Rural Retailer www.ruralshops.org.uk
Issue 23 l Autumn 2013
The Journal of the Rural Shops Alliance
■ P.O. Main conversion ■ How to use Twitter ■ Scores on the Doors
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: Graham Scruton outside his newly converted PO Main branch in Settle
3 4 5 6 11 12 14 15
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19 22 24 28 29 30
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In My Opinion, By RSA Chief Executive Can you help us? Your Action Checklist Wool & Stone: Cotswold Woollen Weavers company profile DEFRA Rural Communities Policy Unit RSA retail members meet Low Pay Commission BIS Select Committee Investigation of the Retail Industry RSA Views: Single use carrier bags, Royal Mail prospectus, Labour Party policies, Electricity contracts Scores on the Doors: the Food Hygiene Rating Scheme Legal Bits and Bobs Thrussington Village Stores company profile Twitter Basics for Rural Shops Update on the Post Office Post Office Main - case study
RuralRetailer ● Published by The Rural Shops Alliance. ● Printed by: Russell Press, Nottingham. ● Design: Kavita Graphics.
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In my Opinion... VARIETY IS THE SPICE OF RETAILING (AND GOVERNMENT) The Rural Shops Alliance is unique amongst retail trade associations by defining itself in terms of geography (rural) rather than by retail sector. Although the vast majority of rural shops fall into the convenience store cum post office mould, one of the great joys of my job is visiting the wide variety of businesses that we represent. In the last edition of Rural Retailer, we highlighted the success of a butcher, whilst in this one you will find profiles of a delicatessen cum tea shop and a very eclectic textile retailer. Other RSA members include petrol stations, farm shops, garden centres, bakers, pubs and gift shops, so there is plenty of variety left for future editions. Although many of the basics of retailing are the same in virtually every business, this very variety can make it difficult to write anything at all. You always have in the back of your mind a picture of a shop you have visited which, by the nature of its business, would not really fit the generalisation you are about to write. However, it is this very variety that can throw up new ideas and challenge received wisdom. Often new entrants to the retail industry are the ones who find a new way of tackling an old issue, whilst good practice in one subsector can suggest different ways of working in another.
Wales supporting small post offices. Everywhere else in the United Kingdom is leading the way for England on the issue of charging for single use carrier bags. Within the UK government, there are several departments with responsibilities affecting rural shops. Leaving aside “one issue” departments (e.g. Health for tobacco, Home Office for crime), three are very important. These are the Department for Business Innovation & Skills, the Department for Communities & Local Government and the Department for the Environment Food & Rural Affairs. In this edition of Rural Retailer, we have a short article from DEFRA’s policy unit outlining their role in ensuring that other government departments do take account of the rural factor in their work. Having a large number of retailers developing the ideas is very productive for the sector. We very much hope that having a range of policies at work in different parts of the UK, and different departments involved within the Westminster government, can be made to be equally productive for the rural retail sector.
At a national level, the same thing is happening. Successful ideas originating in one country within the United Kingdom can profitably be transplanted to others. In practice, this has tended to mean that smaller and nimbler governments in Scotland, Wales and Northern Ireland have led the way, with the more sclerotic United Kingdom Parliament that governs England sometimes following behind. Examples would include Scotland helping rural petrol stations and
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The Fixer... BBC Two’s The Fixer with Alex Polizzi is back and looking for Family Businesses! Do you run a family business or work with members of your family? Are you facing any challenges or dilemmas connected to your business and family? Are you worried about
the future of your company? Finding it hard in the current economic conditions? Whatever your situation we want to hear from you. ● To find out more please contact Naomi at Twofour on 0207 438 1812 or e mail familybusinesses@twofour.co.uk
RSA
Can You Help Us? The RSA has a small team of rural shopkeepers on whom we can call as required for specific help. This could include advising another local retailer, acting as a local spokesperson for the
RSA talking to local newspapers or radio stations, contacting your local MP or other decision-makers on our behalf and letting us know what is happening on specific retail issues in your part of the country. This is not a major commitment of time. We will obviously provide full support and backup and, where necessary, more formal training. It is interesting and potentially gives you a wider perspective on the industry. We would pay expenses incurred and, for more formal consultancy activities only, payment for the hours you worked. We are looking for practising rural shopkeepers, with a store(s) that would reflect positively on the RSA and with good communication skills. You obviously need to be able to spend a limited amount of time not directly involved in your business. ● If you are interested in discussing this further, please e-mail info@ruralshops.org.uk with brief details of yourself and your contact details.
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Your Action Checklist for this issue...
p 2. CHECK ELECTRICITY CONTRACT END p 3. SCORE ON THE DOOR DISPLAYED APPROPRIATELY p 4. ENSURE STAFF ARE PAID THE NEW NMW p 5. SET UP TWITTER ACCOUNT p 6. ENTER PO COMMUNITY FUND COMPETITION p 1. CAN YOU HELP US?
SEE PAGE 4 SEE PAGE 17 SEE PAGE 19 SEE PAGE 22 SEE PAGE 28 SEE PAGE 29
RSA National Meeting
At the RSA’s last National Meeting, Burtons Biscuits gave a fascinating presentation of the important biscuit fixture. Here is the briefest of summaries of what they told us.
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Cotswold Woollen Weavers...
Wool and Stone: A very Richard Martin and the two fellow owners of the highly successful Cotswold Woollen Weavers in the tiny Oxfordshire village of Filkins do not agonise over the demographics of target customers. Instead, they have learned to focus on Richard’s gut feeling for what his customers really want, based on his long experience in retailing. As a result, he has created a true rural ‘destination shop’ – that holy grail for retailers. It occupies a gaggle of 18th century Cotswold buildings full of nooks and crannies. Those who make the effort to discover it are amply rewarded with an extraordinary eclectic range of things to buy, things to try, things to eat and drink and things to just, well, marvel at.
Richard’s love of history and British heritage in particular goes a long way to explain why the sprawling buildings, including two ancient barns, which make up Cotswold Woollen Weavers are home to all manner of items which fight for attention; encouraging customers to spend literally hours wandering around. It’s a fascinating cornucopia of museum artefacts and curiosities sitting alongside elegant, newly upholstered furniture, hand carved limestone, tin toy cars, antiques and brica-brac, fireplaces and ancient textile machinery. Modern kaleidoscopes placed alongside vintage microscopes are a talking point, while greetings cards vie for attention with Cotswold Woollen
Richard with one of his superb cloths
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By Beth Whittaker
unusual retailer A selection of the range of throws
throws, scarves and travel rugs. Richard’s eightstrong team at Filkins still design and make a lot of the fine woollen clothing on sale, but most of the actual weaving is now done in Yorkshire. They also source the very best antique and vintage furniture, and completely rebuild and reupholster as necessary to restore it to tip-top condition, using their own cloth.
There is a lot for visitors to see
The commercial success of the retail business is down to a combination of reputation, good old-
Weavers’ own beautiful tailored clothes and throws made from the finest English wool. Eclectic it may be, but everything shares the stamp of good design and solid making. Richard and company moved to the redundant farmyard and buildings in the Cotswold village of Filkins in1982, after his family’s first successful foray into textiles at an abandoned mill in West Wales during the 1970s. In the past, the family’s fine cloth was sold wholesale to Burberry and Ralph Lauren. Now it is in demand from some of the country’s top hotel groups and A List event organisers who can commission their very own Some ranges can get quite pricey bespoke designs for upholstery, hangings,
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Cotswold Woollen Weavers...continued
Modern coffee shop Cutting cloth on the premises
fashioned merchandising, a canny use of personalised marketing, a firm approach to pricing and relatively low rents. There’s a coffee shop where both visitors and local residents meet, bicycle hire and a holiday cottage too, to help keep the wolf from the door. Although these seemingly peripheral activities only amount to 10% of turnover, they help to sell the company’s own textile products (which account for about 50% of sales), limestone products carved on-site and bought-in items.
business. “It might seem eccentric – but we do work very hard. In the end, it is about focusing on merchandising and display; making any visit a pleasurable experience for the customer,” he says. “Because rents in the country are cheaper than the high street, it means you can have more space; it allows you to be more experimental: it is about putting on a show.
And Richard is completely unfazed by what, to outsiders, can seem an almost wilfully eccentric and consciously disorganised approach to
“We make the most of what we have; there’s a large, relatively flat car park, so we actively invite groups to use us as a meeting point. Recently, we welcomed a large group of veteran car owners who brought their cars; they in turn attracted a lot of interest and all came into the shop. We have regular customers who pop into our coffee shop just for a cup of tea and cake, and don’t buy much else. Then we have other
Display of clothing next to old machinery
Part museum, part shop
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One of the sales areas
The Explorium
people who literally spend hours wandering around, enjoying what they see. In the end, they are all customers, and our reputation has grown. People know they can find something they cannot get anywhere else. “We set great store by our mailing list; I have never understood retailers who don’t build on their relationships with existing customers. We Traditional toys, now collectors’ keep in touch with all our customers with items postcards and emails in a very personal way – so much so that people often ring us to apologise that they can’t make it to one of our special events and ask if they can come another day!
Sample books from bygone ages
“Happy customers bring others, and talk about us to their friends. Hotels across the Cotswolds are delighted to recommend us as a perfect destination for their guests; something a bit different, which visitors really enjoy and take back memories of an eccentric shop – and a few gifts!” Wool and stone – the two tenets of the Cotswolds – seem to be reflected in Richard’s approach to business. There’s the creative, colourful, engaging and softer side, and then there is his tough business approach which brooks no discussion. “One thing I am absolutely adamant about is margins,” he states. “We only ever reduce a price if we have made a mistake in terms of the
Baseball bats next to 100 million year old fossils - this is eclectic retailing
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Cotswold Woollen Weavers...continued The RSA view RSA member Richard Martin originally approached us, suggesting that although most of our membership consists of food retailers, nevertheless we ought to feature other forms of retail occasionally. When we visited his business, we were totally caught up and spent far longer than we had intended exploring this extraordinary outlet. It seems to break every rule in the retail book but in this location his concept works very well indeed, helped no doubt by a location in the affluent and tourist friendly Cotswolds. An old barn tastefully converted to modern use
product itself, which is rare, or as part of a promotion for a large order, for example for a hotel. It’s the death knell of many rural businesses, pricing for volume. Come hell or high water, we need to maintain our margins, otherwise the business fails. People don’t mind paying for quality if they get something they love, which no-one else has, and they’ve enjoyed a great shopping experience! “You must never stop promoting your business; I’m in regular touch with hotels across the Cotswolds, I give talks to the WI and Probus and local history societies. I’ve built great contacts at Honda in Swindon, RAF Brize Norton and the Oxford Colleges and I’m on the tourist maps, both literally and figuratively. I make sure I get to know the great and the good who help me in return by passing on the word.” And at 61, Richard’s commitment to retailing is unstoppable – he has just signed a 30-year lease for the historic Witney Blanket Hall in Witney with plans to recreate, weave and sell traditional Witney blankets, reviving the local tradition. “Although no-one under 40 has heard of Witney blankets, that will soon change,” asserts Richard; and no-one would doubt him. ● For more information, see: www.cotswoldwoollenweavers.co.uk
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A lot of rural garden centres and farm shops have established themselves as leisure destinations, although few have developed such a comprehensive network of advocates to tell potential customers about them. The availability of plentiful cheap space has allowed this company to provide a lot of retail theatre, which is brilliant entertainment for customers but less feasible when each square metre of sale space has to deliver a return. Richard’s relationship marketing, making customers on a database feel individual and that they have a direct link with the company, is quite remarkable and provides very much a case study on how this can be made to work. Again, not being afraid to be outside the mainstream and to allow a strong personality to pervade the business is something that many rural businesses could reflect upon more fully. Stocking products unavailable anywhere else is a key advantage to any retailer, clearly producing your own range of high-quality woollen products really ticks this box, but local products and own label branding provides the possibility to do this in many different types of business. And although many rural shopkeepers will envy Richard his ability to protect high margins, nevertheless it does reinforce the message we are constantly repeating – although price can be significant, it should almost never be the most important part of the proposition for a rural retailer. As the old adage goes, “Any idiot can give stuff away”. We would encourage any reader to visit Filkins but do allow far more time than you think you’re going to need to take full advantage of Richard’s eclectic offer!
DEFRA...
The work of DEFRA’s Rural Communities Policy Unit The Department for Environment, Food and Rural Affairs (DEFRA) is potentially an important ally for the RSA in gaining Government support for rural shops. We asked their Policy Unit to explain briefly what they do and here is their response: Living in a rural community can bring some unique challenges, such as living a long way from economic centres and essential services, lack of affordable housing and limited local amenities such as shops, post offices and pubs. The government recognises these challenges. Its Rural Statement, published in September 2012, concentrates on 3 areas: ● economic growth – we want rural businesses to make a contribution to national growth ● talking directly to rural communities – we want them to know we’re on their side ● quality of life – we want people in the country to have fair access to public services Defra’s ministerial team is acting as champions of rural issues, supported by the Rural Communities Policy Unit (RCPU). The RCPU works across government to ensure policy makers take into account rural areas when they are developing policies. This is called ‘rural proofing’. Defra provides guidance and support for other government departments in rural proofing their policies by advising them on the possible impact of new policies on rural areas. One example of this has been the Post Office Network Transformation Programme, where we are working with the
Business Innovation and Skills Department to ensure the issues faced by rural Post Offices and their importance are recognised. Defra recently published an updated version of the Commission for Rural Communities’ Rural Proofing Toolkit, mainly targeted at nationallevel policy-makers. We have also produced a shorter guide to help shape local public services. Defra funds the Rural Community Action Network (RCAN). This is a network of 38 rural community councils across England. RCAN keeps Defra up to date with local information on the impact of policies in rural areas, as well as making us aware of issues that are causing concern in rural communities. ● Further information about the Rural Statement, Rural Proofing and the work of the RCPU can be found at https://www.gov.uk/ government/topics/rural-and-countryside ● If you have any questions or queries on rural issues please contact the Rural Communities Policy Unit at ruralcommunities@defra.gsi.gov.uk
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National Minimum Wage...
National Minimum Wage: the Low Pay Commission As part of their evidence gathering, three members of the Low Pay Commission (LPC) met with a group of retailers from the RSA. This was an excellent opportunity for them to provide an insight into the operation of their businesses and to explain how the National Minimum Wage (NMW) impacts upon them.
The Philosophy behind the National Minimum Wage
The retailers were united in wanting to pay their staff fairly. They also did not want to be seen as minimum payers and all in fact paid staff above the NMW levels, even if only by a few pence. There was general concern that financial pressures were flattening pay rates, with several of the retailers present unable to pay senior assistants and supervisors the same differential as they had done in the past – wage bands are narrowing.
In the last couple of years the situation of low paid workers has moved up the political agenda, with many unions and other commentators demanding that they receive a higher “living wage”, designed to provide a certain standard of living. The Business Secretary, Vince Cable, has responded to these pressures, saying, “In addition to their on-going annual remit, I am asking them (the LPC) to extend their expertise to help the government and business understand how we can deal with the issue of low wages in the economy. In particular I have asked them to look at what economic conditions would be needed to allow the National Minimum Wage to rise by more than current conditions allow.”
Some of the group did not take full advantage of the reduced youth rates, arguing that staff doing the same basic job should be paid a more equal rate than allowed for in the minima. All agreed that staff appreciated working locally without a time-consuming and expensive commute, offsetting the fact that sometimes their actual wage rate is somewhat lower than might be earned in the nearby town.
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The level of the NMW is set based on evidence, such as that provided in this meeting. The NMW is set as high as possible, subject to not materially reducing employment, affecting the economy or increasing inflation. The LPC exists to provide objective analysis of what so easily can become a political football.
The RSA view When it was first introduced in 1999, the NMW was set at a very low level. After a cautious start, the level increased significantly, the increments tailing off again in recent years. It is a tightrope act. The trick is to raise the minimum to benefit poorly paid workers, whilst
RSA Meeting with at the same time not pricing them out of jobs. In addition to those workers actually paid at or near the NMW, millions of other jobs are related to it. So, for example, a newly appointed shop assistant might be on the national minimum wage but their supervisor might be paid £1.50 per hour above it. The vast majority of rural shopkeepers are not remote bosses but people working alongside their staff. Often they are only able to pay themselves a rate per hour lower than the NMW. The shopkeepers in our meeting were entirely typical, insofar as the RSA and its members would be delighted if trading conditions allowed a significant increase in staff wages. However, the reality is that there are few ways of improving staff productivity in this environment and that higher wages generally pass straight through to the bottom line. The NMW is at a level where it does impact on real
The retailers who met with the Low Pay Commissioners
employment decisions. Wages typically make up about 50% of the costs of running a rural convenience store – it is the key cost other than buying stock. It is very easy for the unions to highlight firms of high earning lawyers paying their cleaning staff at NMW and crying foul. It is relatively easy for public sector employers to smugly agree to pay a living wage, when it is taxpayer’s money used to fund it. It is a very different to ask a small businessman to pay their staff significantly more when the profit is not there to fund it. You could argue that businesses unable to pay a “living wage” should be allowed to go to the wall – that's capitalism. In practice the result would be more rural communities without access to a shop and the vital village resource it represents and less rural employment. With unemployment and underemployment as they are, with most shopkeepers having no difficulty recruiting good staff at the wages on offer, then it would seem better to retain jobs, even close to NMW, than increase wage rates. It is quite legitimate to want to increase wages in industries that can afford them. However, the National Minimum Wage does what it says on the can – it is an absolute minimum that applies across-the-board. If further refinement is needed, then the answer is to reinvent the industry by industry arrangements that used to exist. But for small retailers, the position is quite clear. Too great an increase in the NMW would harm real businesses and real jobs.
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BIS Committee...
BIS Select committee on the retail industry Ken Parsons, RSA Chief Executive, recently appeared before the Business, Innovation and Skills Select Committee Enquiry on the retail industry. He was joined in the session by two other members of the Independent Retailers Confederation, representing cycle traders and bookshops – there was a fairly eclectic mix of experience present. The enquiry is highly topical, with so many national retail chains closing and the occupancy rates for shops in many towns and cities falling. Certainly, if you analyse the businesses that are present in many high streets, including smaller ones in rural areas, the proportion of betting shops, pawnbrokers and charity shops is truly frightening. This is set against the expected continued rise of online shopping, together with such hybrid models as click and collect, whereby customers order online but then pick up their goods from the bricks and mortar store. This was a big success last Christmas and highlights how quickly the retail industry generally is changing. In some respects, the Portas Review, written about two years ago, now seems a bit out of date, despite the fact that there are few examples of its recommendations being implemented as yet. The MPs on the Committee asked a range of questions, many of them prompted by Portas, but also the more recent Grimsley Report on the state of the High Street. The two reports do in fact have more in common than the well-publicised spat between the two authors might lead one to suppose. Grimsley is perhaps more pessimistic some might say realistic – in suggesting a controlled reduction in retail space in town and city centres, a policy being tentatively put forward
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in a small way by government. Certainly there are many market towns where buildings occupied by boarded up shops and pubs could be reinvigorated with new uses. We have a particular area of interest to the Committee was the issue of business rates, something we have discussed several times before in Rural Retailer. Many of our members benefit from either rural rate relief or small business rate relief, but in some urban stores business rates can be as high as or indeed higher than the rent. The system is clearly broken. The retail world is moving very fast. A system introduced when retail seemed to be a stable and reliable industry that could be taxed accordingly. We now have a situation where struggling bricks and mortar retailers are stuck with high fixed overheads, despite in many cases a decline in their turnover and profitability. We also made the point that the whole system of long-term upward only leases can be a real problem; many of the high profile retail bankruptcies happened around quarter days, when 3 months rent is due in advance from tenants. We can only hope that when the Committee's report is published, there is a greater sense of urgency in implementing their findings than happened with Mary Portas’ report.
RSAViews Autumn 2013
CHARGING FOR SINGLE USE CARRIER BAGS – RSA VIEWS ON THE PLANS FOR ENGLAND TO FOLLOW THE REST OF THE UK The UK Government is to introduce a levy on single use carrier bags in England, with the proceeds being passed to charities.
that customers will now accept. Carrier bag use in all three countries has been reduced massively. Scotland has already made the decision to go down this route and it would seem sensible for England to follow suit.
This is an issue on which the RSA has changed its stance. When it first arose, we were afraid that convenience stores, with customers buying just a few items and with a high proportion of impulse sales, would be particularly affected by a charge on bags. Customers might make an effort to take reusable bags to a supermarket, but would not bother when calling into a convenience store just to pick up a litre of milk or something for tonight’s tea.
Although the current plan is that only large stores would be forced to charge the levy, we would expect a large number of our members to do likewise on a voluntary basis and would encourage this move as part of a social responsibility agenda
The last couple of years have tended to suggest that our fears are now unfounded. This is partly due to customers attitudes changing and partly as a result of seeing such schemes in operation. Since the retailers in the town of Modbury in Devon agreed between themselves to not give out free carrier bags. The movement has come on apace. Without government prompting, a significant number of rural retailers have already introduced a charge for carrier bags in England, with most customers happy to go along with the policy once the reason for the charge is explained to them. Ireland has had a charge for many years, whilst more limited experience in Wales and Northern Ireland reinforces the view that this is a policy
Although a relatively small matter, this move does highlight yet again the democratic deficit that exists. Local assemblies in Northern Ireland, Wales and Scotland have been able to take steps to introduce this charge, whilst in England responsibility for the measure lies with the United Kingdom Parliament containing representatives from all four countries. A bizarre situation!
RSAViews
GOOD NEWS FOR POST OFFICES WITHIN THE ROYAL MAIL PROSPECTUS The Rural Shops Alliance has found good news for rural Post Offices within the Royal Mail Group (RMG) flotation prospectus -in fact, it is fair to say that we are very pleased indeed to see how the relationship between Post Office Ltd and Royal Mail Group operates. For a long time, we have been itching to see the contents of the ten-year Mails Distribution Agreement (MDA) between the Royal Mail Group and Post Office Limited, set up in 2012 to last 10 years. Now a summary of it has appeared in the Prospectus. Within it, there are very significant safeguards for Post Office Limited to continue to maintain its position as the prime bricks and mortar outlet for Royal Mail products, whilst Royal Mail is effectively prevented from selling postage through any other retail channels. Our reading of this document would be that it represents excellent news for sub postmasters. It will be a very significant factor in maintaining the Post Office network at its current size in both rural and urban areas. The full prospectus is 441 pages long but this is a very brief summary of the key points that affect the Post Office network:
● Royal Mail has a target of deriving not less than 77% of its retail mails revenue through Post Office Limited. If it fails to achieve this target, then it must pay POL full compensation to make up for the lost fees. ● POL must be given the opportunity to accept and process at least 99% of all prepaid products (other than postage stamps) accepted through physical retail outlets. ● RMG has undertaken not to contract anybody else to provide retail mail products (other than postage stamps) through physical retail outlets. They will not make available any retail mails products (except postage stamps and pre-existing arrangements) other than through POL. ● In return, POL may not provide competing mail services in any of its branches without the written consent of RMG. Taken together, these provisions place a massive block on Royal Mail using any other retail outlets to bypass the Post Office network. Although we would suspect some significant nudging from government to get this agreement, the Post Office Ltd team seem to have done a great job in their negotiations with Royal Mail Group!
● The Royal mail group prospectus can be found at: http://royalmailshares.service.gov.uk/media/ docs/Prospectus.pdf The risks for Royal Mail in their relationship with POL are explained on page 14, whilst an outline of the full MDA can be found from page 227 onwards. It may be dry reading but if you run a post office you need to look at it. © Royal Mail Group Limited 2013
RSAViews
RURAL RETAILERS IN CLOVER AFTER THE END OF ROLLOVER The RSA recently attended a very useful meeting of the All Party Parliamentary Small Shops Group. Under questioning from MPs, representatives of the electricity supply industry explained how they were improving the way they treat small business customers. And certainly to those of us present, we did dare to hope that a corner is being turned. For the purposes of electricity supply, the vast majority of rural retailers will be classified as a micro business. In this case, Ofgem requires suppliers to put the end date and notice period on all bills for fixed term contracts. As another concession, micro businesses can tell their supplier they want to switch at the end of their deal at any time before the notice period. Many retailers make use of this concession by giving notice as soon as they have entered a new contract, even if the end date is years away, to be absolutely sure. Currently, if you fail to tell your supplier of your intention to end a contract before the notice period, your supplier will usually roll you over onto a new contract. For micro businesses, suppliers are only allowed to rollover a contract for a maximum of one year, but it can still commit you to a far more expensive deal. This is now rapidly changing. The regulator, Ofgem, has been consulting on the possibility of banning rollover contracts for micro businesses. In a very positive move, British Gas preempted any decisions by announcing that it would unilaterally abandon automatic rollover contracts. This is already in place for new customers, whilst
existing customers will not have rollover applied after June 1, 2014. Stephen Beyron, Managing Director of British Gas Business, explained: ‘Increasing numbers of our small business customers have told us they don’t like the way the energy industry automatically moves them on to new contracts, so we’ve decided we will lead the way and put an end to this practice.’ Under some pressure, the other five of the “Big 6” energy companies are now committed to following suit, on various timescales. Other measures being adopted include routinely sending reminders to business customers by recorded delivery when their contract is about to end. Hopefully this means that the days of rural retailers being caught on very expensive energy contracts after an automatic rollover are coming to an end. Excellent news for rural retailers!
RSAViews
LABOUR PARTY POLICIES As they might affect independent retailers The Labour Party conference threw up three areas of interest: Business Rates: Labour would use the money that is currently used to reduce corporation tax for large businesses to reduce business rates for small businesses, those occupying premises with a rateable value of £50,000 or less, in 2015 – 16. The rates would then be frozen for the following year. National Minimum Wage: Ed Miliband said that the next Labour Government would “strengthen” the National Minimum Wage. Labour policy would seem to be moving towards a sector-based National Minimum Wage, with the potential for some sectors to be set at a higher rate. Alan Buckle, Deputy Chairman at accountancy firm KPMG, is looking into how the role and powers of the Low Pay Commission could be extended to strengthen the minimum wage. Vince Cable, Minister for BIS, has of course been asking very similar questions. Energy pricing: The big headline announcement in Ed Milliband’s speech at the Labour Party conference was to propose a freeze in gas and electricity prices until the start of 2017 for domestic and non-domestic customers. There are plans to abolish energy watchdog Ofgem and replace it with a new regulatory regime to ensure customers get a “fair deal”.
The RSA View All three of these issues are important to rural shopkeepers but Labour policies seem to be tinkering around the edges rather than addressing the underlying issues. The whole system of business rates needs a radical overhaul – the system quite simply does not work in periods of retail instability.
The national minimum wage has the immense virtue of being a simple safety net that ensures that employers do not exploit workers. A system of minima set by industry would seem to be getting perilously close to going back to the old system of industry wages councils. How the idea would work in practice is anybody’s guess. It is utterly bizarre to offer consumers legally fixed prices when the big energy companies offer their customers the option to fix prices into the future anyway. Hence it is equally bizarre for energy companies to cry “foul” when politicians claim to do the same thing. The real problem is chronic underinvestment in electricity generation and gas storage facilities. Although of course everybody wants low prices, it is fair to say that the average shopkeeper would place reliability of supply as a higher priority than a politically inspired price freeze that takes no account of international energy prices. Over the three issues, good politics but weak economics. Policies correct at the time of going to press
By Helen Gregory
Scores on the Doors This is a national scheme that rates the food hygiene levels in shops and other businesses that sell unwrapped and loose food. The Food Standards Agency (FSA) runs it jointly with local councils’ environmental health departments. Standards are rated on a scale ranging from 0 meaning urgent improvement necessary through to 5 - very good.
The FSA believes that most consumers find a rating of 3 and above acceptable. Proprietors receive appropriate certificates and stickers and results are available to the public on-line. The FSA has recently launched a campaign to encourage firms to display their stickers, as well as an online ‘How to’ guide, with ideas on promoting hygiene standards. Catriona Stewart, head of their food hygiene ratings team, says: “Businesses displaying their ratings are finding this is having a positive impact. People are increasingly looking for the stickers.” But while it seems that village stores are not causing Environmental Health Officers much
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Scores on the Doors...continued trouble generally, particularly as the vast majority get a very acceptable 5 or 4 rating, there is still a small minority scraping a 1. Shoppers at dozens of village stores around the country can see posters about Harvest Festival services and kittens for sale but they won’t find the shop’s Food Hygiene Rating sticker in the window. That’s because when ratings are low, the owners are understandably reluctant to put them up. However, Vincent Lee, owner of The Red Barn Village Store in Sturminster Newton, Dorset, is unfazed by his 1 rating and explains it was a result of not filling in paperwork correctly because the shop had recently opened. He believes it will pass when reassessed, but thinks the lack of a sticker hasn’t made any difference to his business. “Nobody has commented on it and I’m sure it hasn’t affected their decision to shop here,” asserts Lee.
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LRB Consulting agree with this view, that it is possible to have very clean and safe premises but still get a low score due to a lack of training or not having a food safety system in place. Director Mike Ellerby says there can be a “disconnect” between what businesses do and what an inspecting officer is looking for. “Sometimes people let themselves down because they don’t have physical evidence of what they are doing – you can’t just look up the temperature of a refrigerator when the inspector arrives.” During an inspection, an Environmental Health Officer (EHO) will check how hygienically the food is handled, the condition of the structure of the buildings such as cleanliness and ventilation, and confidence in management to maintain standards. Steve Ansell, owner of Ansell Village Stores, runs three shops in Bedfordshire and one in
Hertfordshire. His shops were awarded ratings between 1 and 4 but Ansell doesn’t display any of his stickers. He explains that Pirton Village Stores in Hertfordshire is a leasehold property, converted from two houses. “The inspector said the toilet needed to be moved and that handwashing facilities were inadequate, but the cost of doing that would be prohibitive. However, we’re very careful about how we handle food and we did change to using paper cloths and feeder when asked.” Ansell believes inspections can be subjective and says his Hertfordshire shop had an easier time than the others when it was assessed – although EHOs would probably dispute this. Nick Kelly, Cornwall Council’s food and health & safety manager, insists that all visits are undertaken objectively using the broad standards as a guide. He says: “Any business that feels that they have not been dealt with fairly has a right to appeal.” Shopkeepers are not always convinced that a good score has benefited them. While new owner Liz Hawkins was pleased when Bratton Fleming Village Stores in Barnstaple, Devon, got a 5 rating, she doesn’t think it has had any impact. “It was brilliant to be recognised like that but hardly any customers have commented on it.” Meanwhile, Rob Joynson, owner at Marshchapel Stores near Grimsby, adds that while no one has commented on it, he’s sure they’ve noticed his ‘5’ rating sticker. He explains that he doesn’t stock a lot of loose food, which meant most of the assessment was about temperature of fridges and hygiene. Says Joynson: “It’s not an aggressive process and they were helpful if you hadn’t recorded something in the right place, explaining what to do next time.”
At the other extreme, premises that are rated as zero are revisited several times and actions are put in place to make sure the operator sorts out the problems and works toward getting the business compliant again as soon as possible. The premises will then be re-assessed in approximately six months to make sure the improved standards are being maintained. Whatever their rating, it looks likely that Welsh store owners will have to find space in their window for a sticker later this year when the Welsh Assembly makes it a legal requirement to display them. Similar legislation is being considered for Northern Ireland, although the FSA currently has no such plans for England. Until then, Hawkins at Bratton Fleming Village Stores is like many of her fellow store owners, when she admits: “It might not have made a big difference to us, but I suppose I do look out for them at other shops and restaurants more carefully now!” ● For more information: www.food.gov.uk/business-toolkit-fhrs To see the all the scores given to food businesses in your area, go to your local district or unitary council website.
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Real Time Information The RSA has consistently pointed out the problems that the new real time information for reporting payments to staff to HMRC would cause some small businesses, including some rural retailers. HMRC has obviously taken the point on board, with yet another delay to the deadline for all employers to use RTI. Employers with fewer than 50 employees now have until 5 April 2014 to convert to this new system. Businesses with 50 employees or more should already be using the system.
Legal Bits & Bobs... Zero- Hours contracts and volunteer staff There has been considerable publicity recently about the use of zero hour contracts by large employers, including some supermarket chains. To our knowledge, very few rural retailers use this form of contract, but it does provide a reminder that employment contracts do need to be carefully written. If you work on the basis that one day they may be placed under a harsh spotlight by an employment tribunal, then that is a good starting point. In the meantime, the Government has commissioned a review into zero- hours contracts. We are aware of a couple of small village shops where members of the community are so concerned to keep the facility that they volunteer to work in it for free. There is a high likelihood that this breaches minimum wage (NMW) legislation and we would not recommend going down this route. Anyone on a work experience placement or internment who is a “worker” under NMW legislation is entitled to the minimum wage and this almost certainly applies to volunteers working in a commercial shop on a regular basis. The situation for community shops set up as non-profit-making bodies is different. Here legislation does allow volunteers to work for no pay.
National Minimum Wage From 1 October 2013 new rates are: ● for adults an increase from £6.19 to £6.31 per hour
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● for workers aged 18-20 years old an increase from £4.98 to £5.03 ● for 16-17 year olds an increase from £3.68 to £3.72 ● for apprentices an increase from £2.65 to £2.68.
Employment Tribunals In July 2013, the rules for employment tribunals changed and now an employee has to pay fees in order to bring a claim. In addition, The Employment Tribunals (Constitution and Rules of Procedure) Regulations 2013 have come into force. They require employment tribunals to encourage parties to use alternative dispute resolution wherever practical and appropriate. Means of resolving disputes by agreement include the services of ACAS and judicial or other mediation. Claimants and respondents will have prescribed forms in respect of specific claims. The Regulations also list the proceedings in which a prescribed form need not be used. Claims will be rejected if a prescribed form is not used or certain information is not provided. A respondent has 28 days to respond to a claim. If presented late or not in a prescribed form then the response will be rejected, although an application can be made for an extension of time. If a tribunal considers that any specific allegations or arguments submitted by either party have little
TUPE Regulations reasonable prospect of success then a deposit of up to £1000 can be ordered as a condition of such allegations or arguments being allowed to continue. The compensatory award in most types of unfair dismissal cases is now capped at 52 weeks’ pay or £74,200 whichever is the lower. This applies to dismissals where the effective date of termination is after 29 July 2013.
Flexible working The Children & Families Bill proposes to extend the right to request flexible working to all employees. Employers will have a duty to consider all requests in a reasonable manner. This change is expected to take effect in spring 2014. ACAS will be producing a good practice guide to support this legislation.
Recruitment – Employee shareholders contract The new Employee Shareholders Contract is now available to employers. It gives workers a different set of employment rights. They receive shares in the business of between £2000 and £50000 and in return the employee shareholder will forego certain rights, including those relating to redundancy pay, training, flexible working and some unfair dismissal provisions. They will also have to give more notice to their employer if they intend to return early from maternity or adoption leave.
Employers must provide a written statement about the shares, a 7 day cooling off period and protections for employees who reject the scheme. Also employers must make available free independent advice to prospective employee shareholders. It is fair to say that we do not expect many rural retailers to be offering this contract. However, we would be very pleased to hear from anybody who does about how successful it proves to be.
Termination-Settlement Agreements There may be certain situations in which the employment relationship needs to be brought to an end but neither party has a legitimate means of achieving this aim or, where there is a legitimate means, both parties nevertheless prefer to seek a negotiated termination of the employment contract. Settlement Agreements, introduced in the Enterprise and Regulatory Reform Act 2013 replace previous arrangements and cover the situation where an employment relationship needs to be ended. It includes, amongst other situations, a position where both parties are looking to reach a negotiated termination of the employment contract. The offer of a settlement agreement cannot be used as evidence in unfair dismissal cases.
Changes to the Transfer of Undertakings (Protection of Employment) (TUPE) regulations are expected to come into force in January 2014. They include provision for renegotiating terms in collective agreements up to one year after transfer and allowing businesses with 10 or fewer employees to consult directly with them.
Health and Safety Regulations. From 29 May 2013 Local Authorities are banned from unnecessary health & safety inspections under a new statutory National Enforcement Code. Only higher risk sectors, such as construction, or businesses with a track record of poor performance will now face routine health & safety inspections.
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Thrussington Village Stores...
Providing a Rural Offer for Thrussington is situated a mile east of the A46 between Leicester and Nottingham, with a bus service that travels through the villages to Melton Mowbray and Leicester. The village is a thriving community of approximately 550 residents, with a school, hairdresser and two public houses. The one amenity missing for six years was the village shop, which had closed on the death of the owner in 2006 and fallen into disrepair. That all changed in March 2012 when the shop was re-opened as a store, delicatessen and tea room by former publishing consultant and plumbing merchant Ben Meacock and his wife Jo.
Sometimes it takes an outsider without direct experience to come in and make a project happen against the odds. The retail logic of Thrussington did not look promising – a small village, a dilapidated shop which had been closed for years and a sales area of only 500 sq. ft. On the plus side, there was the opportunity to start a business in tune with the 21st-century without any “baggage”, in a community that knew it had to support its shop if it was going to survive.
Having learnt of its existence from Ben’s mother Miranda and stepfather Alan, Ben and Jo acquired the property and started to float various designs and ideas before finalising their plans. The decision-making process was helped by a survey that was posted to every home within a few miles radius. Jo said, “We sent out over 500 surveys to residents of Thrussington and neighbouring villages and received 80% back, with some fantastic ideas.” The incredible response rate suggested a high level of support for a new shop, whilst the results suggested the range that potential customers wanted, a good example being a strong demand for freshly baked bread.
Ben behind his serve over chiller
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Miranda & Alan (an experienced carpenter) assisted Ben and Jo in fitting out the shop to a high standard. Along with the obvious necessary internal alterations, Ben has developed a patio area at the rear of the shop, so in the summer months villagers can enjoy drinks and conversation outside. A feature on BBC Midlands TV helped publicise the initial opening. After that, attracting customers was mainly through
the 21st Century popular as a gift or to take to a dinner party. Although wastage can often be a huge problem in this type of business, Ben explains: “We have very little wastage on local produce. We find that often it is the local products that sell best. However we do use them in the tearoom too. So, for example, we use the local ham and pork pies in our ploughman’s, lots of the veg. in our soups and we use the local yoghurt from Manor Farm in Thrussington in our cakes, although saying that there is never wastage of the yoghurts, they sell so well!” word-of-mouth, although they do also use Facebook and Twitter. The business plan placed considerable emphasis on providing a good delicatessen range, as much as possible sourced from local producers, together with a tearoom. Ben and Jo are passionate about supporting local producers and reducing food miles. They explained their approach as, “Providing quality products in a friendly environment where you can enjoy tea, coffee & Miranda’s homemade cakes and bump into your neighbours.” Deli lines are in fact crucial to the store’s success, particularly bread, cheeses & wines. The convenience grocery range is basic and really intended for “emergency” purchases. Their bestselling line is the award winning fresh bread supplied by Hambleton Bakery at Exton, in neighbouring Rutland. Cheese and yogurt come from Manor Farm Dairy in Thrussington itself, whilst fresh meat is supplied by a butcher in nearby Asfordby. There is a range of high quality Rutland Preserves. Thrussington label wine is also a speciality at £6.99 a bottle,
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Thrussington Village Stores...continued The tea room is a very important part of the business, accounting for around 30% of turnover, serving sandwiches, cakes and soups. All items sold in the tea room are also available from the deli. Ben also offers a take-away sandwich menu which is popular with residents who work from home. “The tearoom has a steady trade but often gets extremely busy. It is a funny thing in that you can never predict how many customers will be in on a daily basis (the pubs both report the same). It could be anything from 15 - 60 covers a day.” On top of this there is a regular customer base for takeaway sandwiches, cobs, cakes, teas and coffees etc. Obviously this side of the business provides a healthy gross profit margin – but Ben warns that you have to do it well. His advice is “Don’t cut corners. Stick with quality – people will pay for quality.” Ben is pleased to see that the shop has become a meeting point for residents, describing how two fanatical rugby fans became friends after meeting in the shop – both had lived in the village for over 15 years but had never met before!
He says it’s great to see the community talking to each other in his shop. Ben and Jo have made a real effort to integrate and make sure that their shop is a focal point of village life. Customers receive a friendly welcome and where possible are greeted by name. Ben and Jo ensure that any local causes are supported – afternoon tea and cakes in the tea room are popular as raffle prizes and are a great way to get people in. With a year’s trading under their belt, Ben explained how he felt about their move, “This represented not just a career change, but also a complete change of lifestyle – particularly with the arrival of a new baby, Freddie, just before Christmas, meaning four members of staff had to be taken on. Employing staff affected profitability but we had no choice. It has given us great flexibility and enabled us to staff the shop effectively. Jo returns to work in October which we both really look forward to. This will reduce our overheads and also allow us to spend more time in the shop together, moving things forward and improving standards.” Shop opening hours of 7-30am to 7-00pm mean long hours of work, but the only surprise for Ben is how successful they have become in such a
The tearoom
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The RSA view It is excellent to see a new shop opening up and doing so well when so many others are struggling. It does emphasise the importance of finding out what customers really want from a local shop. The answer in many cases is not the cans and packets that still occupy so much of the space in too many rural convenience stores, but the products people buy between their big supermarket shops. Deli ranges are harder to stock, but the rewards for doing them properly are there in many locations for retailers prepared to make the effort. The nature of the catchment is important – this concept would not work everywhere.
short space of time: “We are hitting targets and paying ourselves a small salary.” Ben and Jo already have plans for future expansion. They intend to develop the old bakery at the back of the store, extending the tea room and creating an area for events such as children’s parties and business meetings.
The importance of friendly service is also apparent from Ben and Jo’s success. This should be too obvious to be worth repeating, but we still see examples of poor customer service when visiting members’ shops, often a result of inadequate training for part-time members of staff. An increasing number of rural shops are opening tea rooms. It is obviously an integral part of the offer for garden centres, with many farm shops following suit and even quite small village shops, as in this case, making it part of their offer. This is particularly true for community run shops, where the use of unpaid volunteers means that one of the key costs, the provision of staff, is largely covered. Tea rooms do take up significant space and can be labour intensive, but in return they offer very high gross profit margins and provide a real service and reason to visit the shop. Ben and Jo seem to have made a very good start in their new venture and we wish them well in the future. Thrussington is very lucky to have them!
Convenience store ranges - not a priority
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Twitter...
Twitter basics for Rural Shops In past editions of Rural Retailer, we have highlighted how marketing is changing and how electronic media can provide a cheap means of communicating with customers and prospective customers. One approach that is entirely cost-free and easy to use is Twitter. The basic idea is that you can send messages to people who have signed up to receive them from you. These people are known as your “followers”. You have probably read that celebrities such as Stephen Fry have over a million followers. In the village shop context, if you had, say, 100 local people receiving a message from you fortnightly about your special offers, new lines or other messages, then this would be incredibly effective marketing. You would be getting your message to these people for just a few minutes of your time. Each message is limited to 140 characters, so nobody expects great long essays; “New season locally grown asparagus available now”, “For last Christmas postage dates see our website”, “Selected Australian wines, three bottles for only £15”.
Equally, you can follow the Twitter feeds from your suppliers or other companies in which you are interested. You could start off by following the Rural Shops Alliance feed, for example. Our Twitter address is @Rural_Shops_UK
What is Twitter? Twitter is the ultimate social networking tool. Aside from the occasional advertisement in your feed published by Twitter, it is ultimately clutter free. You follow who you want, therefore you only see posts by the people you choose. It allows you to say what you want publicly without having to accept friendships or be bothered by commentary. Though you can respond to someone else’s Tweet it doesn’t mean that the person will see it or even respond to it.
How to get started! This link is to a youtube video which shows you how to set up an account and all the basics: http://www.youtube.com/watch? v=6ohENXkGI-g This video is not connected with the RSA but we have found it to be a very good guide to the process. It really is very straightforward. All you need to provide to set up an account is an e-mail account, a user name, a password and (ideally) a relevant photo. Setting up the account takes a few minutes. You can then encourage customers to follow you on Twitter to build up the number of followers you have. Don’t send out too many Tweets, keep them interesting and relevant and you are away.
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The Post Office...
Update on the Post Office By Mike Granville, Head of Stakeholder Relations, Post Office Limited The Post Office is an important focal point for so many communities right across the UK – especially rural ones. With almost 11,800 branches, we have the largest and one of the most diverse retail networks in the UK. The Post Office is committed to ensuring this network has a sustainable future and is able to meet the changing needs of all our customers. From small villages to large cities, our unprecedented investment in branch modernisation and new digital services and technology is also an investment in thousands of communities and small businesses across the UK. Our network modernisation programme is key to the growth of our business and is progressing well. Over 1,000 branches have already been transformed, with the local MP and members of the community often joining us to help ‘launch’ these refurbished branches - and there are many more scheduled over the coming months. As you will see from the article in this edition about one of our recently modernised main style branches in Settle in the Yorkshire Dales, the investment is making a tangible and positive difference to these local businesses and their communities. Our customers have welcomed the improved environments and longer service hours, with satisfaction scores averaging around 95 per cent, according to independent research. The Post Office is a growing commercial business, with a social role. Having separated from Royal Mail in April last year the Post Office now wants to define its public purpose to inform its vision for a sustainable future.
The Post Office established a Stakeholder Forum in October 2012 comprising stakeholders and experts from a range of organisations to begin defining its public purpose. The Stakeholder Forum has listened to views from consumer groups, staff and sub-postmasters in addition to hearing from people with experience of organisations which exist to provide services to communities and society as a whole. The Forum is now starting a comprehensive engagement and research exercise to get the views of the public and wider stakeholder groups, before reporting its findings to the Post Office Board. The exercise will involve both qualitative and quantitative research, using interviews, questionnaires, focus groups and surveys to ensure a broad and considered range of opinions. We know that many of our subpostmasters carry out vital work over and above their core business - working with their communities to provide services and support for local initiatives. I hope many of you will already know (and some of you may have possibly entered) our Community Enterprise Fund competition, which we launched earlier this year with the Department of Communities and Local Government. The competition which concludes at the end of October, aims to support and further encourage these initiatives by providing small grants of up to £10,000 to subpostmasters and their local groups, We hope to support up to 20 schemes by March 2014 and will keep the readers of Rural Retailer informed as this exciting project develops.
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Settle Post Office ...
New-look Settle Post Office We have run several articles in Rural Retailer about Post Offices converting to the Local format. For this edition we asked Graham Scruton, subpostmaster at Settle Post Office in North Yorkshire, about his experience of converting his rural Post Office into a Post office Main.
“Straightforward, taxing but worthwhile,” was Graham’s reaction to the question. “The customers like it because it’s much brighter; they like the new quick counter and the more personal face to face service we’re able to give people.” Settle branch was re-launched in May this year as a Post Office Main, part of Post Office Limited’s plans to modernise the network. It took two and a half weeks to completely gut and refurbish the Post Office and shop. Before the conversion, the Post Office was a three position fortress with glass screens. Now it has one screened counter, one open plan and a Post Office serving point at the retail counter. In addition, the windows to the shop and the Post Office were changed and de-cluttered so that more light now floods in. “It looks completely different but the layout is the same,” says Graham. “The main difference was it opened up and became lighter. The Post Office range and other offerings, such as stationery, gifts and making curtain blinds, remained the same before and after conversion.” When the Post Office offered Graham and his wife Lynn the chance to revamp their Post Office they took it eagerly. “You have to move with the times and the Post Office needed a more modern approach and a better look,” says Graham. “If more subpostmasters do it we’ll all look alike, like the banks on the high street, which would be good.”
Owner Graham Scruton outside the refitted Post Office
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The transformation included extending Settle Post Office opening hours to all-day opening on
settles down Wednesdays and Saturdays. “We used to open for a half day on Wednesdays but opening later has been beneficial. The extra hours give customers more choices”. Settle Post Office has seen a rise in revenue since the revamp, partly as a result of the longer hours but also because the Post Office is bringing in new products. Graham says: “People are realising we do mortgages and insurance, and next year there’ll be the Post Office banking system.” The branch team also offers an outreach round. This is a community service that Graham and Lynn host, providing mobile Post Office services to four villages: Gisburn, West Marton, Wigglesworth and Horton. This community-spirited couple did it before the conversion and are continuing the service posttransformation. “When the Post Office closed branches in rural areas it promised people that it would find other means,” says Graham. “We were approached to host outreach services and started with two villages, then they asked us to do another two and we said yes.” Looking back over the last six months, Graham says he’d recommend modernising to other subpostmasters: “Some people like to do what they’ve always done but I think it’s good that the Post Office has invested to bring the business forward. It’s made a difference to ours.”
Local MP Julian Smith helps to reopen the Office
The RSA view The massive investment that the Government is making in Post Office Main branches is very welcome indeed. The new formats look really good and make a great deal of sense in terms of providing better customer service. It is obviously really good news for the people of Settle, with a far better Post Office environment and longer opening hours. It is also great to hear Graham’s positive views on the conversion process and the end result. Obviously it is too soon to say whether the increase in turnover will lead in the long term to better remuneration for Graham and Lynn in return for all their hard work and extra hours, plus the loss of the fixed Core payment and holiday pay. Certainly the four Outreach services Graham operates provide a welcome additional income. Issue 23 ● Autumn 2013 ● RuralRetailer 31