RURAL RETAILER Spring 2015

RuralRetailer

Issue 29 l Spring 2015www.ruralshops.org.uk

The Journal of the RuralShops Alliance

EXCLUSIVE: The TruthBehind Showpiece ShopELECTION: What the Next Government should do for Rural Shops

New Source of Grants for Rural Shops

2 RuralRetailer ● Spring 2015 ● Issue 29

for moreinformation and

news...

In this issue...

Cover image: Chris Grimes in the

brand new shop at Blockley

Your contacts...

RuralRetailer ● Published by The Rural Shops Alliance. ● Printed by: Russell Press, Nottingham. ● Design: Kavita Graphics. [email protected]

Contents...

● Rural Shops Alliance20 Garland, RothleyLeics. LE7 7RF

● Tel: 01305 752044● E-mail: [email protected]● Website: www.ruralshops.org.uk

● In my opinion, By RSA Chief Executive● Your Action Checklist / RSA Weekly Newsletter● Blockley Shop: Be careful what you wish for● RSA Views: Why Rural Shops matter and what Government

can do to help them: Village Shops off the Radar, BusinessRates, Post Office, Cost of Staff, Compensation for Roadworks

● The View from behind the counter● Leader Funding: Possible Financial

Support for Rural Businesses● Whitstone Stores: A good time to be in convenience and

an even better time to be in a symbol group? ● Legal Bits & Bobs: Shared Parental Leave; “Fit for Work”

Service; Carrier Bag Charges; Tobacco Going Dark;Regulations on sales of E-Cigarettes to Under-18s; Automatic Pension Enrolment

● The Values behind a Brand / Bus Routes in Rural Areas● Bishampton does the Double /

“May you live in interesting times”

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In my Opinion...Smaller shops are caught in the crossfire of the ferocious price warsbetween the big supermarkets. This is a situation where being bigmakes life easier.

If you are ordering product by the lorry load youare in a far better bargaining position than if youare buying one case at your local cash-and-carry.In the UK we have the Competition and MarketsAuthority (CMA) with a remit to prevent unfaircompetition and limit this effect.

However, when it comes to bureaucracy, thegovernment too often seems on the side of thebig boys. David Cameron launched the Red Tape Challenge with much fanfare. Many oldregulations were swept away, but any benefits tosmall businesses have been dwarfed by newmeasures.

There has been a raft of new ways to make smallbusiness owners spend their evenings sweatingand swearing in front of their computers, tryingto understand the latest edict. Many of these newmeasures are a nuisance for a large companywith a specialist IT department and dedicated HR professionals. They are a more seriousproposition for a small business, where theowner is pretty well doing everything, frommanaging IT to cleaning the toilet..

In the coming months, millions of tinycompanies will be forced to set up an automaticpension enrolment scheme. The PensionsRegulator helpfully reminds us, “if you fail tocomply with your duties, you may be finedand/or prosecuted”. This has already happenedto some companies – it is not an idle threat.Setting up a scheme can be a bureaucraticnightmare. The pension industry is not exactlyrushing forward to help small employers set up

schemes that may in the event have nobodycontributing into them. It can be a real problemfor the small employer.

There are some fields where economies of scaleare massive and pension provision is one ofthem. This was true back in 1946, when thecurrent state pension scheme was established.It is still true now. It is a total nonsense thatmillions of small employers will spend manyhours of their valuable time and pay out goodmoney to financial advisers, all for somethingthat is far better provided by the state throughNational Insurance contributions. This is a hiddenway that government policy is giving a furthercompetitive advantage to large companies.

I am sure this was totally unintended, just aconsequence of an ill-thought-out policy. But it would be good if one day one of theseunintended outcomes worked in favour of thesmall guy, the small retailer just buying the onecase at the cash and carry. I am not holding my breath.

Issue 29 ● Spring 2015 ● RuralRetailer 3

Another hidden advantage for the big boys?

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RSA WEEKLY NEWSLETTER...

One of the best-known, most successfulcommunity-owned shops in the country issuffering a severe crisis of confidence.

And this is despite the November openingof a brand new, purpose-built 900 sq. ft.store costing a staggering £800,000.

2005. But, unlike most such initiatives, thehugely supportive local residents were preparedto employ an experienced manager (a talentedand well-liked former hotelier who was alreadyrunning a successful café and deli in the village),and to pay all the shop and café staff. So therewas no reliance on unpaid volunteers.

Right from the start, it was recognised that theshop was for all the residents of the localcommunity. Although much of the most intensefund raising was done by those who would notnecessarily rely on the shop on a daily basis, itwas happily understood that their hard workwould benefit those residents – such as elderly

Blockley Shop...


it is an attractive building

Blockley Village Shop in Gloucestershire, likemany community-owned retail businesses, wasborn out of calamity when the village’scommercial shop and Post Office closed in

Be careful what you wish

people and young mums - in real need of whatwas on offer.

The shop with its small café was comfortablyhoused for several years in a dilapidated butwelcoming former Coach House in the mainstreet. Despite the fact that many things wereheld together with sticky tape and BluTak andtasks undertaken by a series of ‘I know a blokein the village who will do that’, the shop wassoon heralded as the ultimate in community-owned projects.

Representatives from around 30 ‘wannabe’villages beat a path to manager Chris Grimes’sdoor to learn just how it should be done.National media trumpeted its award-winningsuccesses. Turnover was exemplary – thecombination of an experienced manager andwell-trained paid staff, a broad offer ofaffordable everyday fare alongside treats andlocal produce, a small but welcoming café and,above all, support from across the village fromsocial housing to mansions and across the ages,from pocket money children to pensioners and

their weekly shop, meant it was soon turningover £500,000 annually.

That helped generate £5,000 a year profit thatwas ploughed back into local projects alongsidea myriad of true community ‘hub’ facilities – ITdrop-ins, lunch club for elderly residents,mother and baby groups, talks from the doctor,police and social housing support and anoutreach PO service three days a week. Theshop even sponsored the village’s May Fair andhosted a Christmas party for the village. It was atrue co-operative venture. The volunteercommittee was supportive of the manager, thecommunity kept fund-raising, customers flockedthrough the door, and all was well with theworld.

But then the lease ran out for the old CoachHouse premises; exciting, grandiose, plans fora purpose-built replacement building tookover the lives of the shop’s committee.

Fund raising started. Placard-waving locals werebussed into Cirencester to successfully persuade

By Beth Whittaker


Assistant Manager Yvonne Smith serving in the modern counter area

A steel beam – a “feature” - across the sales area is slightly incongruous

for...

local planners that the new building had meritand was vital to the next stage of the shop’shopefully long life.

And the money? No less than £500,000 fromthe Big Lottery Fund, £120,000 from villagers,and a £250,000 Social Investment Business loanand grant.

The building was constructed on a reallychallenging site, using beautiful Cotswold stone,slate roof and seasoned timbers. It was to sitnext door to the old shop, abutting thechurchyard. It would have a cellar store room,digging deep into the Cotswold soil andnecessitating the diversion of a stream. The fishin the neighbouring mill pond had to go onholiday for six months while building work was


completed. Expensive but vital bat and treesurveys were undertaken, and the almostinevitable clashes between builders andarchitects took their toll on timescales.

There is underfloor heating in the new publicloos, state of the art chillers which recycle heat,a £30,000 catering-quality kitchen serving theelegant new café, and even a £37,000 disabledlift to allow the shop to employ disabled peoplewho might need to reach the two floors abovethe shop.

So the money was quickly spent and, altogether,the new shop was to be a very, very grand placeindeed – with the annual contribution to thecommunity anticipated to rise to £15,000 a year.

Next, it was time to bring on a new supplier –Nisa (itself a member-owned organisation). Thiswas much to the relief of manager Chris. Thischange allowed prices to become far morecompetitive and provided a ‘brilliant’ two-lane

Blockley Shop...continued

The café provides modern seating

The welcome is spoilt somewhat by the temporary sign still there four months after opening

Chris Grimes


check out and EPOS systems, trade knowledge,back up and IT support for Chris and his team.It’s believed the store has become the firstcommunity shop in the country to become a fullmember of a national buying group. Mostcommunity shops are too small to meet theirusual minimum order requirements, (in the caseof Nisa, 400 cases minimum order).

The shop highlights the Nisa offer progamme

However, Nisa also recommended a £1,000 socio-demographic survey to forecast future footfall inthe new retail palace. And it turns out that theconsultant’s results were wildly – laughably -optimistic. Problems with the build multiplied. Theopening date slipped from July to November - andeven by then, the spanking new fridges weren’tworking and the kitchen wasn’t finished. As aresult, the hoped-for grand opening was a bit of adamp squib. The predicted turnover hadpersuaded Chris to take on far too many staff.Total numbers reached 28 – doubling the originalshop’s number - just before Christmas.

Trade didn’t pick up in the New Year. Localpeople had tried out the fantastic new shop –

Café fitting is a “feature” but very impractical Extensive refrigeration lines 3 walls of the shop

The modern sales area. The high gondolas make it too much like asupermarket for this location. The cut flowers are a big seller

and, sadly, found it lacking. In Chris’s words, itwas all ‘too poncified’ for its own good. “The oldshop was terrible, it was scruffy and “a bitsmelly, like an old dog blanket”, but peopleloved it,” he says. “They loved beans on toast onthe wonky tables in the old café. They weren’timpressed by Eggs Benedict in the new place.

“I think some of the committee got completelycarried away with their ideas,” he says. “Andwhile we are still very successful, with turnoverway up on the last year in the old shop, we’recurrently facing huge cash flow problems becausewe just aren’t getting enough business in throughthe doors. Because of the bonkers forecasts,which we all took at face value, I took on far toomany staff. Due to the huge amounts of moneyinvolved in the new build, the committee felt itwanted more involvement in detailed decision-making, something they had not done during ourhugely successful time in the old place.Unfortunately, I believe those decisions ended uppushing away our core customers – they didn’tfeel at home in the new shop or café. Althoughour high-end ranges expanded, we took our eyesoff the day to day shoppers – the young mums,the older residents and passing trade - and despiteour lower prices through Nisa, the environment ofthe new shop doesn’t really appeal.

“Since Christmas, some of my staff have movedto other jobs so I’ve lost a lot of fantastic,knowledgeable local folk, and I am going to takeonly minimum wage myself for the time being,while it all sorts itself out. It is such a depressingtime at the moment, but I am totally confidentwe will turn the corner. We have learned ourlessons and will make it work. So, it’s a bit of awarning to other community initiatives – becareful what you wish for.”

Chris is now dedicating his time to re-buildingthe reputation of the shop; to welcome back the‘white van man’ wanting a bacon roll, and holdoff a little on the gourmet evening meals andthe late-night openings. He needs to promotethe reduced prices but reassure customers theyare matched by high quality, and to continue tosupport local suppliers. The committee hasrecently had a really positive meeting withSocial Investment Business and the Big LotteryFund and they have both been veryunderstanding and prepared to help the shopthrough this stickly patch.

And, with the support of an almost totally newshop committee, Chris needs to make somequite radical changes to ‘unponcify’ the placeand make Blockley Village Shop once more theenvy of the shires – and bring back the staff henever wanted to lose.

Blockley Shop...continued


The very costly and rather impractical lift

The community lobbied the Council hard to get planning permission for the shop


exciting appearance is a bonus. Do not assume theseprofessionals understand the needs of retail.

■ Involve shop floor staff every step of the way. Thereare aspects of the Blockley shop and cafe that thoseactually working in it could immediately have toldproject management how to get right.

■ The interface between committee and shopmanagers is always important; it is crucial that thislink functions really well when a project of thismagnitude is being undertaken.

■ Estimating takings for a new shop is part science,part gut feeling. For a village shop, so much dependson local circumstances. All takings estimates can bewrong. Keep as much room to respond to changes inthe system as possible – employ staff on flexiblecontracts and do not overstock at day one even if itmeans an emergency trip to cash-and-carry orembarrassingly bare shelves.

■ It takes a really big set of mistakes to give a retailbusiness a cash flow crisis but always havecontingency finance for “just in case”.

■ Make sure that whoever is project managing thescheme has the experience and competence to doso. If it involves employing a professional to do this,then it is often money well spent.

Any other prospective community shops visiting Blockleyat present are likely to be chastened by hearing theirstory and will hopefully take it to heart when managingtheir own projects.

We very much hope that in a couple of years’ time,other community shops will be going to Blockley to hearabout a brilliantly successful community shop .

The RSA viewFor years we have admired the strong performance ofBlockley shop as it achieved turnover figures that mostcommunity–run shops can only dream of, despiteoperating from less than ideal premises.

When we commissioned this article, we were expectingto find a project to hold up as an example to others.This is certainly what we have found but not necessarilyin the way we expected!

The turnover figures are still remarkable for a village thesize of Blockley. This is a massive achievement. Thereare dozens of other community shops who would givetheir grandmothers for the premises and businessachieved at Blockley.

We know that provided this business can overcome itsmanagement and cash flow crises, then the village willhave a shop to be proud of far into the future.

However, there are some very important lessons to belearnt from this case study. Many are the same as wehave seen in other projects, although in this caseperhaps magnified.

■ Do not get carried away by the availability of free oreasy money. The total budget of over £800,000 forthe shop of 900 ft.² is of course totally ridiculous. It isvery easy to spend money when it is available andthere are numerous examples of “gold plating” in thisproject. (We cannot even hope to understand why theBig Lottery Fund thought that supporting most of acost of £900 per square foot for retail space in arural village was a sensible use of their funds).

■ Do give architects or other professionals a very tightand clear brief from Day 1. Do not allow them to givetheir creativity too much rein. First and foremost, ashop or cafe are spaces in which certain activitieshave to take place efficiently. This comes first – an

RSAViewsGeneral Election 2015

Why Rural Shops matter and whatGovernment can do to help them

www.ruralshops.org.uk

RSAViews

Combat social exclusionFor some rural residents, a visit to their localshop is their only social contact of the day.Often, these socially excluded people are elderlyor unemployed. The village shop is animportant, albeit informal and unpaid, part oftheir support network.

Enable continued residenceParticularly for non-car drivers, a shop in avillage can be the difference between remainingliving independently rather than having to moveinto sheltered accommodation elsewhere.Having a village shop, enabling the localpurchase of groceries and access to financialservices, is crucial for a significant number ofrural residents. Postponing the move by elderlyindividuals into a care home or shelteredaccommodation by a few years saves the publicsector very considerable sums of money.

Centre of the communityThe village shop is actually the only facility inmost communities which is welcoming to all ofits members. Churches, pubs, village halls andclubs have very important roles, but only theshop is a place where everybody goes. Mostvillage shops are the centre of village life, theplace where local news is exchanged; raffletickets sold and people see each other.

Why Rural Shops are We all know that village shops are important but sometimes it isuseful to actually think just why this is true. This is our list as to why village shops are so vital:

Convenience storePeople in every community value enormouslythe ability to buy short shelf life items and thoseforgotten during a major supermarket shop.Newspapers, milk, bread, fresh fruit andvegetables can be bought on a frequent basis.When your child tells you at 6.55pm that theyneed this list of ingredients for a foodtechnology lesson tomorrow, you are verygrateful that the village shop is still open until7pm!

InsuranceWhen the village is cut off by snow or floods,customer numbers in the shop rocket. That iswhen the local store is needed most. However,to provide that vital service for one week a year,the shop needs to be viable for the other 51weeks of the year.

Main grocery shopAlthough the number of people carrying out afull weekly shop in their local store hasdiminished over the years, it is still an importantfacility for an important minority of non-drivers.This becomes more important as rural busservices continue to disappear.

Important

Post office and financial servicesIn most rural locations it is now only possible toprovide these services in tandem with a villageshop. Research shows time and time again howmuch these services are valued but today theydepend on cross subsidy from a viable shop.

Business CustomersSmall businesses often depend on their localshop for postal and banking services, as well asstationery and other requisites.

Green issuesIf residents can walk to a local shop, then thisreduces the number of car miles they drive toshop elsewhere, with obvious environmentalbenefits. Shopping locally reduces the overallcarbon footprint, whilst sales of local producecan dramatically reduce food miles.

Support for local suppliersMost new food businesses start off by supplyinglocal shops in relatively small quantities, withsome building up from this base to becomelarge enterprises. The presence of village shopsis a vital in helping their customers access localproducts and thus supporting small producers.Most village shops have their local supplier ofeggs, honey, cheese, even beer, depending onwhat is produced locally.

Source of local employmentVillage shops often employ a surprising numberof people. Retail employs a lot of staff hours inrelation to turnover. Young people often findtheir first paid employment in their local villageshop and for many the experience is verypositive, even life-changing, whilst local shopsare also a key way back into the labour marketfor many parents returning to work afterchildren.

Local circulation of moneyThe fact that village shops employ local people,use local tradesmen and buy from localproducers means that a significant proportion ofthe money spent in a village shop circulates inthat local economy.

The unknown futureMany village shops have changed out of allrecognition over the last few decades. Changewill continue. Once a shop has closed, it is verydifficult indeed to bring it back. Maintaining aretail presence in rural villages retains the socialcapital and capability to bring in new services inthe future.

RURAL SHOPS MATTER!

RSAViews

The problemPredictably the shops that are doing well are those inlarger settlements or with a lot of passing trade,occupying suitable premises and well managed. Insmaller settlements, retailers are struggling. Thereasons for this are many and complex. Intensesupermarket competition has made it more difficult tocompete in terms of range, price and store ambience. Inrecent years, the spectacular rise of home deliveries ofgroceries has upped the pressure. Demographicchanges have affected their business; people oftencommute out of their village each day and there hasbeen a significant increase in the number of householdswhere all adults go out to work. Many potentialcustomers are away when the shop is open.

■ We have already highlighted that the quality ofmanagement in the sector is variable. A large numberof proprietors come into the industry relatively late inlife without any experience. Some do brilliantly but forothers a basic level of specialist training, support andadvice can make a huge difference to theireffectiveness and long term success.

■ Many businesses are undercapitalised. When profitsare under pressure, a natural reaction is to postponeor cancel investment in the business. Comparing amodern convenience store with one from even 20years ago highlights just how much has changed overthe intervening period. It is vital that shopkeepers doinvest in their businesses in order to maintain thelevel of standards that multiples have conditionedtheir customers to (rightly) expect.

VILLAGE SHOPS OFF THE RADARThe current situationOver recent decades, the number of retail services in rural England has declined markedly. Veryfew rural petrol stations remain, except those on main roads serving passing traffic. Hundreds ofrural pubs have closed and many more are under threat. Village shops have also been decliningin numbers. We estimate that about half of them have closed in the last 20 years. Although allpolitical parties recognise the crucial importance of village shops, there is no joined up plan inEngland to support them.

Historically government agencies, the RuralDevelopment Commission and then the CountrysideAgency, understood and were able to address boththese issues on a very limited budget. The subsequentreplacement of these bodies by the RegionalDevelopment Agencies and then the Local EnterprisePartnerships (all within the space of less than 20 years!)has led to these issues not being addressed.

Such support is not charity. It is best seen as a smallcontribution for the community services that thesebusinesses provide on an unpaid basis.

The solutionRural shops need to be back on the radar, to berecognised for the community services they provide andsupported accordingly.

■ One government department, either the Departmentfor Business Innovation and Skills or the Departmentfor the Environment, Food and Rural Affairs, shouldhave a clear responsibility for the rural retail sector.

■ We then need to restore what worked very wellindeed up to about a decade ago when the supportwas lost. A very limited budget is all it would take torestore the situation of providing modest grantfunding on a matched basis to encourage ruralretailers to invest in their businesses. A small team ofspecialist consultants could support them withtraining and advice.

■ More information: http://www.storeisthecore.org.uk/images/Store_is_the_Core_EVALUATION.pdf

The ProblemsIn recent years, the government has supported verysmall businesses by doubling the Small Business RateRelief Scheme, meaning that the smallest businesseshave not paid any business rates at all. This has run inparallel with the Rural Rate Relief Scheme, whichprovides 50% mandatory relief for qualifyingbusinesses, with a further 50% dependent ondiscretionary support from the rating authority, althoughmany local authorities are not nearly so generous inproviding this support as their own budgets have beensqueezed, and demand significant red tape to get it.Some shops are being penalised by being forced toapply to the rural scheme rather than the small businessrelief scheme.

The development of out-of-town shopping centres,online shopping services based on warehouses, plus therise of high street premises for coffee shops,bookmakers, charity shops and the like make thesituation far more complicated. Business rates hitbusiness types that depend on occupying a lot of space.

Business rates are excellent tax or the government,being very hard to avoid and provide predictableincome. However, this very stability can be a downsidefor a retailer. The tax is fixed, so it tends to particularlyaffect companies during their start-up phase when cashflow is particularly tight. It also means that businessesfacing hard times cannot reduce this cost at all.

Figures from the Valuation Office Agency show that the80% of properties with the lowest rateable valuescontribute just 18% of the total rateable value.

Conversely, just 61,000 properties (3.4% of the total)make up 53% of the total rateable value.

The SolutionThis is a very big topic that extends far beyond theneeds of rural retailers. It is a debate that will continueway beyond the election. However, there are a few keypoints that should be taken into account however thedebate pans out.

■ The current conflict between The Small Business RateRelief Scheme and the Rural Rates Relief Schemeneeds to be resolved. This could be done by allowingretailers the choice of schemes (at present the ruralscheme takes precedence) or even better, to havejust one scheme that meets their needs.

■ If businesses deserve a rates relief, then this shouldbe by right rather than through the discretion of theirrating authority, a recipe for a postcode lottery. Thecontribution rural shops make to the fabric of societydeserves to be recognised by giving them fullbusiness rates relief as of right.

■ All small retail premises should be permanentlyexcluded entirely from paying business rates.

■ More information: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/413070/business_rates_review_final.pdf

BUSINESS RATESThe current situationHM Treasury has just published a very useful discussion paper on the future of this tax. Thecurrent system is that a government agency, the Valuation Office Agency, calculates a rateablevalue for each commercial property, based on its calculated rental value, which is then usedeach year to calculate its rates bill. For decades, business rates applied to retail premises workedfairly well, as the retail industry itself was fairly stable.

RSAViews

The problemThe proportion of Post Office Ltd. business originatingfrom the government has declined markedly over the lastdecade or so, meaning that postal services and bankingare increasingly important in the sales mix.

We would highlight two issues.

For many operators, particularly those of smaller Localoffices, the income they receive from the Post Office islinked totally to the number of transactions effected andas a result is not providing much profit. It is often quitedifficult to sell these offices on to new owners and itremains to be seen how viable they will be in the longerterm. It is vital that everything is done to maintain theincome for those running Post Offices – their futuresupport cannot just be taken for granted.

The increased dependency on postal services meansthat the fortunes of state owned Post Office Limited isvery closely linked to that of privatised Royal Mail. Postoffice branches are only allowed to deal with Royal Mailpost and cannot work with any other competingcompany. Royal Mail, however, is in a very competitivemarket. The collapse of parcel delivery company

POST OFFICEThe current situationPost Offices are one of the most valued assets within local communities. They have been in aconsiderable state of flux, as the network adapts to the realities of the 21st-century. Thegovernment has provided a massive investment in the branch network to help this transition.Some 3300 branches are designated as Community Offices, recognising their local importancelocally, and their owners are receiving a fixed core tier payment to make keeping these officesopen financially worthwhile. This is excellent news.

CityLink over Christmas showed just how cutthroat thisbusiness really is. Royal Mail is under threat, as othercompanies cherry pick the easiest and most profitablepostal services This leaves Royal Mail with the UniversalPostal Service that obliges it to deliver post to alladdresses across the UK on six days a week for onestandard price. Whistl (formerly TNT Post) have, forexample, been delivering post just to central London andcentral Manchester.

Secondly, the current Post Office Horizon computersystem is now getting very long in the tooth andalthough it has been updated over the years, itcompares unfavourably with the systems being operatedby major competitors. We make this point knowing fullwell the history of large government computer projects!In practice, the cost of this investment will, we imagine,have to come from central government sources. Amodern computer system would enable the Post Officeto compete far more effectively for contracts fromoutside of government, as well as allowing it to be moreflexible in offering government services in a more cost-effective way.

The SolutionThere needs to be complete clarity as to howcompetition in the postal market is going to be allowedto work. If competitors are allowed to cherry pick, thenRoyal Mail should be relieved of its Universal Postal Service obligation – it really is that simple.Although the cost would be unwelcome to government,nevertheless at some point they will have to bite thebullet and commission a new computer system for PostOffice Ltd.

The National Minimum Wage (NMW) is set to rise by 3%in October at a time when retail price inflation is likely tobe zero or negative – a real challenge for employers.However, all parties rightly sees low wages in theeconomy as a problem to address and want wages torise still further in real terms – the Labour Party forexample is promising an NMW of £8 per hour by 2020.

The problemThe NMW does what it says. It is a national figure thatcovers remote rural areas right through to urban centresand it is a baseline minimum. What is a reasonablewage working near to home in rural Northumberland isclearly not acceptable for somebody commuting a longdistance to work in central London. The one-size-fits-allof the NMW has left millions of small business ownersonly able to pay themselves a rate per hour that isactually less than their staff earn.

Over the past few years, the government has increasedthe non-wage costs of employing staff, such as holidaypay, maternity rights, statutory sick pay and newpension rights. These all add considerably to the costper staff hour. That might not matter if it was possible toincrease staff productivity in small shops. It is verydifficult to increase staff productivity or to raise prices tocover this. Proprietors end up working even longer hoursthemselves, cutting back on investment in the business,reducing customer service or reducing wagedifferentials – supervisors end up getting paid very littlemore than the staff working for them. All harm thebusiness in the long term.

COST OF STAFFThe current situationRetailing is one of several industries where low wages are common. It employs large numbers ofrelatively unskilled, often part-time staff and operates in very competitive markets. In theconvenience store sector, the cost of employing staff can be 10% or more of turnover and is acrucial business cost.

The solution■ A one size fits all National Minimum Wage no longer

works well. One alternative possibility is a return toindustry wage councils, bodies that used to set wagerates in specific sectors. This would ensure that highearners in central London paid their cleaners a fairrate whilst not forcing a small shop in ruralNorthumberland to pay an unrealistic rate.

■ A key way to improve staff productivity and hencewages, is through investment in new technology.Many small shops are undercapitalised and hencethere is an urgent need for government to providegrants or soft loans to allow this to happen.

■ Rural shop owners are often not retail professionalsby background. There is often an urgent need to trainthem to operate their stores efficiently, includingmanaging staff hours better. This would enable themto raise staff productivity and hence to be able to payhigher wages.

■ The level of the NMW should remain a task for theindependent Low Pay Commission in order to keep itas objective and non-political as possible.

■ More information:https://www.gov.uk/government/publications/national-minimum-wage-low-pay-commission-report-2015

RSAViews

When the road is being dug up by the highwayauthority, (central government, county council or unitaryauthority), then unless they are negligent, nocompensation is available. For roadworks by utilitycompanies, the situation is more complex. For watercompanies, compensation can be payable, with eachcompany having its own procedures. Gas companiesshould pay compensation to a small business forsignificant disruption for more than 28 days. Under allother circumstances, the general rule is that nocompensation is payable, although it has been knownfor ex gratia payments to be made and in some caseslocal authorities may reflect the loss of trade in thebusiness rates Bill.

The problemSmall businesses do not usually have massive financialreserves. Each year many rural retailers are badlyaffected when roadworks disrupt their business. Thisusually means a massive fall in turnover and the resultcan be permanent closure. This is crazy; a valuablecommunity asset is lost through collateral damage fromroadworks.

The different situations between different utilities stemsback to the legislation that privatised them and so ishistoric, with no obvious logic in 2015. Rightly,governments have recognised the difficulty ofcalculating compensation and this may be a reason fortheir reluctance to address this problem.

COMPENSATION FOR ROADWORKS

The current situationThere is nothing more frustrating for a shopkeeper than roadworks affecting their premises, anightmare over which they have no control. Entitlement to compensation depends on who isdigging up the road. The default rule is that businesses do not have the right in law to anyparticular level of passing trade and that shopkeepers must treat disruptions as just anotherbusiness risk.

The solutionIt is clearly unfair that businesses can be driven tobankruptcy through absolutely no fault of their ownerand the community can lose its village shoppermanently. Small retailers should be entitled to faircompensation irrespective of who is responsible for thedamage to the business.

Compensation should be calculated according to anagreed formula irrespective of who is digging up theroad. This would have the additional benefit that it couldpersuade contractors to speed up the work knowing thateach additional day will attract a compensation bill. Asimple arbitration service should be provided to dealwith disagreements on the level of compensation due,but if this is laid down in a simple and objective way,then such problems should be few and far between.

■ More information: www.parliament.uk/briefing-papers/SN00200.pdf

This brings me to Pyon Players’ ticket sales. Ourvillage amateur dramatic society (we aremembers) performs four shows every year.Ticket sales over the years have been an “issue.”There have been all sorts of schemes in whichcast and crew members were given first refusal,tickets have been allocated to the favoured andso on. This came to an end when one of the bigcharacters in the village couldn’t get two ticketsfor Saturday night and gave the societypresident her opinion on the matter. Now theygo on sale in our village hall for two designatedhours, then our shop becomes the box office forthe left-overs. Naturally we do this for free. Afterall, surely that’s what we are here for, isn’t it?

Well, Ken Parsons asked me to writesomething for the RSA. He said he mightlive to regret it, I cannot imagine why. Ithanked him for asking me to do somethingfor nothing, a concept with which all ruralretailers will be familiar.

There is so much fun to be had from these sortsof jobs, which we often find out about for thefirst time by reading the Pyonear, our parishmagazine. (To be truthful Pyon Players are notlike this - they always ask first). The instructionswe are given are often poor, so we have beenfalsely accused of such dark deeds as selling toomany tickets, selling them at the wrong price, ornot counting them properly. Of course theobvious answer to being told that we havemessed up is “Do it yourself then.” But thevillage shopkeeper doesn’t have this option. Sonow we only sell tickets to fit these rules: Oneticket per seat, tickets are sold at the price statedon the tickets and first come, first served. But westill get people telephoning from all corners:

“Can you put some tickets to one side as I won’tbe able to get there for a week?” Answer: “Nobut if you send me a stamped, addressedenvelope with a cheque we will send you some”“Can I pay with a credit card?” “No, cash orcheque only, we do this out of the goodness ofour hearts and we aren’t prepared to sub yourticket purchase and the ticket sales don’t gothrough our books” There’s a surprise, it turnsout that they have got some cash after all!Best of all “I want some tickets but I haven’t gotany money.” To which the reply is “So cometomorrow”.

I can’t be critical of Pyon Players. As well astelling us they are grateful, they help to supportthe strapped-for-cash Playing Fields Association,of which I am local chair. Some of the otherorganisations don’t even say thank you. I bet allvillage shopkeepers could tell the same tale, butit’s so nice to have a moan, isn’t it?

By Marcus Williams, Canon Pyon Stores


Marcus Williams

The View frombehind the counter

LEADER funding is available to businesses,communities, farmers, foresters and landmanagers. LEADER funding is intended forprojects that create jobs, help your business togrow and benefit the rural economy.LEADER funds are distributed through LocalAction Groups (LAGs).

Local Action GroupsLAGs cover most of the country, although thereare some gaps. Each one is made up of peoplefrom the local community and the local publicand private sector. LAGs decide which projectsthey will fund in their area. This depends ontheir priorities but all projects must support oneor more of the 6 LEADER priorities. These are to:

■ support micro and small businesses and farm diversification

■ boost rural tourism■ increase farm productivity■ increase forestry productivity■ provide rural services■ provide cultural and heritage activities

They will be in a position to consider applicationfrom summer 2015 onwards. In the previous

round of LEADER funding, it was very difficultfor rural retailers to meet the criteria laid down.This round looks a lot more positive – retailersshould be able to tick one or more of thesecriteria. We would encourage rural retailers tocontact their local LAG to get details of how thescheme will work in your local area, what sort ofprojects will be looked upon favourably and howto apply.

More information■ For general information, see:

https://www.gov.uk/rural-development-programme-for-england-leader-funding

■ For a map to see which one is covering yourlocation, see: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/411012/Map_approved_LEADER_2014-2020.pdf

■ For a list of LAG contact details, see:https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/410658/GOV_UK_NEW_LEADER_PAGE_v2.pdf

These are also available as links from ourwebsite www.ruralshops.org.uk

Leader Funding...


Possible Financial Supportfor Rural BusinessesWhat is LEADER?LEADER is part of the Rural DevelopmentProgramme for England (RDPE), a muchlarger European-wide developmentscheme. LEADER is a French acronym whichroughly translates as ‘Liaison among Actorsin Rural Economic Development’.

Indeed, the owner of Whitstone Stores in ruralDevon credits his success to being a symbolgroup member – a proud Premier retailer since2009. With only 250 houses in Whitstonevillage, Cock has achieved the tricky feat ofsuccessfully catering to three distinct anddifferent customer groups - locals, passing tradeand tourists – and in the process has becomeone of Booker’s shining stars.

“It’s a 1,000sq ft store so we can cater fordifferent markets,” he explains. “We can have agood range of groceries for locals, chilled food-to-go for the passing trade and local food such

“I used to worry that being in a symbolgroup might make people think less of you,if they’d had a bad experience in anotherstore in the same group,” admits Dan Cock,“but that’s not really a problem as most areof a good standard these days.”

as pasties which appeal to holidaymakers. Weget a 30% uplift when they’re around, while wealso bring in more gift ranges in the summer.”It’s a far cry from the loss-making independentstore with limited opening hours that localswere used to back in 2007. It had been badlystocked and run, so new owner Cock quickly setabout building up the business and restoringvillagers’ faith in their local shop. Its growingsuccess meant symbol groups were soonbeating at the door and, after a £20,000 refit,which included new refrigeration units and anupgraded EPOS system; he was ready to takethe plunge.

Cock reckoned that with such a small frontage,people needed the reassurance of a recognisedbrand. “We picked Booker Premier as theyallowed us to retain our independence. We wereencouraged to stock a lot of local products whilethe brand helped us to smarten up our generaloffering by providing good weekly promotions.”He quickly took on more staff and used Premiersupport and materials to become moreprofessional, such as by implementing trainingpolicies.

Premier provided the fascia and advised onwhat lines were selling and which should beditched. The symbol group also made usefulsuggestions, such as encouraging a larger chilledoff licence offering, and provided goodmarketing support, says Cock: “It turned usfrom a traditional village shop into a properconvenience store. We started to concentrate onpromoting value.”

Whitstone Stores...


Dan with wife Viki

A good time to be in convebetter time to be in a

A Premier Business Development Manager visitsevery six to eight weeks to talk through sales ineach category. “Promotions are comparable, ifnot better than, the supermarkets”, he says.“Our Easter Eggs, for example, are cheaper thanMorrisons, which really helps our profile withconsumers. And while you need to commit topromotions, the allocation isn’t unreasonable;you’re able to negotiate on the stock you takeand Booker is flexible”.

Cock acknowledges that he just wouldn’t havehad the same success as an independent. “Youget good support in a symbol group, suppliersalso take you more seriously and it opens thedoor to much more favourable deals – repswant to come in and tell you about theirproducts.”

But obviously it takes more than a shiny fasciaand good promotions to elevate an average shopto something special. One of Whitstone Store’sUSPs is that at least 30% of the total range is

made up of local products such as Cornishpasties, sourced from 60 suppliers. The shop isalso a veritable community hub; there’s a freecomputer with internet access, post office, DVDrental, and parcel collection service. And whilethey’re doing their chores, customers can pickup hot food – there’s even a hot dog machine –and coffee.


By Helen Gregory

nience and an even symbol group?

Local products and deals are very important The muted décor helps to make the store a pleasant place to bedespite the low ceiling

Premier recommended extending the chilled alcohol display

Cock makes sure he’s keeping the customerssatisfied by encouraging staff to chat at the tills(retention is good as staff get above minimumwage with an annual bonus) but there are alsonovel customer listening groups down the localpub.

The store keeps a high profile through itswebsite and a very active Facebook page whichhas an impressive 1,800 likes. Here, shopperscan print off regularly updated offers.

It all adds up to double-digit growth year-on-yearfor the last eight years, which shows no sign ofwaning. Weekly turnover is a healthy £15,000with an average basket spend of at least £6.

“We’ve sometimes had bigger sales in one daythan the old store had in one week,” says Cockproudly. “It’s a good time to be in convenienceand an even better time to be in a symbolgroup.”

■ For more details of Booker Premier, see:http://www.premier-stores.co.uk/join-us/our-success.html

■ For more details of Whitstone Stores, see:http://www.whitstonestores.co.uk

Whitstone Stores...continued


Premier offers and PMPs provide good value

Easter eggs “cheaper than Morrisons”

The shop goes back a long way and is far larger than the frontagesuggests


SHARED PARENTAL LEAVEShared parental leave (SPL) is a new legal entitlementfor eligible parents of babies due or children placed inadoption on or after April 5th. It provides both parentswith the right to take SPL and places a duty onemployers to ensure that their employees are notpenalised for using their entitlement.

The amount of leave available is calculated using themother’s entitlement to maternity/adoption leave, whichallows them to take up to 52 weeks. If they reduce theirmaternity/adoption leave entitlement then they and/ortheir partner may opt in to the SPL system and take anyremaining weeks as SPL. This means their partner canbegin to take SPL whilst the mother is still on maternityleave. Eligible employees can stop and start the SPLand return to work between periods of leave, with eacheligible parent able to submit three notices for periodsof leave A birth mother must take at least two weeksmaternity leave immediately following the birth of a child(four weeks for manual work in a factory) but otherwisemay choose to end her maternity leave at any stage.

■ For details can be found in the ACAS document (linkavailable from the RSA website): http://goo.gl/Tb30xw

“FIT FOR WORK” SERVICERoll-out of the referral service has commenced in twotrial areas, which means that GPs in these areas cannow refer employed patients who are off sick from workto this new service.

With their consent, employees are referred to anoccupational health professional who will identifyobstacles preventing them from returning to work. AReturn to Work Plan will be agreed, providingrecommendations tailored to the employee’s needs,which can replace the need for a fit note. GP referralswill roll out nationwide by autumn 2015, whenemployers can start to refer too.

■ For more information, see: http://fitforwork.org

CARRIER BAG CHARGESThe House of Commons has voted in favour of a 5pcharge for disposable carrier bags in England, to beimplemented on 5 October 2015. Businesses with fewerthan 250 employees are exempt, meaning that the vastmajority of retailers will not have to make this charge.However, evidence from other countries is overwhelmingthat this measure is very effective at reducing

Legal Bits & Bobs...

Legal Bits & Bobs...


customers’ use of these bags and hence the RSA isrecommending that members voluntarily fall into lineand charge 5p for such bags.

TOBACCO GOING DARKThis is yet another reminder of this important change.We have added a document link from the Department ofHealth and the Trading Standards Institute to ourwebsite, “The New Tobacco Display Law From April 6,2015 Your Questions Answered”.

We would emphasise that although we hope TradingStandards will provide guidance rather than prosecuteany retailers breaking the law after April 6, legally theycan take shop managers or even shop assistants tocourt with the prospect of a fine of up to £5000 orimprisonment up to 6 months.

REGULATIONS INTRODUCED TO BAN PROXYPURCHASING AND SALES OF E-CIGARETTES TO UNDER 18SThe Government has tabled two new regulations ontobacco and e-cigarettes. The first will introduce arestriction of the sale of e-cigarettes to under 18s. Thesecond will introduce penalties for proxy purchasing oftobacco and e-cigarettes by adults for young people,

which is something the RSA has consistently beenrecommending. Both are sensible measures.

AUTOMATIC PENSION ENROLMENTEmployers must automatically enrol all UK staff who arebetween age 22 and the state pension age and earnover £10,000 a year. If they don’t want to be in thepension scheme, the employee must then opt out. Thisrequirement starts for employers from their individual‘staging date’- this is based on the number of people intheir PAYE scheme.

■ You can find out your staging date by visiting:http://www.thepensionsregulator.gov.uk/automatic-enrolment.aspx

You will need your PAYE reference (from your P6 / P9coding notice or your P30BC yellow payslip booklet) toput into the Staging Date Tool. You have two key dates.Firstly there is your staging date - the date when thelaw is ‘switched on’ for your business. Secondly, youhave a registration date, when you have to provideinformation to the regulator (this is 5 months after yourstaging date).

Advice and guidance, as well as help finding a pensionprovider prepared to take on very small companies, isavailable, although usually with a cost attached.

■ Contact us on [email protected] if you wouldlike more details.

A recurring theme in many of our profiles of retailers has been the need for villageshops to combine and balance the oftenconflicting requirements of a farm shop and convenience store.

Rural customers usually want to be able to buyhigh-quality local products alongside the bignational brands. Most of the time we have seenthe issue from the side of a village shop, but ofcourse it can look very different from behind thecounter of a farm shop – we will be covering thisin more depth in a future edition of Rural Retailer.The farm shop operator is trying to maintain aclear point of difference with more mainstreamretail and hence is in conflict with the conveniencestore operator trying to do the opposite.

A different front in the same war is opening upwith suppliers. Historically, farm shops haveoften stocked ranges from small local suppliers,

people who are often more passionate aboutwhat they create rather than making lots ofmoney. At the other extreme, there are hugebrands that are nevertheless strong in the farmshop sector. One example of this would beSanpellegrino, a premium water and citrus-based drinks brand that makes much on itswebsite of its history from 1899, listing all majormilestones except for the inconvenient fact thatthe company was taken over by Nestlé in 1997.

Provenance is important to many customers.The key point is to retain their faith in the truthof a brand’s explicit or implied claims. The wayit is sold in a retail environment can build ordetract from those values. Retailers need torespect the story behind the brand in the waythey display and sell it.

■ See: http://www.sanpellegrinofruitbeverages.com/uk/en/history

The Values behind a Brand...


The RSA is somewhat ambivalent when itcomes to rural bus services. On the onehand we are all in favour of anything thatsupports people living in rural areas andmakes their life easier.

On the other hand, clearly bus services can takecustomers into town away from the rural shopsthat badly need their custom. In the past, we havestrenuously objected to specific bus services. Inone case, about a year ago, a heavily subsidisedminibus service was picking up from outsidevillage stores and specifically taking customers tosupermarkets in the nearest town.

In recent years, subsidised rural bus services havebeen under considerable threat, as budget cutshave forced local authorities to review all forms of

expenditure. A survey from the campaign forbetter transport shows that the picture does varyquite considerably across the country, but overallabout half of all local authorities have cut fundingfor bus services in the last year.

About 500 routes have been cut or altered acrossEngland and Wales, of which over 200 have beenwithdrawn altogether. Since 2010, local authorityspending cuts have led to 2000 routes being cut orwithdrawn.

This picture emphasises the importance of keepingthe local shop alive – without public transport,local people become even more dependent on it.

■ The report can be found that:http://www.bettertransport.org.uk/sites/default/files/Buses_In_Crisis_Report_2014_Final.pdf

Bus Routes in Rural Areas...

They had purchased the building by borrowingmoney from the Public Works Loan Board andthen rented it out to a commercial operator.

We recently found out that they have in factrepeated this process to save their local pub, thistime borrowing £300,000 to buy the building,before again renting it to a commercial tenant.

We can only applaud the courage and initiativeof this proactive parish council!

■ For more information on the Public WorksLoan Board, see: http://www.dmo.gov.uk/index.aspx?page=PWLB/PWLB_pc_lending


Bishampton does the Double...

You may remember that years ago we ranan article about how Bishampton parishcouncil had bought their local village shop inorder to save this asset for their community.

This supposed Chinese curse rather sumsup the economic situation, where the Bankof England has warned that inflation is likelyto turn negative in the coming months.

The last time that there was an actual (brief)reduction in overall prices was over 50 years ago

The current round of deflation has clearly notprevented some costs to retailers rising, meaningthat net margins are under pressure for a lot ofrural businesses. A number of different factorshave contributed towards this situation, includingthe cut-throat competition currently playing out inthe supermarket sector.

The “waterbed effect” suggests that the big grocerysuppliers, squeezed by the big 4 to reduce theirmargins, will try to recoup them from smallerretailers with less market power.

Clearly this is not a time to accept any priceincreases from suppliers without long and hardnegotiations. Indeed, with deflation on the cards,cost price reductions should be sought whereverpossible.

The key message is that deflation demands awhole new way of thinking about the way businessworks – you have been warned!

“May you live in interesting times”...

Documents

RURAL RETAILER Spring 2015