Having left local high streets for dead the big supermarkets are re-colonising them at a rate of knots with new small-format stores. Big threat to independents, right? Not necessarily, says Craig Sams
After decades of disembowelling the nation’s high streets, the supermarkets are rushing back in with a variety of ‘Local’ or ‘Express’ or other similar offerings. It could be a case of too little too late, but if it means fewer charity shops and higher footfall then it could be good news for the high street organic retailer who has the right offering.
All the organic brands that started life in the natural food stores and then migrated to the supermarket shelves followed a well-trodden path: the supermarkets all had their ‘A’ stores (huge floor space, high end demographic) right down to stores that were cramped and in less salubrious locations. An aspiring organic brand such as Clipper, Yeo Valley or Green & Black’s would get its shot at stardom in a handful of ‘A’ stores (Sainsbury’s started G&B’s out in 12 stores and the buyer was highly reluctant about allowing that). If it performed then it would move on to the B’s, the C’s and, well you get the picture.
So where do the ‘local’ supermarkets fit in? Limitations of space mean that the range available is greatly restricted. There’s no room for many of the organic lines stocked in the big stores. But frustrated customers can easily pick them up at the nearest natural food store – along with anything else that catches their eye.
Historically local authorities have been part of the problem – shortsightedly, they bribe supermarkets to move into the outskirts and then greedily ramp up downtown parking charges to further deter drive traffic out of town. But this kind of stupidity is in decline.
The small independent convenience stores aren’t going to be a pushover. Menzies now offer retailers a smartphone app that lets them amend orders, make credit enquiries and find out what’s in stock and what’s not in real time from the shop floor. Result: fewer out of stocks, less money tied up in stock, more flexibility, higher sales, happier customers.
A recent report from the Association of Convenience Stores says that 55% of independent retailers are earning less than the minimum wage and 69% are earning less than the living wage (£7.45 per hour). It’s always frustrating when your Saturday girls are earning more per hour than you are, but sometimes that’s the price of freedom and owning your own business. Independent retailers are usually engaged in other community activity, making their neighbourhood a better place to live. Being part of a community is its own reward, one that is increasingly appreciated as central government becomes ever more remote
The big stores are investing in more space. The next five years could see 19 million square feet of new store space and 6 million square feet of internet growth-equivalent space. The new store space will be mostly small. The smaller stores cannibalise sales from the edge-of-town dinosaurs, making them less profitable. What’s worse, supermarket convenience stores are less profitable than big box stores. But they have to make the move. Why? One reason is that people are finally getting it about waste: one big Saturday shop leaves you with more food than you need, stuff goes out of date or just doesn’t look very appetising when the leaves on the lettuce start to curl and the milk is barely fit for Little Miss Muffett. Better to shop little and often, you’ll spend less and waste less. People find they’d rather get a life than stand in a long checkout queue on a precious Saturday morning to get food they never knew they wanted before they entered the hypnotic environment of the big store.
The other big factor coming down the line is carbon footprinting. When you factor in the total greenhouse gas emissions associated with big stores, food waste, being non-organic, excess meat consumption and all that driving around it’s not a pretty picture. From September 30 this year every major company will have to declare its total annual greenhouse gas emissions. In a few years there’ll be a carbon tax that will force them to swallow a cost they’ve been able to dump on society up till now. That will tip the balance even further towards locally sourced, organic, lower meat and dairy, less waste and healthier food choices.
Perhaps not ‘roll on Tesco Express’, but not as scary as you might think.