RURAL RETAILER winter 2013

www.ruralshops.org.uk

Issue 20 ● Winter 2012/2013

RuralRetailer The Journal of the Rural Shops Alliance

n r o e fe id Of ins nt fe ou r li sc fo Di gs ba

■ How to get free advertising ■ Selling your shop - the property market ■ Government consultation on alcohol pricing

Your contacts... for more information and news...

● Rural Shops Alliance Egdon Hall, Lynch Lane, Weymouth, Dorset DT4 9DN ● Tel: 01305 752044 ● Fax: 01305 772949 ● E-mail: info@ruralshops.org.uk ● Website: www.ruralshops.org.uk

Contents...

In this issue...

Cover photo: Many farm shops have been trading well despite the recession

3 4 5 6 10 13 14 15

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19 ● 21 ● 22 ● 24 27 28 30

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Chief Executive writes.....

Our Partners Your Action Checklist...

When a shop becomes a tourist attraction Ecobags: Special discount for readers of Rural Retailer Price Comparisons Facebook: Marketing for Free RSA Views: Countryside hit hardest as government cuts council funding; Consultation on Alcohol Sales in England and Wales; Local Government Finance Act 2012; Property Extensions; Police and Crime Commissioners Selling a Rural Shop The Risk of Flooding Legal Bits and Bobs: Red Tape Challenge; Health and Safety; Financial controls; Employment; No Smoking signs Buying stock in the 21st century Retail Apprenticeship Scheme The Biscuit Fixture Standardised Tobacco Packaging

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

2 RuralRetailer ● Winter 2012/2013 ● Issue 20

Ken Parsons, RSA chief executive, writes...

Who picks up the Bill?

The connection between the Chimney Sweeps Act of 1834 and rural retailing may seem a bit tenuous. In fact, this Act was one of the first modern pieces of social legislation.

At the time it prompted cries of anguish from many quarters, the argument being that banning the employment of children under the age of 10 to clean chimneys would inevitably increase costs and drive the industry to bankruptcy.

All government interference with the freemarket prompts the same basic debate, where the balance lies between protecting workers versus adding unacceptable costs to industry.

Each year the RSA makes a submission on the proposed level of the National Minimum Wage and each year the debate follows this same template. But more recently, there has been a marked increase in pressure from trade unions and other organisations to persuade employers to pay the “national living wage”, a higher figure based on the estimated cost of providing a designated standard of living irrespective of affordability. A number of public sector bodies have agreed to pay these rates – not hard to do when the money comes from taxation.

hospitality and cleaning services where it is very hard to increase staff productivity, but where wages are a crucial part of total costs.

Every retailer I have spoken to has, without prompting, told me that paying significantly higher rates would inevitably lead to the employment of fewer staff hours, less money to reinvest in the business and/or potentially disastrous increases in prices. When staffing makes up half your costs, it could not be otherwise.

Achieving the right balance between the interests of employees and business owners will never be easy, but I would be more confident that the debate would be on a sensible level if more politicians had experience of the real wealth–creating economy. Instead, many of them have moved seamlessly from university to internships, think tanks or consultancies and then into politics, circles where low paid staff are few in number and somebody else picks up the bill.

However, the picture is very different in industries such as retail. When I discuss this with retailers, they are all agreed on two things.

Firstly, they would very much like to pay their staff more, and secondly, they cannot afford to do so. Very often, the owners of these familyrun businesses are themselves working alongside their staff but paying themselves far less than the national minimum wage. And here lies the dilemma. In the hard commercial world, there are some sectors such as retail,

Issue 20 ● Winter 2012/2013 ● RuralRetailer 3

Our Partners...

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To obtain further information on any of these companies, please contact the RSA at info@ruralshops.org.uk or phone 01305 752044 4 RuralRetailer â—? Winter 2012/2013 â—? Issue 20

Your Action Checklist for this issue...

1. SIGN UP TO CITIZENCARD 2. LOOK AT RSA & ECOBAGS DISCOUNT OFFER FOR READERS 3. REVIEW USE OF FACEBOOK 4. RESPOND TO CONSULTATION ON ALCOHOL SALES 5. CONSIDER IMPLICATIONS OF LEGAL CHANGES 6. REVIEW STOCK PURCHASING METHODS

CITIZENCARD Rural retailers are usually a key part of their local community. This includes the responsibility to do everything possible to ensure that age related products are only sold to customers entitled to buy them.

p p p p p p

SEE PAGE 5 SEE PAGE 10 SEE PAGE 14 SEE PAGE 16 SEE PAGE 22 SEE PAGE 24

commission paid to you for every one of your customers who signs up.

■ For more details, see the RSA website at www.rural shops.org.UK. ■ To apply, e-mail or phone your contact details to the RSA, info@ruralshops.org.UK or phone 01305 752044.

A practical way of supporting your community and ensuring that you meet your legal obligations is to encourage customers to apply for a CitizenCard. This Home Office approved card has all sorts of advantages for the holder and is widely accepted as proof of the holder’s age.

We would encourage all rural retailers to distribute CitizenCard application leaflets in their shops. In addition to meeting your social responsibilities, there is also a very useful

Issue 20 ● Winter 2012/2013 ● RuralRetailer 5

A tourist attraction...

When a shop becomes a tourist attraction!

Since moving to the village of Withypool, at the heart of the Exmoor National Park, 15 years ago, Tony Howard has thrown his heart and soul into running this tourist hotspot’s only shop and the tea rooms just across the road, and, with the help of his wife Anita, has been steadily building up the business.

The shop with its petrol pump standing guard

6 RuralRetailer ● Winter 2012/2013 ● Issue 20

“I moved here after running a pub on the edge of the Chilterns near London, and while I’ll never make my fortune, I wouldn’t swap this life for anything, even if I did once have a customer knocking on my door in the early hours because he’d run out of cigarettes!” says Tony.

When the shop and café came on the market, Tony’s parents, who used to run the pub in Withypool, suggested he swapped pulling pints for the life of a rural shopkeeper. “I saw there was potential, so I thought I’d give it a go. Anita joined

The tearoom with adjoining toilets

me 14 years ago, and we got the café up and running across the road,” Tony recalls. The village may only have about 200 residents, but in the summer months customer numbers quadruple, with queues for the shop and tea rooms stretching over the famous Withypool Bridge. The visitors enjoy everything from the famous home-made cream teas and cakes to buying inflatable dinghies that children love floating on the wide, shallow

stretch of the River Barle which flows through the middle of the village.

Although recent wet summers have had a huge negative impact on sales, the Howards have noticed that the tourist season is getting longer, which helps balance the trade out a little.

Holidaymakers can also take their memories home thanks to a personally-selected range of high quality gifts which Tony also sells. “I started selling cheap toys and souvenirs for the tourists, but soon realised my mistake. I started to stock good quality items which not only appealed to visitors but to locals alike.” So now the small gift section of the small 1,000 sq ft shop boasts a range of hunting-themed items including bronze statuettes of stags, horses and hounds, which fly off the shelves.

The site is awkward to manage, with the shop on one side of the road and the tearoom and a

Issue 20 ● Winter 2012/2013 ● RuralRetailer 7

A tourist attraction...continued disused petrol forecourt on the other. These pumps are a tourist attraction in their own right, whilst another 1950s petrol pump stands like a sentinel in front of the shop. Together they are reminiscent of a bygone age: they were some of the last working gallon pumps in England. “We wanted to keep them going but then foot and mouth came along in 2001 which virtually shut Exmoor down, so we decided to finally close the pumps,” recalls Tony.

Visitors and locals alike are also well catered for in terms of the mouth-watering choice of local produce on sale, including beef from just five miles away, free range eggs, Somerset cheeses and preserves, and home-made cakes and scones on sale in the tea shop.

Tony also runs a pre-ordering service for people in self-catering accommodation so their shopping is all ready for them when they arrive.

“We offered this service first for our own holiday cottage, but now we’ve extended it to other holiday rentals and seen an increase in demand. Holidaymakers arrive with cars loaded with full supermarket bags, but once they see our great range of fresh goods, they order from us next time. They say using the local shop is part of the holiday experience and want to leave the supermarkets at home.”

What with running the shop – open seven days a week - and Post Office, and starting a family four years ago, the couple tried to hand over the reins to the café to tenants a couple of times, but it didn’t work out. “In the end, we discovered no-one can run it quite like us, so now we’ve got to win back the café’s reputation and make it really work for us,” says Tony, ruefully.

Part of the re-think for the café involves the Howards buying the public toilets next door – also used by families changing into their swimming costumes before a paddle in the River Barle - and an adjoining small room, currently owned by the Exmoor National Park.

“We’ve agreed a price with the National Park, now we’re just hoping we get planning permission to put a pitched roof on the building, take over the toilets and convert the empty room into a purpose-built kitchen addition for the café – complete with a dishwasher which will cut down on the washing up, and give us more space for tables - hopefully in time for the tourist season.

The National Park has spent quite a lot over the years on the loos – I think they’re quite glad to hand them over. We’re a bit concerned about the cost of maintaining them, but the development of the tea rooms should increase our trade to compensate.”

The Howards employ one full timer – Jill Scoins – and supplement the summer staff in the café with local young people happy to work weekends and school holidays.

The former forecourt

8 RuralRetailer ● Winter 2012/2013 ● Issue 20

The nearest supermarket is 15 miles away, so, during times of flood or heavy snow, the shop is a lifesaver not just for the villagers, but for people living in neighbouring hamlets, with Tony and Anita keeping an eye out for older

Below - Bridge Cottage on the River Barle - Withypool

residents. “There are supermarket home deliveries, but in the winter, the vans have problems negotiating the lanes whereas my trusty 4WD always gets through – even with 4ft of snow! Luckily for us we get snowed in quiet often; I love those times, as everybody pulls together. We work hard to make sure our locals are kept supplied,” says Tony.

And even when the weather is fine, Tony is still on hand helping villagers get on-line, sorting out their TVs and video players and organising baby sitters, gardeners and cleaners.

“Before we had the children, I took very few holidays, but since the girls came along, I have had to force myself to take some time out and have really begun to explore the beautiful countryside around here,” says Tony.

“Although we’ve been an official National Park Information Point for some time, now I can actually make personal recommendations about where people should go!”

Getting the business balance right between seasons in a tourist area is a challenge for any rural retailer, ensuring that locals don’t feel visitors are demanding all of Tony and Anita’s attention at the height of the summer. Income from holiday season has to be sufficient to carry the business through the winter.

It is a fine balance though – Tony reckons that groceries account for around 35% of the business, with the tearooms a close second, then gifts (20%) then newspapers and the National Lottery, the latter being a new venture. Although the Post Office is currently open only 19 hours a week, it provides a much-valued local service and does bring customers into the shop.

So a combination of dedication, innovation, different income sources and an ‘Open all

Hours’ mentality is proving a recipe for success.

Even four-year-old Amy gets in on the act and helps her dad sort out the papers before she goes to school each morning!

The RSA view This shop is a classic case to demonstrate just how important village shops are, both to local people and as a key part of the tourist industry. The business is viable because of the multiple income streams, all contributing to the whole. Of particular interest is the gift and souvenir range, which includes some quite expensive items, contributing significantly to turnover but more importantly offering very good margins. There is a potential lesson here for other shops in tourist areas – souvenirs do not need to be cheap and tatty. The problems the Howards have experienced finding good tenants for the teashop highlights the tight management that these businesses demand – profit margins can be very good but they still have to be earned; staff costs and wastage can soon erode profits.

Issue 20 ● Winter 2012/2013 ● RuralRetailer 9

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10 RuralRetailer ● Winter 2012/2013 ● Issue 20

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Issue 20 ● Winter 2012/2013 ● RuralRetailer 11

Rural Shop issues...

Price comparisons supermarket X seem like the best place to shop. The other danger is that comparisons can only be of proprietary brands, whereas in practice price sensitive customers are likely to be buying their own labels, which now make up over 40% of supermarket sales.

When we are out visiting stores, we often hear the complaint, “customers think we are expensive in comparison with the supermarkets, but really, we are not. What can we do about it?”

As a question, it is probably up there with the meaning of life or why people still laugh at Bruce Forsyth’s jokes.

However, it is clearly an important issue that demands a considered response from retailers. The problem is widespread. The results of every local market research survey that the RSA has helped to conduct, has shown that local shops score very highly for personal and friendly service and not at all well for cheap prices and good special offers. These results need to be kept in context. Although price is crucial to some low wage families, for the majority of the population it is but one factor amongst a number in terms of deciding where to shop. The eye watering prices at some garage forecourt shops highlights the fact that in a trade-off between convenience and price, convenience often wins.

To be blunt, the big supermarkets are spending tens of million pounds a year to convince the country that they are providing good prices. Much of this expenditure merely negates the similar advertising from competitors, but overall this wall of price messages creates a background impression that is very hard indeed for a small shop to overcome. This is particularly true of independent stores not affiliated to a symbol group – for symbol group members the position is somewhat better.

Of course you make the most of the situation to ensure that customers know your pricing is fair. Of course you display your wholesalers special offers prominently and stock a good range of price marked packs, particularly in ranges such as biscuits where they are so important.

But what you don’t do is to make price the central plank of your communications with customers.

Nevertheless, it is not an issue that can be ignored. The reality is that for the majority of rural shops, their prices will be somewhat higher overall than their supermarket competitors. We do know of some shopkeepers who have consciously tried to match supermarket prices, at the expense of a much reduced gross profit margin, and it is fair to say that not many of them are still trading.

There used to be a saying in the retail trade, “any idiot can give stuff away”.

What you do is to play to your strengths. For most local stores, this will be friendly and personal service, the availability of local products.,

We are often asked whether it is a good idea to make direct price comparisons between the shop and its nearest supermarket competitor. This often takes the form of a basket of goods displayed near the entrance with a triumphal price comparison. Our Price £25, Tesco price £27, that sort of thing. We have always been somewhat cautious of this approach. There is a very real danger that you merely publicise the fact that supermarket X is the price leader, the place that everybody is trying to beat, and in the process you are in danger of making

Pay particular attention to the pricing of Known Value Items (KVIs), the relatively few best-sellers where customers do compare prices and do support your wholesaler's special offer programme. But for most rural retailers, we would not suggest attempting to persuade customers that you are actually cheaper than the supermarkets.

Issue 20 ● Winter 2012/2013 ● RuralRetailer 13

Marketing for free...

Facebook is the fastest growing social platform in the world. It provides small businesses with a way to market their business to potential customers without having to spend anything; it is free to use.

Here is how it works: To create a Facebook page for your business is very straightforward – just follow the prompts.

Start by going to www.facebook.com/pages/ create.php Then: ■ Select a business classification from the six offered ■ Fill in details of your business ■ Upload a main photo ■ Complete the “About” section – 2-3 sentences that sum up your business. Be sure to include a link to your company website.

■ Use the “Admin panel” to add more information or to make changes.

■ Postings to your page add further content.

■ Whatever you do, do make sure the page is kept up-to-date.

At this point, you then need to attract your customers onto your page.

■ Send emails to invite existing contacts to connect with you or ‘like’ your page on Facebook.

■ Introduce your business by putting information in your profile, linked to your website, if you have one, and to other community websites. It can help to get things going if you encourage staff, very loyal customers and suppliers to post messages to your page, giving it a buzz. Writing

comments publicly to another user is “writing on their wall” in Facebook jargon.

■ Post pictures about you or your business, make the pictures interesting if they are of people ensure they are cheerful and smiling ■ Post information about the services you offer, post regularly, but keep them brief, to the point, relevant and current. Do not overdo it – make sure that your posts are genuinely interesting and newsy, use pictures if possible, and provide links to other sites. So a post telling your customers that this season’s asparagus has arrived would work better with a tempting photo and perhaps a link to the site of the farm where it was grown.

■ If people make comments or post on your page make sure you respond to keep the ‘feed’ live.

■ Facebook is really quite easy to get to grips with and you do not have to be a computer expert. If you need them, there are lots of useful websites which will give you further hints and tips; just search on “using facebook for business”.

14 RuralRetailer ● Winter 2012/2013 ● Issue 20

RSAViews Winter 2012

Countryside hit hardest as government cuts council funding Rural communities will bear the brunt of government cuts that will force local councils to slash their services. This warning follows the publication of the government’s finance settlement, which details the amount of central funding given to local authorities.

struggling to provide services to countryside communities.

Even before these reductions, urban areas received about half as much more funding per head than do rural areas.

This settlement further widens the gap. Rural residents already pay more council tax for fewer services because of historic government underfunding, so the settlement is very bad news for the countryside.”

Rural councils will face a bigger reduction in central grant and spending power than urban councils, according to an initial analysis by the Rural Services Network, a group of more than 200 organisations working together to improve the delivery of rural services across England, of which the RSA is a member..

On average, district councils will fare worst, with a 6.78% reduction in formula funding.

Information released by the government is incomplete with much detailed information to follow. But an initial assessment paints a bleak picture for the countryside. It certainly does not represent a fair deal for both urban and rural communities, as claimed by the government.

The Rural Services Network calculates the reduction in their formula funding from central government for different types of local authority as follows: Urban local authorities Predominantly rural local authorities Rural local authorities

-2.04% -3.81% -5.21%

Rural Services Network chief executive Graham Biggs said: “This is a body blow for rural councils already

It is very difficult to speculate as to how local authorities will respond, particularly as the Department for Communities and Local government is trying to press them into a zero increase in the other main component of their income, the rates that local authorities themselves levy. However, it is a fair bet that expenditure on anything that is not a statutory duty will come under considerable pressure.

■ For the local government finance settlement 20132014, see: http://www.local.communities.gov.uk/ finance/1314/settle.htm ■ For information on the Rural Services Network, see: http://www.rsnonline.org.uk ■ The rural definition and classification were devised by the Rural Evidence Research Centre (RERC) at Birkbeck College. Further information on these can be found on the RERC website at www.rerc.ac.uk

RSAViews

CONSULTATION ON ALCOHOL SALES The Home Office is currently consulting on alcohol issues. The document goes under the snappy title, “A consultation on delivering the Government’s policies to cut alcohol fuelled crime and antisocial behaviour”. The consultation closes on February 6, 2013, and we would urge rural retailers that sell alcohol to respond to it. The consultation invites views on: • a minimum unit price for alcohol • a ban on multi-buy promotions in the off trade • reviewing the mandatory licensing conditions • health as a licensing objective for cumulative impact policies • freeing up responsible businesses The consultation includes a total of 35 questions although respondents do not have to answer all of them and there are just a few that are likely to be of specific interest to rural shopkeepers with off-licences.

One proposal is for issues of health to be considered, alongside the existing licensing conditions, when dealing with applications for a new off-licence. We think that this would be unlikely to affect many rural retailers if implemented, having more impact on urban high streets where the number of premises with off-licences might be curtailed, although it is hard to be sure.

The two most important issues for convenience retailers are:

MINIMUM PRICING OF ALCOHOL The government has already decided that there should be a minimum price for alcohol, but is consulting on the level at which it should be set and how it should be adjusted over time. The initial proposal is for a minimum price per unit of 45p, intended to be a level that would discourage problem drinkers without interfering with the pleasures of moderate imbibers. The minimum prices for some typical products at three different minimum price levels would be those shown in the chart below.

At 45p, products such as white cider would surely suffer a marked decline in sales as they cease to be cheap. It

product

size

av

units

40p

45p

50p

bottle of lager can of beer bottle of wine white cider bottle of spirits

300ml 500ml 75cl 2 litre 70cl

3.60% 4.50% 13% 7.50% 40%

1.2 2.25 9.75 15 28

£0.48 £0.90 £3.90 £6.00 £11.20

£0.54 £1.01 £4.39 £6.75 £12.60

£0.60 £1.13 £4.88 £7.50 £14.00

RSAViews

IN ENGLAND AND WALES has been estimated that 59% of all units are sold currently for less than 45p, so collateral impact on normal drinkers will occur. The consultation document itself implies that the off trade would gain windfall profits of about a billion pounds from a 45p minimum – and you can be sure most will stay with supermarkets rather than being shared with their suppliers!

There will be a clustering of brands at the minimum price point, so we would expect competition between brands to become very interesting.

As regards the issue of how the minimum price should be adjusted over time, a straightforward link with the Retail Price Index (RPI) would seem the most straightforward.

To repeat – the consultation is not about the principle but about the level at which the minimum price should be fixed. Would customers buy less? Continue to drink but cut back on other things? We would welcome your views!

Reportedly, the European Commission has written a nine page letter to the UK government suggesting that the proposals amount to a restraint of trade, with winegrowing countries keen to kill the idea. Scotland has similar proposals, only at a price of 50p per unit, prompting the surreal picture of Berwick-on-Tweed in the future being full of Scots seeking cheap booze.

BAN ON MULTI-BUY PROMOTIONS Secondly, there is a proposal to make it illegal to sell the same product in quantity more cheaply per unit than the price for one, so, three bottles of wine could not be sold for less than three times the price of a single bottle of that particular wine. Some rural retailers have been very successful promoting wine in this way, but the main beneficiaries of this practice have of course been the supermarkets. The practical problems of drafting

legislation to close off potential loopholes are quite significant. As a measure, we would on balance see it probably helping to make rural shops more competitive with supermarkets.

RETAIL OPINION As always, we would welcome retailers’ views to help us draft our own response to this consultation – do let us know how you think these measures would affect your business.

RESPONDING The full consultation document can be found at: ■ http://www.homeoffice.gov.uk/publications/about-us/ consultations/alcohol-consultation/alcohol -consultation-document?view=Binary The contents of the House of Commons wine cellar can be viewed here: ■ http://www.parliament.uk/site-information/foi/ foi-responses/foi-disclosures-2012/foi-disclosures -january---march-2012/content-of-house-of -commons-wine-cellar

RSAViews

Local Government Finance Act 2012 The Government has outlined its plans for local councils to retain more of the business rates they collect from April 2013. The idea is to encourage local economic growth. Councils will retain a 50% local share of business rates and will also keep a 50% share of any growth they generate, subject to a levy The prediction from Government is that the new system could deliver around an extra £10bn to the wider economy by 2020 and generate more business rate income for councils. Minister Brandon Lewis said:

“These reforms allow councils to stand tall, and rewards them for supporting local jobs and local firms”.

Unfortunately, this is allied to the decision to delay the revaluation of business rates for two years.

The current system of pooling business rates nationally was set up to overcome the inequalities resulting from local authorities in successful business areas being able to spend more, thus encouraging more inward investment, thus rewarding existing winners and penalising declining areas. We have seen no evidence to suggest that the same dynamic will not occur in the long term this time around.

Property Extensions The government have carried out a consultation on the ‘Extending Permitted Development Rights to Homeowners and Businesses”.

It would seem that either 50m2 or 100m2 is the right level; a temporary relaxation does not seem to make much sense.

The consultation proposed to facilitate the process of extending a home or business by temporarily relaxing the regulations on permitted development. Currently businesses or homes can extend their premises by 50m2 without the need for planning permission; the consultation proposed to extend this to 100m2.

Police and Crime Commissioners Following the local elections last year, Police and Crime Commissioners (PCCs) are now in post.

objectives that are low priorities in the plans. The RSA would urge shopkeepers to engage with their local PCC. Obvious issues of concern are local crime, anti-social behaviour and licensing issues.

Their first task is to develop a 5 year Police and Crime Plan for their area in consultation with local government and other organisations, setting out their priorities.

■ Details of the newly elected PCCs can be found at: www.chosemypcc.org.uk/election-results.

It is obviously important that issues that affect small shops are given appropriate weight in this planning process – we would expect resources to be limited for

■ More details of the role of PCCs can be found at: http://www.homeoffice.gov.uk/publications/police/ pcc/what-partners-need-to-know?view=Binary

Property matters...

Selling a Rural Shop Running a rural convenience store is a very particular lifestyle choice.

Undoubtedly there are a significant number of soldiers in Afghanistan dreaming of eventually running a rural shop or pub, or pen pushers in Whitehall desperate to exchange their semi in the suburbs for a new life in the countryside. For most, it will remain just a dream.

different from their current salaries. Demand for stores that can do this is high, which, coupled with a distinct lack of supply, ensures strong levels of interest when such a business does come to market.

We all know that high turnover does not always mean high profits. Running costs such as rent, rates and staffing can be particularly high in the major towns and cities. There is also the ‘fear’ factor of a large national opening up nearby as competition.

However, the RSA had expected the economic downturn to increase the number of people being made redundant and then looking to buy a rural business.

National business transfer agents EM&F had also thought that this would happen, but their experience is that this has just not materialised.

Nevertheless, they report that sales of village stores & Post Offices are running more or less in line with 2011 levels, despite the challenging trading conditions facing the sector.

This feeds the demand for businesses in smaller towns and villages, where these factors are less acute. Rural villages are predictably attractive to older buyers looking for a change in lifestyle, whilst younger buyers, and particularly buyers from the Asian community, are less interested in finding an attractive location and concentrate more on turnover and profitability.

The majority of buyers are new to the industry.

A change in lifestyle and wanting to spend more time with family are the key factors in the demand for rural shops and Post Offices. A number of buyers come from professional/ management backgrounds such as accountancy.

They want to leave City life behind and take on a new challenge - which a busy village store/Post Office can certainly provide!

Llangernyw Post Office: This general store is at the heart of the community in thius picuresque village, famous for its

Many of these buyers want a high turnover store 4,000 year old yew tree. As a freehold business opportunity which can generate substantial profits not too it proved a popular choice.

Issue 20 ● Winter 2012/2013 ● RuralRetailer 19

Property matters...continued EM&F confirms that confidence in the market for businesses including Post Offices remains strong, especially following the news that POL have retained the DVLA Vehicle Licensing contract. They report that the prospect of Post Office Local contracts have not really had an impact as yet as all sales so far have involved an existing PO contract.

During the year, the RSA has received a number of calls from prospective purchasers of businesses, aghast at the reduced remuneration from a PO Local contract compared with the existing sub postmaster’s remuneration. EM&F believe that the real impact of this will take place in 2013, when most purchasers will have to take on the new PO Local Contract. Once they work out the drop in revenue and adjust a vendor’s accounts accordingly, EM&F believes that they may try and re-negotiate on price accordingly.

It can be no surprise that asking prices for businesses need to be realistic for today’s trading conditions, not based on higher expectations from the past. Michael Taylor from EM&F comments, “An ambitious asking price can be tried but invariably this leads to lower interest

and the property becoming ‘stale’. By the time it comes to reducing the price, the initial marketing impact has been lost. Even if a sale is agreed at a high price, there is always the risk of it ‘falling down’ when it comes to the valuation, in particular if bank finance is required”.

In the natural order of things, at any one time there are hundreds of village shops on the market. If you are planning on selling a business in a couple of years’ time, it is therefore important to plan now to make your business as attractive as possible. It is not hard to do.

It goes without saying that your accounts should present the business in the best possible light.

Attention needs to be paid to keeping key costs such as electricity and staffing down. Year-end stocks should not be too high – it would not be a good idea to have a large order arrive the day before your financial year end, for example.

Michael Taylor adds, “Get the property in order – make sure it is presentable. There is no need to spend huge amounts of money, just do those little jobs – touching up paintwork, etc. Crucially, make sure your accounts are up to date.

Ideally accounts need to be to hand 3 months following your financial year end, as any purchaser is going to ask for up to date accounts in order to evaluate trading last year, Purchasers are very cautious in the current climate and will not buy on historic information”.

■ Our thanks to EM&F for their help in compiling this article.

Colyton Stores: A desirable location, just off the Jurassic Coast, plus sales of about £15,000 per week, ensured strong buyer interest.

■ If you are thinking of selling your business then E M & F would be delighted to provide a free market appraisal, please visit www.emfgroup.com for details of your local office or alternatively contact E M & F Head Office on 01404 813952.

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Flooding Risk...

“Water, water everywhere, nor any drop to drink” According to the Environment Agency, over 5 million homes in the UK are at risk of flooding.

Hence this is a massive concern for hundreds of rural shopkeepers and the customers they serve.

In fact, village shops are very often in the old heart of the village, whereas often the properties affected by flooding are the more modern houses built on the outskirts of the settlement, a few feet lower and closer to the local watercourse; our ancestors knew about floodplains. Sometimes modern developments even have names such as Water View or River Close – once evocative of rural charm but probably not good marketing when it comes to selling properties these days.

David Cameron tweeted his support for the victims of the recent flooding but government actions tell a different story. Back in the year 2000, the government and the insurance industry came to an agreement, which expires in June 2013. Provided government kept spending on flood defences, then the insurance companies promised to provide affordable insurance to all homeowners. It is clear that the government has not kept its side of this bargain.

The Coalition Government cut funding for flood defences by over 25% on taking office and there are as a result nearly 300 flood defence schemes that have not been built. This will mean that flood insurance premiums for houses at risk will soar, or at worst, that some homes will become uninsurable.

provides funding through grants to the Environment Agency, internal drainage boards and local authorities to actually carry out the work. The system does not inspire confidence.

Village shops have always been a lifeline for local communities when it snows, but it is clear that shopkeepers have also risen to the challenge of floodwaters, in extreme cases enlisting the help of local farmers with their tractors to ensure supplies get through. It is vital that local residents are reminded of these efforts, made when supermarket home delivery vehicles were notable for their absence.

The RSA would be delighted to hear from rural shopkeepers who have particular stories to tell about beating the floods and we’ll aim to publish some on our website and in a future edition of Rural Retailer. At a national level, we will be reminding government that village shops do continue to matter.

DEFRA has responsibility for national policy on flood risk management. The government then

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Red Tape Challenge In its drive to reduce red tape, the Government has announced that it will replace the present “Onein, One- out” rule with “One- in, Two- out” which means that every new domestic regulation that places a new financial burden on businesses must be off-set by reductions in red tape that will save double the cost of the new regulation.

As with the old rule, One- in, Twoout will not apply to EU legislation that has been introduced into UK law, unless the introduction has gone beyond the minimum requirements of the EU law and is putting UK businesses at a disadvantage

Legal Bits and Bobs Health and Safety The Government has announced its intention to scrap thousands of regulations and to free many businesses from burdensome health & safety inspections.

After April 2013, only higher risk sectors or businesses with a poor track record of poor performance will face health & safety inspections.

The Government is also introducing legislation to ensure that businesses are only held liable for civil damages in health and safety cases where it is proved that they have been negligent.

At present businesses can be held liable even if they have not been negligent. (Enterprise & Regulatory Reform Bill)

On the 1 October 2012 HSE introduced its new cost recovery scheme – Fee for Intervention (FFI).

Under The Health & Safety (Fees) Regulations 2012 those who break health and safety laws are liable for HSE’s related costs, including inspection, investigation and taking enforcement action. This new system means that the businesses concerned, rather than the state, will pay these costs. It goes without saying that business owners do need to manage H&S risks, not only to prevent harm to employees and customers, but also to ensure that your insurance cover remains valid.

■ For more information see: www.hse.gov.uk

Financial Controls Late payments The new Late Payment Directive approved by the European Parliament must be brought in by member states by the beginning of 2013.

Under this new directive public authorities must pay their bills within 30 days and companies must do so within 60 days or face penalties and punitive interest rates. The 60 days period cannot be extended “unless otherwise expressly agreed in the

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contract and provided it is not grossly unfair to the creditors”.

Taxes – PAYE H M Revenue and Customs (HMRC) have extended the piloting of its new Real Time Information (RTI) service which makes very substantial changes to the PAYE system.

Under the current PAYE system, employers tell HMRC what they have

Employment Unpaid Parental Leave

Employee owner contract.

To comply with an EU Directive on Parental Leave the Government is introducing legislation to increase the parental leave allocation from 13 to 18 weeks and grant employed agency workers the right to request flexible working on return from parental leave. These changes are expected to come into force in April 2013.

Under Government plans a new form of employment contract is introduced. The employee owner’s contract will provide workers with a different set of employment rights and shares in the business of between £2000 and £50000. Any gains will not be subject to CGT.

Recruitment – Vetting and Barring The Protection of Freedoms Act 2012 makes various amendments to The Safeguarding of Vulnerable Groups Act 2006 and reduces the number of people who will have to undergo criminal record checks. The Criminal Records Bureau (CRB) and the Independent Safeguard Authority (ISA) merged into the Disclosure and Barring Service (DBS) in December 2012. The DBS will combine the criminal records and barring functions. From March 2013 it is intended that employers will be able to use the checks instantly online.

deducted from employees pay after the end of the tax year. Under RTI employers will be required to tell HMRC what deductions are being made from employees pay when or before the payment is made.

Subject to the pilot being successful most employers will begin to use the service from April 2013 and all employers will be using it by October 2013 according to HMRC

In return the employee owner will forego certain employment rights such as those relating to redundancy pay, training, flexible working and some unfair dismissal. They will also have to give more notice to their employer if they intend to return early from maternity or adoption leave.

Following consultation the Government is proposing various amendments, including a renaming of this form of contract to “employee – shareholder” contracts.

No Smoking Signs The Smoke Free Signs Regulations 2012 revoke the Smoke Free Sign Regulations 2007 and replace the detailed requirements of the earlier regulations with a requirement that at least one nosmoking sign must be displayed.

The new Regulations came into force on 1 October 2012.

Age Discrimination The Equality Act 2010 made provision for the Government to ban age discrimination against those aged 18 and over in services and public functions.

Any discrimination on the basis of age is now unlawful unless it is covered by an exception from the ban or good reason can be shown for the preferential treatment (“objective justification”). Exemptions relevant to retailers mean it is lawful to provide age-based concessions and to apply age verification procedures for agerelated sales.

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Buying Stock...

Buying stock in the “I haven’t been to a cash & carry in about 18 months – it’s about 12 miles away and I decided that by the time I’ve paid for a litre of diesel, and taken a couple of hours out of the day, it’s just not worth it.” Colin Woods, owner of Amberley Village Stores in Sussex, is typical of many rural retailers who now shun a shopping trip to the cash & carry.

Perhaps unsurprisingly, delivered wholesaler Palmer and Harvey has worked out that using a cash & carry can cost independent retailers more than £2,500 a year in extra staff and travel, and reckons it takes up more than four hours a week – and probably more for rural retailers who have to travel further. But these days it’s not just a simple choice between going to the local depot or poring over catalogues and brochures, explains Patrick Mitchell-Fox, senior business analyst at IGD. He says that until recently, supply options for small retailers had been limited to two types of wholesaler service: delivered or cash & carry, which meant storeowners were faced with a trade-off between the convenience of delivery against lower cost prices.

This distinction is beginning to blur, says Mitchell-Fox, as cash & carry operators have launched their own delivery options. One example of this is Booker, which now deliver free of charge at cash & carry prices from all its depots. Mitchell-Fox continues, “Delivered wholesalers, such as Palmer and Harvey, have responded by lowering prices to match cash & carry operators and being more flexible.”

This has also meant a surge in online ordering systems, allowing stores to pick and choose from a wider choice of suppliers whilst comparing prices. The Federation of Wholesale Distributors believes that online ordering is a big opportunity for the sector, and predicts that at the least 50% of order capture will be online soon.

Booker was the first to launch a viable online service, and its online sales in its last full year

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By Helen Gregory

21st century were £635m, more than 16% of its total turnover. To put this in context, it is a bigger proportion than online sales are for Tesco – with online sales growing at 11% this year, reports Mitchell-Fox.

out what lines aren’t selling, and replace them quickly. For small retailers without much backroom space or cash, it means your stock levels are reduced.”

Delivered wholesaler J.W. Filshill in Glasgow distributes into rural Scotland and MD Simon Hannah says while its customers are embracing scanners which upload orders onto its website, EPoS can make life even easier by managing stockholding and margins for stores. He acknowledges the initial outlay is off-putting,

Both delivered and cash & carry players, such as Booker, Bestway and P&H, now give retailers hand held scanners to scan barcodes, which are downloaded through a USB port. P&H already has 3,400 retailers using them, and aims to get 70% of its customers on board by 2014. Says a spokesman: “We’ve heard that some customers used to spend up to seven hours a week going through brochures and placing their orders; now many retailers are saying they’re completing their ordering in around ten minutes.”

Woods at Amberley Village Stores is a convert, getting deliveries from both Booker and P&H, using hand-held scanners to scan barcodes. He reveals that by using both scanners, he’s able to work out which wholesaler gives him the best price. “If you just go to cash & carry you wouldn’t know what price other wholesalers are offering,” explains Woods.

In recent years, the big wholesalers have encouraged retailers to integrate their EPoS systems with on-line ordering. Chris Sharrinton, who runs a Spar shop in Helston, rural Cornwall, has used EPoS for 20 years to buy stock through this symbol group and reckons it’s worth forking out for an off-the-shelf system, as it will pay for itself in the long-term.

“We couldn’t run the shop without it,” says Sharrinton. “We don’t run out of stock, can find

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for the service. Could the concept work for wholesalers? Nisa has already looked into it and the IGD’s Mitchell-Fox says that while some deliveries can be subject to charges or minimum drop sizes, there is still scope for wholesalers to offer click and collect services: “This would give customers even greater flexibility to purchase the exact quantities they want, when they want them,” he says. In a small shop, sales can go down and retail theft can go up when the manager is out of the shop, while another advantage of not going to the cash & carry is that you won’t be tempted to impulse buy.

which is why he has just started offering EPoS systems free on loan to retailers. “They get the benefits and we are able to use their data to get better deals from suppliers, although we do insist retailers then give us 100% of their business.”

Steve Fox, Sales Director for Retail at Booker agreed with these benefits: “”Epos systems are an essential part of an independent store and we are delighted to be providing them free of charge for our customers. This system helps retailers improve and develop their business efficiencies including price changes, stock levels and promotions. It is also a great way of ordering, saving both time and effort.

The system can also produce reports to help retailers identify profitable lines, slow sellers and category sales.” Last year Booker launched a free Epos system for independent retailers who agree to spend more in their local Booker.

So what’s the next step in the wholesale revolution? Click and collect works well in the retail sector because shoppers love the fact they don’t have to be at home for deliveries or pay

However, going to the cash & carry in the normal way is still a good option for those stores watching their cash flow. Fox comments: “ We understand that our customers’ time is precious so deliveries can make their lives easier, while visits to branch mean they can learn about emerging trends and see if anything new catches their eye. This connection between our customers and their local branch is something that really helps our independent retailers to grow and adapt their business.”

David Bolton, manager of Sulgrave Village Shop in Northamptonshire, agrees, “When you’re at the cash and carry you can see everything, and pick and choose, whereas if you’re ordering from a company they won’t send you something if they haven’t got it. Going in person means you can be more flexible in what you order, and we can also make sure we get any good promotions.”

It is clear that new ways of working are developing rapidly and becoming mainstream, although for many retailers the drive to the cash and carry will remain part of their lives for many years to come. The key message is that it is important for retailers to keep their systems under review in order to achieve the best approach or mix of approaches for their particular circumstances.

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Retail Apprenticeship Scheme...

Providing young and talented staff to independent retailers The Retail Apprenticeship Scheme is designed to help independent retailers to benefit from young and talented apprentices, without getting involved in any administrative burden.

reducing the risk, cost and time commitment for the retailer. The scheme is open to independent retailers employing fewer than 250 employees in England. To take part, retailers need to:

At the RSA, we are constantly reinforcing the message that one of the key advantages small retailers possess is their ability to deliver good personal service. That, of course, depends on the quality of staff and the way they are trained and managed. There has never been a more important time for retailers to develop, train and retain a talented and skilled workforce.

Despite this, few independent and smaller retailers employ apprentices. The reason is obvious; the pressures of day-to-day management leave little time for recruiting, training and supporting an apprentice in-house.

The idea behind the Retail Apprenticeship Scheme is to take away this burden, whilst providing retailers with access to affordable and talented new recruits, enthusiastic people who can make a real difference to their business.

The apprentices are recruited and employed by the Retail Apprenticeship Training Agency (RATA). Before they start work, each apprentice is given two weeks classroom-based training.

This includes courses on retail knowledge, customer service, numeracy and literacy. This ensures that retailers gain a work-ready employee from day one. The placement is for 12 months, during which the apprentice will attend 10 one-day training sessions to continue their learning. Crucially, RATA retain responsibility for the welfare, H&S, learning and employment of each apprentice, thereby

■ Provide a work placement for up to a year of 30 to 40 hours per week, with a clear role job description.

■ Provide a safe working environment ■ Be involved in the selection of their apprentice from a pool of candidates ■ Pay a weekly fee of about £140 towards apprentice wages, NI contributions and administration ■ Provide appropriate induction and uniform for the apprentice ■ Provide a supervisor or mentor for the apprentice The apprentice is employed on a full-time contract, which may include Saturday and Sunday working. During their year, the apprentice will complete a Level 2 Retail Skills Course which covers the practical skills needed to become a good retailer. Units include working effectively in a team, storage of stock, stock control, displays to promote sales, processing payments, customer service, health and safety and security. At the end of the year, the retailer has the opportunity to recruit the now-trained and experienced apprentice, but has no obligation to do so.

■ More information can be found at: www.nsaforretail.com/RAS ■ The National Skills Academy for Retail can be contacted: Telephone: 0844 264 0238.

E-mail: RAS@nsaforretail.com

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Biscuits...

The Biscuit Fixture According to Burton's Biscuit Company, the UK biscuit market is worth a massive £2.4 billion per annum, with growth at a healthy +5% per annum.

The British certainly love their biscuits, making them one of the most important product groups within grocery. And they are also products that customers pick up on impulse, often during visits to convenience stores. They are an affordable treat, something that many customers appreciate when budgets are tight.

Biscuits are a vital product group in our sector.

As an impulse purchase, it is important that biscuits are displayed in a high traffic area, not tucked away at the back of the store.

For most stores, the extra sales will more than justify the investment of space. Price-marked packs have become very common on the biscuit shelves in recent years. Some retailers do resent the loss of margin they often demand, but the general experience is that extra sales do normally compensate and that their presence does reassure customers that the store as a whole is providing fair prices – a real halo effect.

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Tobacco packaging...

Standardised Tobacco The results of the Department of Health’s public consultation on the merits of tobacco standardised packaging have been delayed by the need to analyse the massive numbers of responses received. This does highlight how emotive the issue has become – perhaps not surprising, given its nature.

SCOTLAND In the meantime, Scotland is joining the rest of the UK in banning open display of tobacco products after a legal challenge was rejected by a five-strong panel of judges on the UK Supreme Court. This ban is expected to come into effect in April.

EUROPEAN COMMISSION Medical professionals apparently become instant world experts on consumer packaging, whilst some defenders of the status quo seem to know to the finest detail how counterfeiters will respond to a new set of pack designs to replicate.

The RSA response to the consultation was, we hope, fairly measured. We highlighted that our research of the impact of standardised packaging on retail operations – the best work available, but still only a simulation, showed there would be a negative impact on the retail industry and suggested that the Australian implementation would soon provide real world data.

Late in December 2012, after years of discussions, the European Commission has adopted its proposal to revise the Tobacco Products Directive.

The proposed legislation consists of new and strengthened rules on how tobacco products can be manufactured, presented, and sold. It bans the use of cigarettes, roll-your-own tobacco (RYO) and smokeless tobacco products with characterising flavours, such as menthol. It also makes the use of large pictorial health warnings mandatory on cigarettes and RYO but does not go as far as to demand plain packaging.

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Packaging Australia has always been an early mover on anti-tobacco laws, banning advertising on TV and radio as early as 1976, in newspapers in 1989, and sponsorship of sports and cultural events in 1992. One of the world’s toughest anti-tobacco laws came into effect in Australia on December 1st, banning all company branding and logos from cigarette packaging. A pack of cigarettes in Australia is now an olivegreen box with dominant and graphic health warnings, with the brand name and variant written in a discreet, generic font at the bottom of the pack.

packages have just made it harder for small business owners like her to keep up with stocking shelves and placing orders. "[It's] very costly; costly in time and effort. I’m supposed to have gone home at half past two, and I’m still here because I’m still doing orders, because it takes us twice as long to do.”

CTC Tobacconist Bruce Whatley said the introduction of plain packaging had not reduced tobacco sales at his Cairns business. "I’ve been in the game since cigarettes were 20c per packet, it hasn’t affected anything, consumers don’t care," he said. "We’ve had to create an extra 20 to 40 staff hours because we can’t tell what each product is, we’ve had to restructure the whole business to look after it."

It is early days and there is no hard evidence as yet on the long term effects of the new Australian packaging on tobacco smuggling, smokers or retailers. Not surprisingly, anecdotal comments emerging from Australian retailers tend to support the RSA’s findings. The following are a few quotes that have found their way onto the Internet but are not claimed to be a representative sample: James Yu, who runs the King of the Pack tobacconist in central Sydney, said the uniform packaging made it harder to stack his shelves, "It used to take me an hour to unload a delivery, now it takes me four hours," Yu commented.

"The government should have just banned them altogether and then we'd go OK, fine, we're done, we'll shut up shop," he said, throwing his hands up in the air.

Meanwhile, Sandra Ha of Zico Import Pty Ltd, said demand for cigarette cases (silicon covers to go over and mask the unpalatable packets) had shot up, suggesting that the graphic pictures may be having the desired effect on smokers.

"People are still coming in and saying, 'Oh, that’s terrible.' But they’re still smoking," says shopowner Brenda Jones. She thinks the graphic images haven’t really deterred any of her customers, and the hundreds of look-alike

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