security lights, steel shutters, or alarms, or replacing imperial weighing equipment with metric.
In 2008 the UK Government proposed giving fridges to local shops in less-affluent areas to encourage them to sell fresh fruit and vegetables. A pilot scheme began with 12 shops in N E England in November 2008.
There is generally a wide and ever-changing array of grants for shopkeepers to choose from, each for a quite specific purpose. This can be good and bad. A wide choice means if the shop is unsuccessful at applying for one grant it can apply for another. However the unstable and variable nature of grants is confusing, means more paperwork and reading for shopkeepers, and by the time a grant is applied for, it may no longer exist. Grants for e.g. rural areas tended to be on a ‘one size fits all’ basis, yet what is appropriate for wealthy commuter villages outside Harrogate may not be appropriate for poorer ex-mining villages near Doncaster.
Shopkeepers felt the need to be better advised on what grants were available and which they themselves would be eligible for. However shopkeepers tended to distrust official advisors, and used informal sources of information such as family, friends, and neighbourhood organisations more. There may be a need for local ‘grant shops’ in some retail areas, especially in areas of many ethnic-minority shopkeepers.
Ongoing grants for things like wages or running costs are generally not available. However shops in villages of under 3,000 persons can get business rates reductions. The idea here is not so much commercial help as maintaining the vitality of the village. Since village housing is occupied more by wealthy persons nowadays, this grant, with this purpose, may be seen as rather regressive. Perhaps similar grants could be given to the last shop on a less-affluent suburban housing estate (see 4.4. below).
4.3.
Problems with grants, moral hazard
A major moral hazard with grants is that the shopkeeper may come to rely on these rather than try and run an efficient business. Yet often an ‘inefficient’, that is commercially unprofitable, business, can still be socially vital for an area, at least for those in the area of limited mobility. There is a grey area of costs where a business of negative profitability nevertheless produces a positive return if its social benefits are allowed for, and a positive return in financial terms if those social benefits could be costed. For example, having a local shop may reduce the need for some care costs. Often, though, these costs and social benefits are not quantified, because to do so would be a complex and costly exercise.
Bureaucracy is another problem with grants and subsidies. There are administration costs, costs of checking up on cheating, and costs of dealing with those who miss out on the grant and appeal. Also shops that are seen as relying on outside help to survive may be seen as hopeless, ‘basket cases’, something society does not really need.
Interestingly, many small business associations such as Chambers of Trade, many of whose members may well be small shopkeepers, did not want subsidies for small businesses. Shopkeepers, even if pessimistic about the future of the sector as a whole, tended to be more hopeful about the future of their particular business, and preferred lower general taxation to government help and ‘interference’.
4.4.
Suggestions for other financial help for small shops, problems with these
The idea of reducing the business rates of a single shop in a village of under 3,000 people could be extended to isolated shops on poor housing estates, that is, treat the estate as a ‘village’. In theory there would be no competition issue; however these estates often have several empty shop units as well. If one of these units was taken up, would the first shop immediately lose its grant, as well as now facing competition too? There might have to be guaranteed continuity of the grant for say two years, irrespective of what retail developments took place, but that would be costly; otherwise the retail facilities on these estates would be very unstable.
There could be a rates and/or rent ‘holiday’ for anyone taking on a previously empty shop. However this would lead to ‘churning’ as when the ‘holiday’ ended, shopkeepers would move to another empty shop.
The burden of taxation on retailers could be shifted from a floor-area based measure to one based on profits. This would help smaller shops because large retailers tend to make more profit per square metre of sales area. However a profit-based tax would be harder to administer because floor area is set and easy to measure whereas clever accounting can disguise much of the profits a business makes.
Some have suggested earmarking, or hypothecating, taxes to support small shops. Some of the petrol tax could be used for this, in an effort to help the environment perhaps. The Treasury tends to resist hypothecation of taxes, for three reasons. Firstly, the economic cycle tends to result in the need for tax revenue for a particular purpose rising just as the actual tax payable is falling. In this case the Treasury would find itself subsidising the hypothecated tax with general tax money at the bottom of the economic cycle, and probably taking some money out of the hypothecation destination at times of economic boom. This would destroy the hypothecation idea. Secondly, hypothecating taxes may reduce the willingness of the public to pay taxes in some instances. Those who see no benefit to themselves in the purpose the tax is hypothecated for may resist this tax. Thirdly, hypothecation reduces the discretion of the Chancellor to use taxation as (s)he sees fit.
5. Farmers markets
Farmers markets have grown rapidly in the UK. The first Farmers Market in Britain was set up in 1997, but by 2001 the UK had over 200 such markets, with a combined turnover in 2001 of £65 million (Guardian 11, 5/2/02, p.64). By 2006 the UK had 550 Farmers Markets, and even the giant Tesco was sending Regional Buyers to some of these markets to see if the supermarket chain could source some local foods from there (Guardian 16 September 2006, p.29).
Such markets can help the trade of local fixed shops rather than compete with them, as local people and tourists visit the market. Existing shops may put out stalls too. However the success of the market, and its impact on local shops’ trade, depends a lot on pedestrian flows and car traffic. Brigg, Lincolnshire, set up a farmers market in June 2000, and attracts between 1,500 and 2,000 extra visitors to Brigg. A survey by North Lincolnshire Council found that 35 out of the 40 businesses who replied thought the market had boosted their trade.
Barton, Lincolnshire, also began a farmers market in autumn 2001, but this was less successful and closed in September 2002. A poor location was blamed, away from the main pedestrian flows, along with having the market on a weekday when many were at work. Epworth, near Doncaster, also had a farmers market but some shopkeepers there felt this was too successful (Scunthorpe telegraph, 13/11/02, p.13). The stall operators and their customers took all the car parking, making it harder for customers of the regular shops. Some shopkeepers complained that the stalls took over many of the parking bays from 6am.
These examples show that the micro-geography of pedestrian, car, and lorry flows need to be considered at a very small scale, down to a few metres, for a market to work well with the local shops.
References
H FESTING, ‘So you want to start a Farmers’ Market’, ‘Town and Country Planning’, July 1998, pp.216-219.
6.
Local buyouts of grocery stores
In some wealthier villages, villagers, faced with the closure of their local grocery store and no alternative for miles, have clubbed together to raise funds to take it over and run it themselves. In Maiden Bradley, Dorset, the villagers raised £21,000 from the UK government’s Countryside Agency, and 150 of the 240 adult inhabitants contributed sums from £5 to £500, to buy shares in the village grocery store (Guardian 10/6/2002, p.24). Some villagers contributed by volunteering labour to paint and refurbish the shop. It reopened with an upmarket selection of home made bread and other locally produced foods, along with wine and specialty teas. The shop is leased by its owners, the village, and manages to make a good profit.
However this option may well not be open to inhabitants of less well off villages
6.1. Community owned stores
On some poorer estates, such as Longley in Sheffield, which in 2000 had 30% unemployment, shops have been set up by local people. Employment was provided out of the shop’s profits, and the shop enabled people to access fresh fruit and vegetables without paying an 85p bus fare each way, a lot out of £50 a week Benefits.
7. Local activism, local co-operation
7.1.
Saxmundham
Saxmundham is a small Suffolk market town, with a weekly food market going back to9 the 13th century. With a population of around 4,000 it was a typical target for Tesco to set up a medium-sized supermarket there, in 1997. However Saxmundham is very untypical in that, to date (Daily Mail, 1/7/2006, pp.56-57), Tesco has been kept out.
Three factors appear to have contributed to the success of the town in preserving a small-shop economy, free from the threat of closure a Tesco supermarket would possibly bring. Although Tesco can also justify an argument, the ‘clawback of trade’ principle, that a supermarket can actually boost the footfall to local shops. The clawback factor seems to work if the supermarket is close to the other shops, bringing people in past their front doors, if the local economy is prosperous, supporting a diverse array of shops, and if the small shops can diversify and complement, not compete, with the supermarket, offering specialist foods Tesco doesn’t sell.
The three factors in Saxmundham were, firstly, the energy of one campaigner, Lady Cranbrook, in evaluating the local food economy and I galvanising other people and shops to get together and face Tesco. Secondly, the subsequent co-operation of all interested parties, such as shops, wholesalers, and farmers. Thirdly, a helpful attitude by local government, namely, Suffolk Coastal District Council. The Council for the Protection of Rural England also became involved and has published a report on Saxmundham. Local Saxmundham shops have continued to make a real effort to attract custom, with the spectre of Beccles down the road to spur them on; in Beccles, the local market ‘died the week Tesco opened, with only four stalls left operating there in 2006’. Local stores source food locally, pride themselves on the freshness of the produce, and give local services to those unable to access them easily, such as the elderly, disabled, and unwell.