Rural Retailer www.ruralshops.org.uk
Issue 22 l Summer 2013
The Journal of the Rural Shops Alliance
■ Fresh meat in convenience stores ■ Who are your customers? ■ Free shop local poster inside
Your contacts... for more information and news...
● Rural Shops Alliance Egdon Hall, Lynch Lane, Weymouth, Dorset DT4 9DN ● Tel: 01305 752044 ● E-mail: info@ruralshops.org.uk ● Website: www.ruralshops.org.uk
Contents... In this issue...
Cover photo: Pauline Phipps with some of her excellent pasties
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21 22 24 25 26 27 30
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In My Opinion, By RSA Chief Executive Our Partners Your Action Checklist... R A Phipps Family Butchers company profile Fresh meat: a real opportunity for convenience stores RSA Views: Retail to residential permitted development proposals, shop theft, business rates relief, VAT flat rate scheme So who are your customers? 2011 Census data Energy Bills Ice cream – keeping one village shop alive Small Business Saturday Banking for small businesses The Coffee Fixture Collect Plus – delivering convenience to rural communities
RuralRetailer ● Published by The Rural Shops Alliance. ● Printed by: Russell Press, Nottingham. ● Design: Kavita Graphics.
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In my Opinion... Fresh produce – getting “the spiral” going the right way At the last RSA National Meeting, the research agency Him! gave a very interesting presentation, based on thousands of interviews with convenience store customers. It highlighted the main reasons why these customers do not use convenience stores more. There were four basic points. Two – prices and limited range – were entirely predictable. The other two, the limited range and quality issues with fresh produce, were less so. In fact, many retailers know how important fresh produce is to customers. However, it is worth repeating: many customers base a lot of their judgement on the store overall on its fresh produce offer. However, produce sales may only make up a few per cent of total sales. Although gross margins are probably good, by the time the staff costs of servicing the range and the inevitable wastage are taken into account, then financially it can hardly be worth stocking for many retailers. I have been raising this issue with retailers at meetings and on my store visits. In many parts of the country, it is clear that it is very hard to find a good wholesaler, one prepared to deliver relatively small quantities, sufficiently frequently and at acceptable prices. Some retailers did report that such paragons do exist and in several of my meetings the retailers present then spent a very productive five minutes exchanging details of their produce suppliers.
well as the shops. When rural businesses close, overall demand weakens. Less frequent deliveries from weaker wholesalers can mean that the produce display is tired and undesirable; a downward spiral ensues. On the plus side, several of the symbol groups have improved their range of fresh produce markedly in the last few years and in many convenience stores the displays have never been better. We also know of independent retailers who have consciously decided that they need to develop their produce range. They have accepted that it may take several months of excessive wastage and financial loss to establish the range and to get it onto a “virtuous spiral”. As customers buy more it becomes easier to provide freshness and good availability. This leads more customers to buy locally, making it easier to keep the display fresh….and so on. The reality is that many other rural retailers should really be following this hard path. ● Do let us know (on info@ruralshops.org.uk) if you have an excellent local produce wholesaler we can tell other retailers about!
But this issue does highlight how rural businesses can be interconnected. Sometimes wholesalers will only deliver to a village when there is sufficient business to justify their mileage. This “critical mass” can only be generated if there are pubs, restaurants, school kitchens, works canteens or other customers as
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Our Partners...
Retail Services Team Credit and debit card acceptance service Supply wide range of cards with great service EPos systems designed for independents Identity cards for all ages Buying and selling retail businesses
Free help to reduce electricity bills Wide variety of bags personalised with your logo H&S and fire risk support Excellent cover and competitive rates for rural retailers Electronic security systems
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—? Summer 2013 â—? Issue 22
Your Action Checklist for this issue... 1. REVIEW APPROACH TO FRESH MEAT IF APPROPRIATE 2. PUT UP SHOP LOCAL POSTER 3. GET CENSUS DATA ON CATCHMENT POPULATION 4. MAKE SURE YOU ARE CONTROLLING ELECTRICITY COSTS 5. PROVIDE VIEWS ON SMALL BUSINESS BANKING TO OFT 6. REVIEW COFFEE FIXTURE
p p p p p p
SEE PAGE 10 SEE PAGE 15 SEE PAGE 21 SEE PAGE 22 SEE PAGE 26 SEE PAGE 27
Post Office We have heard from a number of members operating sub post offices that the new Royal Mail postal charges introduced in April, which have increased the price the sending parcels of certain size/weight combinations considerably, are reducing the number of parcels being sent through post offices. This change was to
Camelot We know that a significant number of RSA members with National Lottery terminals were very concerned at receiving a letter from Camelot in June suggesting that outlets with sales of lesson £800 a week could lose their terminal. After a meeting with Camelot management, we can confirm that this was a general letter (many retailers had thought this
ensure that Royal Mail covers its costs, no doubt an important factor before privatisation but one that seems to be harming some rural post offices. On a more positive note, Royal Mail and Post Office Limited will be launching a “click and collect” service later this year, to compete with services such as Collect+ (see page 30).
threat was directed to them personally) and that the number of vulnerable outlets at present is actually quite low. We do know that a significant number of the new outlets that received their National Lottery about nine months ago are concerned. Some may be designated as community outlets and therefore protected. Others are struggling to achieve this required minimum level. We can confirm that no store which has had a terminal for less than 12 months is included in the cull this time round.
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R A Phipps: Family Butchers...
Suppliers were taking bets on When Graham and Sylvia Phipps were expecting their third child, the champagne was ready to be popped to welcome a baby boy – an heir to the family butchers business in Hanley Swan, Worcestershire. But when the child proved to be a third daughter, Pauline, the bottle was put back in the cupboard unopened. “My father was one of eight children – the Phipps family had run the butchers shop since 1932. Everyone was hoping for a boy to carry on the family business. Then I was born!” laughs Pauline. As a small child, Pauline’s grandfather Allan even refused to allow her into the shop. “I
Some of the mouthwatering pies on display
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still remember him looking up, pointing at me and saying: “You: out!”, and I ran.” But later, when her father took over the business, Pauline was allowed to get more involved. “My dad reared his own cattle and sheep, as well as running the abattoir at the end of the garden and the butcher’s shop, so I loved helping out with the animals, and in the shop. After I left home, over the years, I found myself back in the village, helping out occasionally in the shop. But I had no thoughts about taking over; butchery was very much a man’s business.” Almost 20 years ago Pauline found herself at a crossroads. “I’d recently moved back to the
By Beth Whittaker
how long she would last village with my young daughter, and when my Worcestershire asparagas and strawberries father died suddenly my mum didn’t know what to do with the business, so I said that, so long as we could pay the bills, we could run the shop; we’d just give it a go,” she recalls. Little did Pauline realise that the shop’s suppliers were taking bets on how long she’d last running the business! “One only gave it a year! Almost 20 years later, I think they’ve realised a woman can be a successful butcher,” she says – although being only just over 5ft tall and a lightweight 8 stone does mean lifting carcasses is a challenge! Pauline’s love of animals and knowledge of animal husbandry has given her a passion for the best quality meat, reared and butchered with care. “I can tell just by looking at the meat if the animal has been over-stressed, or has arthritis no amount of cooking will make it tender,” she says. “People know I have very high standards and I’ve used the same suppliers – often other family businesses – for many years. I know where all my meat comes from, and I like to keep the ‘food miles’ to a minimum, as travel stresses livestock. I know what I am looking for, and my suppliers understand that. For example, I’m expecting two Gloucester Old Spot pigs this week – I know where they were born and bred and I know they will be of the best quality, because that’s what I expect. That passion for good meat, well cared for, comes from growing up in a butcher’s family.”
me the idea. I started with a basic meat pie, which proved very popular. That started my creative juices flowing!” That simple meat pie spawned a whole range of delicious, national award-winning pork pies, meat pies, sausages, pasties – and even fruit tarts, all home-made with the finest local
A chance discussion with a salesman at Hereford Refrigeration a few years ago when Pauline wanted a new chiller unit led to her next major business decision: to branch out into making pies. “He took me round to some local Part of the meat range shops which made their own pies, and it gave
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R A Phipps: Family Butchers...continued “Hanley Swan is very pretty village with a duck pond and village green; and the shop is eyecatching, decorated with flowers and looks very attractive. We built an old-fashioned wheeled cart, painted green and red with a striped awning to display our fruit and vegetables outside the shop, as we had no room inside, and this attracts custom too.”
Produce cart provides extra selling space
ingredients by Pauline and her mum. “We have built such a reputation for the quality of our pies that we have customers coming from Coventry and Nottingham,” says Pauline with pride. “They can buy them frozen to bake off at home, or already cooked. They often buy in bulk!” The range of meats and pies is matched by an excellent range of local cheeses, fruit and vegetables.
Even the catering businesses which trade at the Three Counties shows stock Pauline’s sausages; she also supplies a local children’s nursery and a residential nursing home with all their meat. Recently, Pauline and her mum prepared 700 assorted pies for a customer to sell at the Good Food Show, and she sells dozens of her pork pies to hungry bargain hunters at a local flea market. As the ultimate in praise, one visitor from Cornwall was so convinced of the superior quality of Pauline’s Cornish pasties that they asked whether she would post some – a real heresy across the Tamar.
The very popular Blackmore caravan and camping site at the foot of the Malvern Hills, just a mile away, is a rich source of customers, as are the thousands of visitors en-route to the many events at the nearby Three Counties Showground.
“About half of the business now comes from the pies. To keep a traditional butchers business going in the 21st century, you have to keep coming up with new ideas: you can’t stand still. You have to move with the times – people are getting more interested in the cheaper cuts of
The shop is not large
The building with the walk in chiller, freezer and the kitchen
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The shop is close to the pond in the centre of the village, with a resident heron Pauline Phipps
meat, but they don’t know how to cook them. That’s what a good butcher can help with – we can tell them the best way of cooking any cut of meat. We also sell marinated meats for barbecues and offer ‘veg and meat’ box deliveries – although we find most of our customers prefer to come into the shop to buy – and to chat!” Pauline employs another butcher and is considering taking on an apprentice – but she knows she will be the last Phipps to run the shop. “My daughter is training to be a surgeon, so wielding a scalpel is as close as she will get, but that’s not a problem – I’ll be happy to sell the business eventually. My grandfather would be shocked that a woman is running the shop, and that we now make and sell famous pies, but hopefully he’d be pleased that Phipps the Butchers is still going strong after more than 80 years!” ● For more details, see: http://hanleyswan.net/shops-businesses/ shops/r-a-phipps
The RSA view For most retail businesses, it is the sales area that is the vital part. For Pauline, the service building at the back is nearly as important. In addition to the walk-in freezer for meat, this contains a walk-in chiller, necessary for the batch production of the pies and pasties. It also accommodates the kitchen, where Sylvia works her magic. This building was set up and equipped about 13 years ago, with help from a local government- funded scheme to help rural businesses in Warwickshire and Worcestershire, as well as a significant investment from Pauline herself. The resulting long-term success is an excellent example of how this type of grant support for capital investments can provide long-term benefits for small businesses and the rural economy. There is a real lack of such schemes today in England (Scotland and Wales do have support programmes). Some local authorities have run successful schemes but with budgets under such extreme pressure, these are currently few and far between. Over the years, many rural family butchers have closed, but the recent horse meat scandal highlights how important it is that outlets such as this for locally reared meat provide a real alternative to the supermarkets. Issue 22 ● Summer 2013 ● RuralRetailer 9
Fresh meat...
A REAL OPPORTUNITY
FOR RURAL CONVENIENCE STORES “I had to double-check the price when six sausages came to £6.98 the other day,” admits Richard Jones, who runs Colne Engaine Village Shop near Colchester, who adds: “It sometimes surprises me, but then this is an affluent area and people are happy to pay for quality.” His customers gladly snap up chicken breasts and ham from The Rare Breed Meat Company and Blackwells Farm, just three miles down the road, as well as meals made by the farm – despite the price tag – mainly because locals like knowing the provenance of their meat, believes Jones. He operates on margins of 35%, and has a good working relationship with the farm: “We work with them side-by-side, getting deliveries three times a week. Meat sales are important to us but nothing we do here takes business away from them.” Some butchers who supply rural stores agree that they too are in a win-win situation, such as Sue Harris of Tywardreath Butchers, in Par, Cornwall, who says: “A lot of the people who buy from the village shops – where there is a limited stock - also come here, whereas before they didn’t, so it is good advertising for us.”
Jon Thorner supplies dozens of stores
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And those butchers who make big delivery rounds are also more likely to find supplying
By Helen Gregory small shops worthwhile. Jon Thorner’s farm shop and butchery counters in and around Shepton Mallet sell to dozens of rural stores in a 50-mile radius. Owner Jon Thorner says his business model works because these village shops also buy baked products such as pies and quiches from him, making deliveries more costeffective. The company’s gas atmosphere packaging machine gives meat a seven-day shelf life instead of the typical two days you get with cling film, which helps to prevent wastage. Thorner gives most shops approximately 30% profit on cost and adds: “They can make a reasonable margin – our mark-up on meat is enough to allow us to do that.” Wastage can be a problem when you’re selling meat; who hasn’t bought in a bumper back of sausages and burgers only to fall victim to an
optimistic weather forecast? Getting customers to place orders instead of holding stock on shelf can be a way round this - something community co-operative Radley Village Shop in Abingdon, Oxfordshire, does successfully, buying from local butcher Q Gardens. A volunteer picks up orders once a week, otherwise Radley shop manager John Goodenough reckons the butcher wouldn’t think it was worth his while. The shop gets 20% off each order but profits are minimal because it takes so few – about five a week, says Goodenough, who reckons it’s partly because the final retail price can fluctuate, sometimes giving customers a shock. If the answer to really successful meat sales is a very close relationship between village shop and
Brindon Addy, Chairman of the Q Guild of Butchers
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Fresh meat...continued mince, steak and chops – individually, which means that products in the village stores sell for slightly more than in the butchers. But it seems the arrangement is not always lucrative for her either, as Harris admits that as a family butchers shop she doesn’t want to let these stores down. “It’s really not worth our while in the winter when sales are lower, but it makes up for it in the summer when sales go up.”
butcher, you can’t get much closer than at K.W.Clarke butchers, in Bramfield, Suffolk, where half the butchers shop is also the village store. Two-thirds of sales come from meat while it also supplies about a dozen other village stores, particularly with home-cured ham and bacon, along with beef from owner Jeremy Thickitt’s farm. He says: “It’s definitely worth the business for everyone – if a pack of sausages is £2 here, it would be £2.20 for them, but I’d take 20% off so I’m selling to them for £1.80, so they make 40p.” Adds Thickitt: “Our set-up works well because there’s a lot of crossover between the two parts of the business and people will pick up groceries to go with their meat. They complement each other.” However, a sense of duty and sentimentality can keep chops and mince on the shelves of some rural shops, rather than any hard-nosed business decision. “I can take four chickens but then be left with three that I have to put in the freezer,” admits Kate Hogg, owner of Lerryn River Stores in Lostwithiel, Cornwall, where meat sales can fluctuate wildly. “We carry meat because we like to give customers the full range of options – otherwise they might go elsewhere to shop.” Hogg is supplied by Tywardreath Butchers, which also delivers weekly to five other village stores in a 40-mile radius. Owner Sue Harris says that it takes time to package products – typically fresh sausages, burgers,
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This situation is not uncommon, with other butchers recognising that small orders and delivery costs can dent profits. “Not many of our members supply small shops,” says Brindon Addy, chairman of the Q Guild of Butchers, who attributes this to the stores’ lack of refrigeration and small margins: “Our usual 40% margin minus their 20% doesn’t leave a lot.”
The RSA view The recent horse meat scandal has made consumers much more aware of the provenance of the meat they are eating, with many independent butchers experiencing massive sales increases as a result. Although inevitably a lot of customers have drifted back to their old supermarket habits, at least some have hopefully remained. Rural convenience stores that stock fresh meat have also done well. Irrespective of the horse meat issue, the fact does remain that more people are shopping locally rather than visiting the supermarket quite so often. This means that there is a real opportunity for convenience stores to provide, in the horrid jargon of marketing, a full “meal solution” for their customers. Clearly stores need to consider issues such as the costs of extra refrigeration and wastage, but for many stores this does represent a real opportunity. And if customers know they can get their meat at the store, then they have the opportunity to sell them the vegetables, the sweet and the bottle of wine to go with it.
RSAViews Summer 2013
RETAIL TO RESIDENTIAL PERMITTED DEVELOPMENT Proposed government consultation In his budget statement in March, the Chancellor announced that the government would be consulting on extending existing rules on “permitted development” to allow easier change of use for buildings. This would provide further flexibility for change of use from certain agricultural and retail uses to residential use, “to increase responsiveness within the planning system”. This is the latest in a series of changes to the planning system aimed to reduce planning barriers and stimulate investment. Specific flexibility is already enacted which includes time limited use class changes as well as powers to allow for businesses to extend by up to 100 m² without requiring planning permission. The specific proposal has been prompted by the fact that many town centres have a lot of retail premises empty and that alternative use of these buildings for residential purposes makes some sense. This involves conversion of premises designated for retail use (A1) to residential (C3). In rural areas, many village shops and post offices occupy buildings converted from houses, often making for a very straightforward reconversion back to residential use. In thousands of rural settlements, high house prices mean that premises are worth more as houses than they are as shops. Where this is the case, it would take a high-minded individual to sell their property as a shop, rather than market it as a commercial property. Indeed, as the property is often the retirement investment for the owner, few could blame them for
maximising their financial return in this way. At present, most planning authorities have policies in place to make it very difficult to convert the last shop in the village to residential. Typically an applicant has to prove that they have made real efforts to sell the business as a going concern for a reasonable length of time. Relaxation of the safeguards could have a significant effect on the rate of shop closures in rural areas. The Department for Communities and Local Government is planning to consult on this issue – indeed, the consultation may be underway by the time you read this. We do not at this stage know what the detailed proposals will be. Clearly it makes sense to allow shops in marginal locations in big cities to be converted to residential use, particularly as online retailing continues to take market share from bricks and mortar businesses. However, it is important that any relaxation in the regulations takes into account the very different circumstances of other parts of the country. We have expressed these concerns to the Department. We would urge rural retailers, parish councils and other interested parties to keep an eye open for the consultation – details will be provided on the RSA website when we know them – and to make sure that you express reviews on this important topic. The right answer is of course to provide limited government support so that rural shops are sufficiently profitable that the premises they occupy are worth as much as a shop as they are as a house.
RSAViews
SHOP THEFT Shop theft is a crime that sometimes the government finds hard to deal with. There is an understandable desire to keep the costs of the criminal justice system under control, to avoid if possible giving young people a criminal record for behaviour that hopefully they will grow out of and a feeling that theft from a business has less impact on the victim than theft from domestic premises. A new bill is currently progressing through Parliament called The Antisocial Behaviour, Crime and Policing Bill which has significant implications for retailers. Late in the day, the Home Office has included a new clause – clause 133 – into this Bill. If enacted, this would change shop theft of goods below the value of £200 from being an “either way” offence to becoming a “summary offence”.
This would mean that shop theft of £200 could not be heard in a Crown Court but only by magistrates, who hear the vast majority of such cases anyway. However, there is a very important implication. This clause would change how shop theft is dealt with by the police and the Crown Prosecution Service. It would make it easier to process guilty pleas for shop theft. A present, the police have to collect evidence of the shop theft and present the case to the CPS, who then makes a decision whether it is in the public interest to proceed with the case. This process would change, so the police would present their evidence to the defendant, who would then makes a decision whether to plead guilty or not. If they decided to plead guilty, they could post their plea to the magistrates court without having to attend and they would then be issued with the appropriate penalty. Existing legislation already allows for the issuing of penalty notices for shop theft up to £100. Clause 133 makes provision for repeat offenders by allowing defendants charged on the same occasion with two or more offences of shoplifting to have the values involved aggregated – this will probably not happen that often. Priti Patel MP., Chair of the All Party Parliamentary Small Shops Group, raised the concerns of many small shopkeepers during the second reading of the bill, “I urge the government to look again at clause 133 on low value shoplifting. Owners of small shops in particular will be concerned about what they will see is a downgrading in the way that thefts of a value below £200 are treated.”
Priti Patel MP
The RSA would suggest that concerned shopkeepers should contact their MPs to express their views. In particular, we would suggest that repeat offenders should be treated more seriously, with the potential for their case being referred to the court system.
RSAViews TWO GOOD APPROACHES COME INTO CONFLICT Business rates can be a significant cost for many rural retailers. Fortunately there is a scheme in place to provide relief for small retailers but unfortunately it contains a great big anomaly. Rural rate relief If your business is in a rural area with a population below 3,000 you could get rural rate relief. You can get relief if your business is: ● the only village shop or post office with a rateable value of up to £8,500 ● the only public house or petrol station with a rateable value of up to £12,500 By law you must be given 50% off your business rates. Your local council can at its discretion also: ● top up the mandatory 50% relief to 100% ● give relief to other rural retail businesses of up to 100% (for properties with a rateable value under £16,500)
Small business rate relief You can get small business rate relief if: ● you only use one property ● its rateable value is less than £12,000 Until 31 March 2014, you will get 100% relief (doubled from the usual rate of 50%) for properties with a rateable value of £6,000 or less. This means you won’t pay business rates on properties with a rateable value of £6,000 or less. The rate of relief will gradually decrease from 100% to 0% for properties with a rateable value between £6,001 and £12,000. The deadline for 100% relief has been extended several times in the past and this may happen again.
The problem Businesses that qualify for rural rate relief cannot also apply for small business rate relief. The rural rate relief scheme takes precedence. In the past this did not matter. The vast majority of rating authorities provided the discretionary top up to rural rate relief, meaning that qualifying rural businesses did not pay any business rates. However, the pressure on local authority budgets has meant that this cost is coming under increased scrutiny and some businesses are not getting any or all of the discretionary component. This means that at present they are being penalised compared with businesses in larger settlements unable to claim the rural relief – the complete opposite of government’s intentions. The RSA has brought this anomaly to the attention of relevant parties but at present the anomaly remains. It may be a useful argument to deploy if your local authority is minded to refuse to pay discretionary rural rate relief on your premises. ● See: https://www.gov.uk/apply-for-business-rate -relief/small-business-rate-relief
RSAViews
VAT FLAT RATE SCHEME In principle, this is a very attractive concept for small retailers. If your VAT taxable turnover is less than £150,000, you can elect to pay HMRC a fixed percentage of your turnover, rather than calculating the actual amount of VAT you owe each quarter. The Flat Rate Scheme can massively reduce the time that you or your bookkeeper needs to spend on accounting for and working out your VAT bill. It sounds like a no-brainer, a really good way to reduce paperwork. Unfortunately there is one great big flaw with this. Most rural retailers will fall into the HMRC category of “Retailing food, confectionary (sic), tobacco, newspapers or children’s clothing”. For this category, the flat rate is 4% of turnover. (Quite why children’s clothing, which is zero rated for VAT, is lumped in with the rest is a bizarre mystery wrapped up in an enigma). This means that a retailer with a turnover of £150,000 a year will pay HMRC £6000 VAT per year (4% of turnover). This immediately highlights the “gotcha”. Very, very few retailers (if any) would pay anything like this amount under the normal VAT rules. This is because: ● A significant proportion of convenience store sales are zero rated ● You reclaim the VAT on your stock purchases and so only pay VAT on the difference between your buying and selling prices ● You reclaim VAT paid out on purchases such as shop fittings or consumables At the RSA, we have tried various realistic sales mixes, profit margins and cost structures, and for every scenario we have tried, the VAT bill is significantly higher under the flat rate scheme.
This situation is really frustrating. We have a government dedicated to reducing red tape. Here is an ideal opportunity to dramatically cut administration for small retailers. In the past, we have briefed an MP on this issue, who then raised it with HMRC. Unfortunately they are not prepared to budge on this issue. We have recently met a couple of retailers who had elected to sign up to the scheme and who went ashen when we pointed out how much extra tax they were paying as a result. Obviously every shop has different circumstances and if you are in any doubt, we would strongly advise discussing the issue with your accountant. Our advice is quite clear, that unless simplified bookkeeping is overwhelmingly important to you, then most shops would be far better off living with the administration and remaining on the standard VAT scheme. ● For more information, see: http://www.hmrc.gov.uk/ vat/start/schemes/flat-rate.htm#3
So who are your customers?...
2011 Census data now available... When we are talking to shopkeepers, two of the RSA’s constant themes are that they need to know their customers and that they need good information in order to manage effectively. Data from the national census combines both of these themes, providing as it does a clear picture of the number and type of people living in their particular catchment area. Figures from the 2011 National Census are now available for small local areas and can provide a fascinating snapshot in numbers. For example, we are often told when visiting shops that the village we are in is a retirement area, containing a large number of old people. Quite often reference to the census data shows this not to be true – shopkeepers think they live in a retirement area simply because it tends to be the older people who make up a majority of their customers. Knowing that in fact there are a lot of younger people of working age living locally can lead shopkeepers to review the ranges they stock, their approach to marketing and even the shop opening hours.
Insert your postcode in the box and click on “search” This will provide you with top line information on various aspects of your neighbourhood, including the number and type of people living there, the nature of the jobs they do, the number of cars they own and what type of households they live in. Comparisons are also provided with national and regional averages, which provide a useful context for the local data. If you want more detailed information than this summary, then on the homepage you can access more data via “find statistics for an area”. At stage one, insert your village name or postcode At stage two, click on “more areas”, which will allow you to access parish level data – click on this option. Click “search” This will give you access to a vast array of data tables for your area. If you are really keen, you can download the information into an Excel spreadsheet and produce your own charts and formats!
Access to the 2011 Census data is freely available online and it is very easy indeed to use. ● Go to: http://www.neighbourhood .statistics.gov.uk/dissemination On the right of the homepage, see “neighbourhood summary”.
Issue 22 ● Summer 2013 ● RuralRetailer 21
Energy Bills...
OFGEM changes to the energy Ofgem is the Office of Gas and Electricity Markets. As the industry regulator, they work on behalf of all energy consumers to promote value for money, security of supply and sustainability. They do this through the supervision and development of markets, regulation and the delivery of government schemes. After carrying out a consultation exercise, Ofgem announced the following changes at the end of June 2013: 1. Protecting more businesses by expanding the definition of a micro-business. The threshold for energy consumption is being raised to 100.000 KWh for electricity 2. Suppliers will have to show clearly on every bill or statement of account the date on which
the contract will end and the deadline for customers to give notice to terminate. Customers will be able to give notice that they will terminate the contract at any time during the course of that contract. This will eliminate the current practice of some suppliers which requires notice to be given during a narrow timeframe, typically just 30 days. Suppliers are urged to make these changes as soon as possible but they must ensure customers have access to the information in relation to their contracts before March 31, 2014. 3. Put in place and enforceable Standards of Conduct (SOC) that require suppliers to treat micro-businesses fairly. This will cover aspects such as contact information, switching supplier, deemed contracts and billing. To comply, suppliers must make sure information is not misleading and act promptly to put things right if they make a mistake. 4. Increased monitoring of customer transfers between suppliers with enforcement action taken where necessary by Ofgem. 5. Further steps will be taken in respect to third party intermediaries for energy related services. The RSA very much welcomes these changes. In particular, ensuring that small businesses are able to keep track more easily of when their contract expires is very important, as is the ability to give notice at any time during the contract. Excellent news! ● See: http://www.ofgem.gov.uk/Pages/ MoreInformation.aspx?docid=539&refer =Markets/RetMkts/rmr
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market for small businesses 10 WAYS TO KEEP YOUR ELECTRICITY BILL UNDER CONTROL ... Energy costs are obviously one of the key expenses of
running most retail busine sses, especially convenience stores with a large number of chillers and freezers in operation, often operating in a constricted sales area with low ceilings, meaning that heat from compresso rs has nowhere to go. The following suggestions may fall into the “teaching grandmother to suck eggs”category but hopefully for many retailer s it may be useful to have a consolidated checklist. 1. Do make sure that you kno w when your contract comes up for renewal. Have it marked in large letters in your diary and on your calendar; we are still surprised at the number of businesses that allow themselves to be rolled over onto contract extensions at significant extr a cost. 2. Do consider using a profess ional to help you find the best contract. The RSA has a partner in USC. The services are free (they get a commission from the providers) and they can save you a lot of time researching the market as well as finding the best deal. Email info@ruralshops. org.uk for details. 3. Use an electricity monito r to find out how much electricity each of your piec es of equipment is using. These small instrument s can be bought online for £10-£20 and can highlight which chillers are running efficiently, and which are using excessive electricity. 4. Modern electrical equipm ent often uses a lots less electricity than older kit. The payback period for replacing ancient freezers can be very short. It is
well worthwhile considering this option if you do have museum-quality refriger ation still in use.
5. It is possible to add lightwe ight plastic doors to the front of many open deck chil lers. The cost may be quite high – some manufact urers can spot a captive market when they see one – but again the payback period in terms of reduced electricity consumption can be very sho rt. Most retailers report that these doors are acceptable to their customers and do not materi ally affect sales. 6. Turn off soft drinks and alco hol chillers overnight – this product is only chilled for customer enjoyment, not to preserve the product. Do you need all the refrigeration currently being used? For example, could the ice cream freezer be removed in winter? 7. Is the refrigeration position ed optimally in relation to air conditioning units or nat ural flows of air? It may need a specialist engineer to provide the answer to this question. 8. Make sure the compresso r and other parts are kept free of fluff and dust. Runnin g a vacuum cleaner over them regularly can ena ble them to work more efficiently and extend their lives. 9. Make sure inlet ducts to refrigeration are not blocked.
10 Make sure the door sea ls on freezers are in place and undamaged. Self-closin g doors that do not self close can have the same effe ct of allowing cold air to escape, to the detriment of energy costs.
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Ice Cream...
OUR SHOP WOULD NOT BE HERE My wife and I, with a bit of very reluctant help from our `potential Royal Marine` son and several part-time staff, run a village shop / PO / ice cream parlour / tearoom and garden on the River Severn in Worcestershire. We also do 2 paper rounds and try and keep the locals happy. We also have quite a few walkers, canoeists, cyclists and railway buffs who all need sustenance and ice cream.
The serve over freezer
When my wife Jocelyn and I were discussing buying this business we could not believe the vendors’ assurances that they had a healthy ice cream trade. Well, they did. It now accounts for over a third of our turnover. This is not your Mr Whippy soft aerated version but `straight from the cow to the freezer` artisan type. The margin is not as good as Mr Whippy but if you can get the portion size correct, it will keep you in business. Our best sales were 661 scoops in one day! Suffice to say that the poor weather decimated our sales last year and our GP% suffered accordingly but this year with a couple of good bank holidays and weekends we are well
ahead of plan and last year. We have to remember that the business only has 56 days a year - sunny weekends - to keep us through the winter. The upside of this business is that we sell ice cream on almost every day of the year, as children especially seem immune to the cold weather and are addicted to the stuff.
Peter with his external ice cream sign - hard to miss!
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The down side is that the scooping machines, plus one upright and one chest freezer, take up quite a bit of space and consume a fair bit of electricity. Following some advice from Ken Parsons of the RSA, we rearranged the shop, so that we now greet the customers face-on when they come through the doorway. We also installed big ice cream display signs inside and outside the premises.
By Peter Smith, Upper Arley Post Office & Stores
WITHOUT IT! The shop also sells a good range of loose sweets - popular with all generations
We encourage children to empty their parents’, and especially their grandparents’, pockets by offering:
The RSA view ● ● ● ●
Monthly special flavours Taste before you buy, A range of sprinkle and chocolate cones Free sauces and sprinkles.
My ambition would be to create a full ice cream parlour but space and cash preclude it. However, given our location and setting I could see it becoming a real destination for children on a dayout with their grandparents.
The investment of staff time, money and space needed to sell ice cream in this way is significant and it clearly needs a good level of sales, usually only found in tourist spots, to make it viable. Here its contribution to the overall business has helped to keep the village shop and post office open for the benefit of local residents. There are a good number of rural shops in tourist locations where this approach could provide a very welcome boost to profits and where it would be well worth trying.
Small Business Saturday This is an American shopping holiday held on the first Saturday after Thanksgiving Day, during one of the busiest shopping periods of the year. It was first run in 2010. Conceived and promoted by American Express, it has really taken off in the States. Last year, even President Barack Obama visited an independent bookshop on the day – endorsements do not get much bigger than that. It has been very successful in generating awareness and sales for small businesses. Chuka Umanna MP is the Labour shadow Secretary of State for Business, Innovation and Skills and is now bringing this initiative to the UK. “I saw the success in the USA of Small Business Saturday where it has become a national event. Spending in small shops on the day rose as well, leading to a long-term increase in customers. It also helps local small business to come together and champion their vital role in local communities”.
The first event will take place on Saturday December 7, when it is intended that the day will celebrate small businesses and encourage communities to support them at a key time in the shopping calendar. For many rural retailers, this is a time of year Chuka Umanna MP when they see even loyal customers making a foray into big supermarkets to stock up before Christmas. Any activity that encourages people to shop locally at this critical time of year can only be welcomed. The RSA will provide more information when it becomes available. Issue 22 ● Summer 2013 ● RuralRetailer 25
Banking...
IS YOUR BANK MEETING YOUR NEEDS?
A chance to tell the Office of Fair Trading The central government seems to have two contradictory objectives for the banking system in the UK. On the one hand, they are insisting that banks rebuild their balance sheets and reduce their level of risk taking. On the other hand, they want the banks to lend to companies in order to drive economic growth. This probably helps to explain many of the issues surrounding the UK banking industry. At the RSA we have been bemused by the two conflicting views we hear on the issue. Our members, almost all of whom are SMEs, consistently tell us about their banks refusing loans or only offering them with punitive and unacceptable conditions. Then we read the statements from the banks, emphasising what nice people they are and how much they are desperate to lend to small businesses. The Office of Fair Trading (OFT) has now announced that it is going to carry out a market study on competition in banking for small and medium-sized businesses (SMEs) and is seeking views on its scope.
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The OFT is seeking views on: ● Competition in the supply of banking services to SMEs - do SMEs have access to services that meet their needs and represent good value? ● Competition in the supply of lending or other finance to SMEs - is any lack of competition between banks holding back lending or other finance to SMEs? ● Are there types of SME (for example, startups or small financial firms) that face particular difficulties, and if so why? Clive Maxwell, OFT Chief Executive, said: ‘A competitive banking system and access to finance is vital to businesses and to economic growth. Our review of SME banking is part of an ongoing planned programme of work in this area to allow the Competition and Markets Authority to decide whether or not to make a market investigation reference by 2015”. ● The OFT would like to hear from SME customers of the banks and anyone who would like to submit views can contact the OFT at: retailbanking@oft.gsi.gov.uk.
Coffee...
THE COFFEE
FIXTURE In recent years, coffee shops have come to dominate town centres up and down the country. Even in recession, they have continued to thrive, providing an affordable treat and Wi-Fi access amidst the bustle of the high street. According to the Local Data Company, Holloway Road in north London has the most outlets, boasting no less than 24 along its length. Nationally there are more than 15,000 coffee shops. The prices charged for a flat white or a caramel frappuccino mean that the turnover of the sector far exceeds the value of coffee products for home consumption. As a result of visiting coffee shops, a significant number of customers now see themselves as connoisseurs of coffee, seeing it in the same way as they view wine. They are interested in the provenance of the beans and how they have been roasted and ground. Suddenly the word “barista” has entered the language, giving the lowly counter assistant new credibility. Andy Harrison, chief executive of Whitbread, owners of Costa Coffee, claims that coffee now has a classless appeal. “The customer profile has massively expanded .There was a time when this was a habit of the middle classes, but now it is a mainstream activity. It has become part of people’s daily lives.” There is already some crossover into the home market, with brands such as Starbucks and
Costa developing youth targeted products for home consumption. This can seem a world away from the typical rural convenience store, but many customers are in fact regular users of coffee shops and part of this national trend. For the office worker used to a mid-morning cappuccino, the coffee fixture in their local convenience store can seem very staid. Overall, the in-home coffee market is worth about £850 million a year, making it an important product group within the grocery sector, although volume sales growth has been stagnant over the past five years. However, as part of the widespread interest in the quality of the coffee they drink, customers are trading up to more expensive premium products (“premiumisation” in marketing
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Coffee...continued speak). “Consumers are trying to replicate what they can get on the high street by choosing to drink better quality coffee at home,” says Jeffrey Young of analysts Allegra Strategies. Not surprisingly, the emphasis on taste is influencing how coffee is made at home. While 64% of consumers still use instant coffee, ground coffee is now drunk by 54% of people at home. A small but growing minority (15%) use whole bean and coffee pods (pre-packaged capsules of different types of coffee) and 12% make instant cappuccinos and lattes. Obviously the same consumer may make coffee in different ways on different occasions. The convenience of soluble coffee is still key to the “in the home” market, with premium and super premium market penetration now at 76% (compared with 58% four years ago). This is where the key opportunity for retailers lies. The general conclusion is clear. Consumers are trading up when it comes to coffee quality, and the reality is that most convenience stores have
A RETAILER’S VIEW GOOD-BETTER- BEST ranging in action
“My refill sales exceed my jars sales, while my customers are getting better value. Kenco Millicano is a lovely products and it’s moving, for those that want a high quality instant product it is a fantastic offer, while introducing 200g large jars has helped drive my revenue further –this opportunity has been a pleasant surprise to me . Cadbury Hot Chocolate has moved well and the stick packs have been another pleasing introduction to my range, I'll be sticking with my new planogram as my sales have increased significantly both in value and volume terms!” Derek Balding, owner of the Mace stores Mundesley, Norfolk
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not kept up with this trend. In addition, shopping habits are changing, with more consumers using small stores to top up on traditional grocery lines such as hot beverages . This makes it even more important to make sure that the coffee fixture is given its fair share of space and attention. Whereas in the past it might only have been necessary to stock a few lines of instant coffee, today the market is becoming far more fragmented. Certainly it is worthwhile reviewing whether there is a sufficient range of ground coffee on shelf and considering two other range extensions:
Some tips 1. Keep on top of the latest trends, particularly the move to premium products. 2. Stock refill packs. Refill packs offer better value for money compared with jars. They are lighter for local customers to carry and they have a positive effect on the environment. 3. Make sure you use shelf space well. A wide range of tastes can be catered for even in limited space 4. Cover a range of qualities from Instant Granules to Super Premium. 5. Lay out the category from ‘Good’ to ‘Better’ to ‘Best’ 6. Use POS such as shelf edge tickets to highlight new ranges or lines. 7. Consider holding staff and/or customer tasting sessions when you introduce new lines, so staff can talk with confidence about the different types of coffee available and customers can actually experience the taste. 8. Use layout to promote associated categories such as sugar and milk. Supermarket research shows that a good coffee and hot beverage range is likely to impact sales of tea, preserves and spreads, biscuits and sugar, so site these near the hot beverage fixture if possible.
Wholebean Instant Coffee Kenco Millicano is the first ‘Wholebean Instant coffee’ from the company. It is a clever and innovative combination of freeze-dried coffee and finely-milled beans, giving coffee lovers the convenience of instant with the quality and taste reminiscent of roast and ground coffee at home. Kenco say, “It’s our closest thing to ‘proper’ coffee in an instant”. It is currently the number one wholebean instant product.
FREE TASTING KITS Mondelez are giving away tasting kits absolutely free to 30 shops. These kits contain trial samples of Kenco Millicano, disposable cups etc., to enable your customers to try the superior taste of wholebean instant coffee. The recipients will be chosen at random. To be in with a chance, email coffee@ruralshops.org.uk with your name and address.
Refill packs – great for convenience Instant Coffee refill packs are growing very fast, up by 54% year-onyear. This is important for convenience stores, as refill packs are lighter and more convenient for customers walking to the store
With grateful thanks to Mondelez for supplying information for this article.
Cadbury have been strong supporters of the RSA over many years. Our partnership has continued under Kraft's ownership of the company. Now the name for the group has been changed to Mondelez, a constructed name intended to have the connotation of "delicious world".
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CollectPlus...
Delivering convenience Our customers will always rely on their local stores for essentials and services at convenient times. Yet the economic downturn and changing shopping habits have made it all the more important to tailor what you offer to your customers’ needs to give you a valuable edge over your competitors and foster long-lasting customer loyalty. Rural stores are central to the success of CollectPlus and, throughout our growth, shopkeepers have played an integral role in making our services so popular with customers. Since the launch of CollectPlus in 2009, we have provided customers with seamless, convenient and cost effective parcel services. As a result, CollectPlus offers rural stores a great opportunity
to attract more customers and grow as a business. CollectPlus is the largest store-based parcel delivery service in the UK and our network has been strategically developed to incorporate the best local stores. As a result of our rapid growth, 89% of the UK population live within five miles of a CollectPlus shop in rural areas. Our rural growth strategy is focussing on introducing CollectPlus stores into towns and villages where our customers are and we are not, but which the extensive PayPoint network allows us to do. By joining the CollectPlus network, a participating store can expect significant commercial benefits, as offering our services is proven to increase sales over and above the commission earned from CollectPlus. Recent research has found that the average store earns additional annual revenue of £2,7121 from its CollectPlus customers Furthermore, almost two thirds (64%) of customers stated they had not used the store for other visits or purchases before using the CollectPlus parcel service. With nearly 50% of CollectPlus customers stating that they purchase other items from the store, as well as 63% stating they will use the store again, there are instant and lasting benefits for participating stores.
Neil Ashworth
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The strength of our service is its convenience. Nearly all outlets offering the CollectPlus service are open seven days a week, early until late. With 40% of CollectPlus’ customers sending or dropping off parcels outside traditional 9-5 opening hours, the service solves a long-term problem for residents in rural communities.
By Neil Ashworth, Chief Executive, CollectPlus
to rural communities CollectPlus has been designed so that it creates as little work as possible for the retailer. No money changes hands – payments are made online, either when ordering goods from an online merchant or when booking a parcel into the system on the CollectPlus website. When customers are sending a parcel, they download and print a label, which contains a barcode. All the retailer needs to do when the customer brings the parcel into the store is use the PayPoint scanner to scan the barcode. The PayPoint terminal prints a receipt for the customer and the retailer simply needs to store the parcel for the next collection by a delivery driver. When a parcel is delivered to the store for collection by a customer, the retailer scans the parcel in, stores it and scans it out when the customer calls to collect it. Commission is paid to the retailer both when customers collect their parcels and when they drop them off. CollectPlus offers three services which have all been designed with a focus on making the experience as easy and simple as possible. The ‘Click&Collect+’ service allows online shoppers to choose a CollectPlus store as their delivery address from a growing number of retailers, including Amazon, House of Fraser, ASOS and Very.co.uk CollectPlus also works with over 210 retail brands to provide tracked returns solutions. This allows customers to drop off unwanted items at their local CollectPlus store for delivery back to the retailer.
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CollectPlus...continued Thirdly, CollectPlus offers the option for UK online sellers to send items sold online to buyers, or for individuals to send gifts to friends or family, at their local CollectPlus store for delivery to any UK address. Customers sending parcels can choose between the two working day Standard service option and the 3-5 working day Economy service. To reward customers regularly using CollectPlus, we have recently introduced a three-tiered Volume Reward Scheme through our website. Customers sending 50 parcels or more a month, using either service, now qualify for a discount on the price of all parcel labels purchased the following month. It has been a very strong 12 months for CollectPlus as even more retail brands and their customers have discovered the solution we provide to a changing retail environment. Helping to redesign and augment the customer experience, and making it as convenient as possible, is key to how CollectPlus operates and is something we are continuing to invest in. I believe that it is these core values that allow our partners to better align themselves with the busy lives of their customers. We are now handling 9 million transactions a year. On average, five new retail brands are
partnering with us each month in order to offer their customers fully tracked returns and Click&Collect+ solutions. CollectPlus has responded to the needs of consumers by offering delivery and returns services that are seamless and fit in with their day to day lives, which ultimately leads to an increase in revenue and repeat business for rural stores. We are committed to a continued expansion of the network, acting as a trusted partner to our network of stores and, importantly, enabling even more local businesses to reap the benefits of providing our innovative service. â—? For more information, see: http://www.collectplus.co.uk
1 PayPoint store value research April 2013, conducted on behalf of CollectPlus. 32 RuralRetailer â—? Summer 2013 â—? Issue 22